South Africa looks to its entrepreneurs

A few weeks ago, I had the opportunity to participate in the International Small Business Congress in Johannesburg. The Canadian Federation of Independent Business was a founding member of ISBC and we have attended all of its 37 congresses. This one was a bit different as it was held for the first time in Africa. We’re really proud of that. Many international small business organizations were keen to hear of measures taken by the Canadian government that helped our country through the recent recession. Policy developments such as the two-year freeze on Employment Insurance premiums and the more recent EI Hiring Credit were of great interest to advocates for entrepreneurs from countries still mired in the economic muck. The congress in South Africa was also a terrific reminder of the crucial role small businesses play in creating jobs and reducing poverty. With a strong participation from small business groups, governments and leaders, it was clear that Africa is very focused on small firms as the solution to their economic challenges. This is good news. In the bad old days under Apartheid rule, we learned that many policies were in place to actively discourage black South Africans from starting new businesses. Thankfully, times have changed. We were told that, for too long, many developing countries depended on large investments from foreign giants, governments, major resource companies and aid dollars. While all of these investments can help if structured properly, Africa is increasingly looking at small business as the source of jobs for local citizens.We heard many inspiring stories. The president of one African chamber of commerce said he started out as a hawker in the street — selling batteries and whatever else he could acquire on a day to day basis — and now represents thousands of South African entrepreneurs. The owner of a security company with 6,000 employees shared that she began by selling her bit of land and then lived in the streets for several years until she could get her business off the ground. All of the entrepreneurs I spoke to were so proud of the contributions they have made to their countries and to the lives of their employees. They told me of the steps they took to retain workers during the economic downturn — unlike their larger counterparts. Many large companies — particularly those based elsewhere — dramatically scaled back their operations or pulled out altogether during the recession. It was great to hear these stories because they’re so similar to the actions taken by entrepreneurs from around the world, including Canada. During the recession, job losses in small firms were very small compared with the significant downsizing in the large corporate sector. It was a good reminder to us all of the important role small firms have in job creation. Despite all the ways some governments make it more difficult for entrepreneurs to hire — mandating wage hikes in recessions, raising payroll taxes such as WCB premiums, making labour laws more rigid — entrepreneurs keep our economy moving. In fact, small- and medium-sized firms represent 60% of jobs and 50% of Canada’s GDP.African business owners shared their headaches with red tape, too. In their case, the first problem was the expensive and time-consuming process to register a business. Many said it can take months or years to get government to process all the paperwork required to start a firm. Then those same governments wonder why so many entrepreneurs remain in the informal economy — selling tomatoes on the side of the road. While the specifics are different, this is all too similar to the situation in Canada, where small firms tell us red tape is their second most significant problem, right after the total tax burden. I also learned of some really neat initiatives, such as the South African small business agency that offers a hotline to small firms who are experiencing problems with government procurement or late payments. This is a big problem in Canada, too, and I plan on raising this issue with the Minister of Public Works. Whether you are in Canada or Mozambique, the spirit of enterprise is alive and well. More than anything, I came away from the Congress in Johannesburg optimistic about the future in Africa — particularly because some governments are beginning to recognize that economic development must start at home, at the micro level, with local entrepreneurs. — Ever since my Sept. 4 Financial Post column, “Shop small and locally to make a big difference” was published, sign-ups for Canada’s Small Business Saturday have skyrocketed; enthusiasm among small business owners is growing every day. Consumers and entrepreneurs are encouraged to check out www.shopsmallbiz.ca to learn more about the very special day planned for Oct. 20. Dan Kelly October 1, 2012 http://business.financialpost.com/2012/10/01/south-africa-looks-to-its-entrepreneurs/