Demographic-entrepreneurial relationships

Accelerated and Shared Growth Initiative for South Africa (ASGISA), Black economic empowerment (BEE), Competitiveness, Demographic-entrepreneurial relationships, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, Enterprise friendly environment, Job creation and unemployment, Preferential procurement, State Capture, State Owned Enterprises (SOEs), Township enterprises, White monopoly capital theory

30 years on: Is Ramaphosa preparing his version of FW’s “to-the-dustbin-with-ideology” speech?

Johannes Wessels
@johannesEOSA1

Thirty years ago (on New Year’s Eve 1989), FW de Klerk knew that the South Africa was on the verge of massive change. The combined debilitating effects of apartheid’s shackles on the economy (including sanctions) and the impossibility to continue with the disenfranchisement of the majority of the population, prompted him to prepare his watershed 2 February 1990 speech in which he effectively pulled the plug on apartheid.

Will the combined negative legacy of the transformational drag on the economy and the implosion of state-owned enterprises (SOEs) prompt Ramaphosa to discard the ANC’s ideological stance in 2020?

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Accelerated and Shared Growth Initiative for South Africa (ASGISA), Black economic empowerment (BEE), Central planning, Crime against business, Demographic-entrepreneurial relationships, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, Job creation and unemployment, Marxist-Leninist ideology, Productive knowledge

SA Government values mice as cheese factory managers more than productive knowledge

Almost 50 years ago, in 1970, Alvin Toffler in Future Shock wrote: Knowledge will become a more important driver of growth than capital or labour.

The two parties that then dominated the South African landscape did not hear the message: they had ideological ear wax and blinkers.

Inside the country the National Party wasted an opportunity to revamp and refocus Bantu education. In the words of Verwoerd, Western education was “of no avail for training which has as aim absorption in the European community while he cannot and will not be absorbed there. There is no place for him in the European community above certain forms of labour. However, within his own community all doors are open… For that reason, it must be replaced by Bantu Education. In the Native territories where the services of educated Bantu are much needed, Bantu education can complete its full circle, by which the child is… developed to his fullest extent in accordance with aptitude and ability…”

The harvest: the Soweto 1976 riots.

In exile and underground the ANC under the SACP influence believed labour was all important and capital from hell and that labour time was all that gave value to a product or service – a belief still voiced in 2016 by their leader. (That statement was never repudiated by Ramaphosa or any leader in the ANC.)

The 80’s introduced “liberation before education”, the burning of schools and the intimidation of teachers and after 1994, the ANC government ensured SA’s education system became one of the worst performers in the world at the highest cost (% of GDP).

The harvest: a suffocating labour regime that leaves SA businesses hamstrung (considering productivity levels) and that promotes low-employment business practices.

Whilst race remains an important indicator to measure inequality, trying to always explain situations from a racial perspective often implies ignoring solutions with better potential than betting on race. The ANC is not alone in operating with racial blinkers. Musi Maimane’s statement that race remains “the only consistent measure we have at this point for measuring inequality”, is simply wrong.

So is Ramaphosa when he offered protection for Maimane for that remark.

And so is Chris Bateman’s editorial to a recent Bloomberg report on Johann Rupert’s comments during the Chairman’s Conversation when he wrote: “What he (Rupert) misses in his strong argument that Eskom and other SOEs are the real monopolies, is that White Monopoly Capital, like all effective propaganda, is built on the fundamental truth that our Gini-coefficient runs on racial lines – due to the architecture of apartheid.

There are non-racial measure tapes available… and some measure more accurately than race. After a few examples where the ANC government chose cadres rather than knowledge, the focus will fall on one non-racial explanation for income and wealth inequality.

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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.

