Curing the mischief

These were the words of Minister Trevor Manuel as he opened a presentation at the World Economic Forum on Africa on 5 May, with the topic of the morning centering on challenges and solutions for financing business innovation in the SME market.

 

With how big business can support small business being a key theme, the Minister announced that he was going to take a step back from this issue and provoke discussion. “While it’s not a bad thing for big corporates to throw some money from the Chairman’s fund in order to support start-ups, the question we really need to ask is, does it actually help? How sustainable are SMME start-ups?”

 

Taking a step back means identifying “the mischief we want to cure”. In the African context, unemployment comes first. Manuel says one only needs to see the image of the Libyan man who set himself alight when his fruit and vegetable cart, his source of income, was confiscated, to understand how important employment is. Therefore, in triggering support systems for SMES, the sustainability of that employment is critical. While “inclusive businesses” that aim to contribute to poverty reduction through the inclusion of low-income communities in their value chain may seem like the answer, Manuel says it’s vital to ask the question: “If we outsource our cleaning or gardening, or whatever it might be, is that really supporting the SME sector? Or is it in a way alleviating ourselves from the burden of employment?”

 

Manuel’s questions were the first of many posed during the course of the session. Other points raised were around how entrepreneurs can present their ideas in a way that allows bankers to share in the dream, and how corporates can shift their mindsets away from a “quarterly report” mentality and key into the needs and competencies of African small business owners. A firm consensus was reached, both by Thierry Tanoh of the International Finance Corporation, as well as Nick Van Rensburg of Anglo American Zimele, that simply providing start-ups with financing, without technical assistance, proves disastrous. The two need to work hand-in-hand in order to achieve success. And that in fact, there needs to be collaboration on all fronts, including among big business itself, in order to truly support SMES in a way that will make them sustainable and help cure the mischief of the continent.