NEVA MAKGETLA: The small business deficit

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SA’s huge jobs shortfall reflects the dearth of small business, and any effort to grow this sector won’t work until the electricity crisis is solved

At 40%, the share of SA adults in income-generating employment is among the lowest in the world. The international norm is about 60%. SA’s huge jobs shortfall largely reflects the dearth of small business people. Of all employed people, in SA just 6% are business owners. In other upper-middle-income countries the figure is 20%.

This malaise has obvious roots. Apartheid policies shut down black-owned businesses through expropriation plus discriminatory licencing, education and financing. Yet the transition to democracy didn’t spark a qualitative shift up to international norms. The reasons lie in the structure of the economy as well as the lack of resources for emerging entrepreneurs. That said, any effort to grow small business is pie in the sky until the electricity crisis is solved...

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