Economic apartheid in South Africa – How can the developed world help?

While the initial rainbow nation image has taken a bit of a beating in recent years the fact remains that few countries have been able to take the step from an apartheid system to a democratic system as successfully as South Africa. While the politicians played a vital role, it was the people of South Africa who were — and continue to be — the true reason for the successful integration of all the races, creeds and cultures.

The new apartheid is an economic apartheid. Poverty and unemployment separate the people of South Africa as strongly (if not more) as the laws put in place by the apartheid government did.

So I pose the following question: Should we not turn back to the people to solve the issue? Could the same dynamism and love for the land that prevented full out civil war not be used to create jobs and eliminate unemployment? This is hardly a new or novel question. The recent election proved that economic freedom is top of mind — clearly illustrated by the over one million votes for Julius Malema’s Economic Freedom Fighters.

I would however wish to add one further question: Is it jobs we need to create? Or do we need to create new and sustainable businesses? It is broadly accepted that in order for South Africa to be able to gainfully employ all job seekers the size of the economy will need to triple in size. This would be simple if we could just triple the turnover of existing businesses (which would also make investors exceptionally happy and boost the JSE dramatically) but, truthfully, this is not likely nor would it have the desired result. Our only option is to start up new companies. And for this we need entrepreneurs.

In South Africa we have a large number of unemployed entrepreneurs with great ideas and the fire in their hearts to do what needs to be done to be successful. They yearn to uplift their families and their country. Yet the entry level to business is above the grasp of most. Existing interventions such as providing working capital, assisting with business plans and enrolling into supplier development programmes do work — but the failure rate is high and post-intervention sustainability low. Another primary (yet often overlooked) reason for an entrepreneur failing or giving up is the fact that it is a very lonely road.

As a South African (or someone who has a passion for development through business) you might ask yourself what you can do to make a difference. The answer is surprisingly simple. With the favourable exchange rate and existing controls implemented through South Africa’s Department of Trade and Industry and investment promotion agencies such as Wesgro, the Gauteng Growth and Development Agency and Trade and Investment KwaZulu-Natal amongst others you can invest directly into companies.

Another option is to invest in companies whose core business is the sustainable development of new businesses such, one of which is Caban Investments Ltd.

South Africa is open for business. And the return on your investment is sure to surprise you.

Dylan James is the COO of Caban Investments Ltd.  For further information please visit www.caban.co.za or contact him via info@caban.co.za.