In the last six decades the world's economy has undergone a dramatic change; and in the process we have witnessed phenomenal economic changes. Consequently, massive government intervention through public works programs or extended public works to ubiquitous economic ills, as suggested by the erstwhile economic theorist of the time, John Maynard Keynes (1883-1946), is no longer the preferred prescription to modern economic challenges such as the incessant and nagging unemployment and joblessness which are coupled to fluctuating inflation and unsteady interest rates. Keynes will be remembered for his thesis that governments should borrow and spend money to augment economic activity during economic downturn or depression. And at some point in the economic boom, part of the surplus should then be used to repay the money owing.
Furthermore, big business and government expenditure through extended public works programs is no longer considered the only panacea to wealth creation and job creation around the world. Notwithstanding, extended public works programs and government intervention as suggested by Keynes fuelled economic growth in the great depression of the 30’s and 50’s but in today’s economy that intervention is not only temporary but it is grossly inadequate. Extended Public Works Programs have a limited time span and tend to create temporary jobs. Consequently, government intervention in the economy through extended public works expenditure should be seen as a short term measure and as a small part of the solution and should not be depended upon as an eternal economic solution.
This has led some politicians, some community activists and some economists of both developing and developed economies to focus more on SMALL BUSINESS sector or the small medium and micro enterprise (SMME) as a panacea to socio-economic development. More attention and interest is now paid to the development of the small business sector, but policies and programs and literature aimed at helping the emerging businesses are still to identity the unique problems associated with starting a small enterprise in South Africa (SA) in particular, Africa in general.
Notwithstanding, the small business sector is now regarded all over the world as a sector destined to persistently play an important, if not a critical, role in the creation of employment and wealth to a great majority of people. However, the relevance of large industrial corporations, mining conglomerate and the multi-national companies cannot be discounted in the creation of wealth and, subsequently in economic growth. The world is currently biased in favor of the small business sector because their labor absorptive capacity is high. The average capital cost per job created is usually lower than in big business. In addition, the role they play in technical and innovation is vital for many challenges facing both developed and developing economies like ours.
Before South Africa’s first democratic election of April 1994 a great deal of attention was given to the attainment of political democracy for the Africans and the crucial issues of economic democracy namely wealth creation for both urban and rural black communities were not spoken about. Consequently, the gap between the haves and the have-nots has now reached a critical proportion. More and more black communities are becoming poorer and poorer as more workers lose jobs as big business face economic downturn and; as black families lose breadwinners due to the AIDS epidemic.
It is argued that poverty and unemployment problems has motivated some people to turn to crime in an attempt to satisfy their personal and their dependents needs for basic items such as food, clothing and health. It is, therefore, grossly unfortunate that the ruling African National Congress (ANC) under the leadership of President Dr Nelson Mandela ignored the above realities in its first public works oriented development strategy, namely the Reconstruction and Development Program (RDP) (RSA, 1994). Instead of placing weight and priority on job-creation within urban and rural black communities and entrepreneurship training and SMME development in general, the RDP placed more emphasis on the delivery of houses for the unskilled and unemployable black urban homeless. Albeit the above-mentioned solution had noble ideals and was well intentioned, but noble ideals and good intentions of government often do not address the omnipresent economic ills of a young democracy. Therefore, the most recent pronouncements by the current President Mr JG Zuma (2009- ?), regarding the creation of five million jobs in the next five years through extended public works programs do not promise a ‘better life’ for the poor because this is merely a mirror reflection of the mistakes of fifteen years ago.
Finding tangible and permanent solutions to joblessness is more crucial than providing temporary jobs and temporary earnings that may disappear in next to no time without making a dent in alleviated poverty. A person with marketable expertise and a permanent income or entrepreneurial skills could easily afford food, clothing and basic health for a long time without resorting to hand outs. Let us imagine an RDP policy that advocated a million SMMEs in the first years of our democracy. And let us also imagine those million enterprises maturing and becoming competitive, I shudder to think about the wealth that could have been created, and jobs that could have been created. I believe the reader will do better in this exercise of imagining as to where SA would be today vis-à-vis the state of joblessness, poverty alleviation and a better life for all. Personally, I think we could have perhaps ‘realized our common vision of a better and more prosperous nation’ by now. However, SA is not alone in this regard, the rest of the continent has faired poorly with regards to promoting indigenous entrepreneurs and enterprise after independence.
Undoubtedly, there is an apparent need to encourage the participation of black South Africans in economic development. And this should definitely form a huge political concern and not just cheap talk. Black participation in the economy should also undoubtedly become one of the major hotly contested issues if our elected ruling and opposition politicians seek acceptable formulae that will enable blacks to participate in the formal economy without making others worse-off.
