johanneswessels

Agriculture, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, Export-led growth, Municipal efficiency

From idiom to disaster: the radical transformation of “daar’s ‘n drol in die drinkwater”

The incapacity of Government to fulfil its basic task to effectively protect the rights and property of all persons (natural and juridical) thereby ruining economic growth, is matched by its dedicated neglect of scarce natural resources. In a water-scarce country like South Africa this amounts to much more than an ecological disaster: it borders on economic suicide.

Like people, no single enterprise can thrive without access to reliable water. The situation in South Africa remains far better than in most African countries. However, not every middle-income country can boast its Government has systematically:

Daar's 'n drol in die drinkwater

undermined its own water resources by extending (within a mere 12 years from 1999 – 2011) the poor ecological condition of its main rivers by an astounding 500% with some rivers pushed beyond the point of recovery (March 2018 Draft National Water and Sanitation Master Plan);

Continue reading “From idiom to disaster: the radical transformation of “daar’s ‘n drol in die drinkwater”” →

Credit risk ratings, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, ECONOMIC POLICY AND STRATEGY, Investment/Divestment, State Owned Enterprises (SOEs)

Turning ad hoc-decisions into “add havoc” decisions: Updated prospectus shows SA has much “emerging” to do…

If the Ramaphosa quest for pursuing economic growth and restoring full investment status for South Africa was packaged as a new venture in January it would have received substantial interest. In light of the tsunami of promises about FDI since then, it may be time to look at an updated “prospectus”.

Indicator: Economic growth is the highest priority

In his “New Deal” Ramaphosa promised to keep “an unrelenting focus on growth”. He stated: “We must be bold and determined. We should be targeting 3 percent GDP growth in 2018 rising to 5 percent growth by 2023.”

Prospectus update:

Screen Shot 2018-07-26 at 6.01.54 PM — The Messenger (25 July 2018)

Continue reading “Turning ad hoc-decisions into “add havoc” decisions: Updated prospectus shows SA has much “emerging” to do…” →

Anti-poor, Cities, CITIES, TOWNS AND SETTLEMENTS, Construction services, Consumer-led development, Demographic-entrepreneurial relationships, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, Enterprise regularities, Enterprise research, data and statistics, ENTERPRISE SECTORS, Entrepreneurial space, Local economic development (LED), Population size, Predictive capabilities, Pro-poor strategies, Trading services, Urban economy and growth

Pro-poor LED fails our cities, towns & the poor: Enterprises of the right kind generate city growth

Johannes Wessels
@johannesEOSA1

There is an intriguing symbiosis between cities and towns on the one hand and enterprises on the other. As the world population urbanise, so are business activities.

Physicist Geoffrey West in his “Scale: The Universal Laws of Life, Growth and Death in Organisms, Cities and Companies” says based on city growth one can state precisely what will happen with the number of businesses in that city: a doubling of population does not require a doubling of grocery stores or filling stations, economies of scale kick in in a predictable manner. The reverse is also true.

Unfortunately, South Africa’s economic and enterprise development policies and strategies ignore these predictable realities. In addition, LED plans by municipalities in the main demonstrate a lack of understanding of what drives development.

Continue reading →

Construction services, Culture and development, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, Informal businesses, Small enterprises, Small towns

Creating jobs and reducing poverty: why not enable the informal sector properly?

Author: Frederick Fourie

President Cyril Ramaphosa aims to set the country on a new path of growth, employment and transformation. Key to this are action plans for employment creation, to be deliberated at a jobs summit.

The South African Informal Sector: Providing jobs, reducing poverty A new edited volume, published by HSRC Press, flags the importance of explicitly addressing the informal sector in such initiatives, given the key role it plays in providing paid employment and reducing poverty. The book is based on research done in the Research Project for Employment, Income Distribution and Inclusive Growth (REDI3x3).

This research shows unambiguously that the informal sector is an important source of employment (and of paid employment), with a growing propensity to employ. Regrettably, for many decades the sector has remained forgotten or, at best, in the margins of economic analysis and policy consciousness. Many policy makers appear to group it together with formal SMMEs. Such an approach risks missing key elements of the ‘forgotten’ world of informal enterprises – their potential, the constraints they face, their particular vulnerability, and the policy support they need to be viable and self-standing.

How many jobs are created in the informal sector?

Continue reading “Creating jobs and reducing poverty: why not enable the informal sector properly?” →

Anti-business, Black economic empowerment (BEE), Black-owned businesses, Business incubation, Company tax, Crime against business, ECONOMIC POLICY AND STRATEGY, Home-based businesses, Informal businesses, Job creation and unemployment, Local economic development (LED)

The folly of creating businesses whilst tolerating a criminal-friendly environment

Johannes Wessels
@johannesEOSA1

The South African enterprise world remains in critical condition despite numerous initiatives to cultivate entrepreneurship and new businesses since the real causes undermining its well-being are not addressed. One of the fundamental causes for a struggling enterprise world is the fact that SA is more criminal-friendly than enterprise friendly.

We’ve seen that:

as the belief in the (unproven) curative powers of bloodletting had prevented an active search for medical applications that could cure the range of problems bloodletting was supposedly curing, the paradigm of small enterprises as the knight that will overcome unemployment and economic stagnation comforts its adherents in their belief that they are on the right track.
Repetitive incantations of beliefs embolden policymakers and administrators that there’s no need for them to consider alternatives and that they can ignore evidence to the contrary. Why seek solutions acknowledging the data-supported evidence of regularities that shape entrepreneurial space if you “know” that all that is required is the “massification” of new businesses through state-induced enterprise creation?

Comfortable in this paradigm, Government embarked on an interventionist road to transform the economy in accordance with its perceived reality. It launched a range of black enterprise incubation programs with massive grants, prescriptive procurement strategies, BEE, industry charters, interference with IP and a commitment to even expropriate without compensation.

Continue reading →

Black economic empowerment (BEE), Black-owned businesses, Developmental state, ECONOMIC POLICY AND STRATEGY, Enterprise dynamics, Enterprise regularities, Enterprise research, data and statistics, Population size, Predictive capabilities, Religion and economics/Ideology and economics, Small and medium enterprises (SMEs)

Are our enterprise policies shaped by obsessions? Paradigm paralysis (2)

Ramaphosa’s Manifesto – “A New Deal” – envisages the “massifying” of black enterprises to promote growth and job creation. It is shaped – like the National Development Plan – by the paradigm of SMEs as prime agents for growth and jobs. As the belief in the curative effects of bloodletting – it was the general consensus – acted as a barrier that prevented the consideration of alternative treatments, the belief in SMEs obscures evidence that net job creation is largely independent of firm size.

Convictions, one must remember, do not necessarily yield to evidence.

Masaai Mara crossing

For the creation of several hundred thousand successful businesses (or would “massifying” – Ramaphosa’s term – imply businesses by the million?) there needs to be at least a similar number of entrepreneurs with effective business skills and plans for these businesses to have a chance of survival.

But for a business to succeed one needs other ingredients than mere entrepreneurial aptitude and astute management: it requires support from customers and clients. Successful “massifying” of new businesses would therefore depend on a prior (or at least simultaneous) mushrooming of the spending power of existing consumers and/or the “massifying” of consumers.

On that, the New Deal is silent… Could a 2016 warning about economic transformation hold the explanation?

Continue reading “Are our enterprise policies shaped by obsessions? Paradigm paralysis (2)” →