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Business and economic indexes, Company tax, Demographic-entrepreneurial relationships, ECONOMIC POLICY AND STRATEGY, Enterprise profitability, Enterprise research, data and statistics, Entrepreneurial activity, Investment/Divestment, Job creation and unemployment, Large enterprises, Medium sized enterprises, Population size, Small and medium enterprises (SMEs)

Investment ambassadors can try, but SA company losses exceed taxable income

Johannes Wessels
@johannesEOSA1

Pres Ramaphosa’s announcement that four special ambassadors – including well respected Trevor Manuel – are to roam the globe in an aggressive pursuit of foreign investment “… like a pack of lions”, appears to be premature. It would have helped these ambassadors if they could have had a better story to tell than one of a business environment with stagnating profitability and growing losses where:

only 25% of firms have earned sufficient to be liable for company tax;
firms with a taxable income below R10 million decline at a rate of 31 per week;
a mere 635 companies are responsible for 77% of company tax;
from 2009 to 2015 company losses as submitted to SARS increased by 85% and for the last two years were higher than the taxable income assessed.

SARS data for tax years 2009 to 2015 (for the latter 95.4% of company tax returns have been assessed) as indicators for the health of the South African enterprise landscape, show the business devastation of the Zuma administration (5 with Motlanthe and 4 with Ramaphosa as deputy). This administration, responsible for mismanaging the macro-environment and overseeing the collapse of the police force and education quality and a rise in crime and corruption, critically damaged the enterprise environment.

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Agriculture, CITIES, TOWNS AND SETTLEMENTS, Demographic-entrepreneurial relationships, Eastern Cape, Enterprise richness, Small towns, Tourism & hospitality services, Town resilience

The resilience of some small towns in the Karoo

A new article in the Journal of Arid Environments (see reference below) examines the ‘Small Town Paradox’ in eight small towns in the Eastern Cape Karoo. Normalised data (enterprise numbers per thousand residents) and estimates of enterprise richness were used in the comparisons. Willowmore, Steytlerville and Jansenville outperformed Aberdeen, Hofmeyr, Steynsburg, Venterstad and Pearston in terms of total enterprises per 1000 residents as well as enterprises per 1000 residents in the tourism & hospitality services and agricultural products and services sectors. In fact, in some measures these towns even outperformed the larger towns of Graaff-Reinet, Cradock, Somerset East and Middelburg. Over some seven decades, the enterprise richness of Willowmore, Steytlerville and Jansenville increased (like those of the larger towns) whereas the enterprise richness of the other five small towns decreased. Hausmann et al. (2017) postulated that productive knowledge is a main determinant of the wealth/poverty of nations. I think this is also true for towns and used enterprise richness as a proxy for the levels of productive knowledge in the towns.

The resilience of towns is now a hot scientific topic. It refers to the ability of towns to respond successfully to adverse changes. Some do it well and some not; hence the ‘Small Town Paradox’. The decline of agriculture, particularly wool farming, in the Karoo stressed many Karoo towns. The study was done to determine if resilience was present in the Eastern Cape Karoo. It was.

The article demonstrates two important issues: 1. There are useful measures whereby the strengths/weaknesses of the entrepreneurial development of South African towns can be compared. 2. Productive knowledge is probably an important component of the resilience of South African towns.

References

Toerien, DF (2018) The ‘Small Town Paradox’ and towns of the Eastern Cape Karoo, South Africa. Journal of Arid Environments. Available free of charge for a limited period at:
https://authors.elsevier.com/a/1WwV0Vu7-m4sz

Hausmann, R, Hidalgo, CA, Bustos, S, Coscia, M, Chung, S, Jiminez, J, Simoes, A & Yildirim, MA. (2017) The Atlas of Economic Complexity: Mapping Paths to Prosperity. Center for International Development, Harvard University.

CITIES, TOWNS AND SETTLEMENTS, Demographic-entrepreneurial relationships, Enterprise regularities, Enterprise research, data and statistics, Free State, Large towns, Medium sized towns, Orderliness, Population size, Small towns

Zipf’s law and South African towns

An important question has exercised the minds of many economist over time: why are there differences in the sizes of different towns? For instance, why are all towns in a region not of equal size? The answer has to do with power laws.

There is no Hobbesian significance in the word ‘power’ – it is just a mathematical term. If the value of some quantity q depends on the value of another quantity x according to a power-law relationship, this means that each time x is doubled, y increases by some constant factor (Ball, 2005).

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