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Entrepreneurship: A New Mindset for South Africa
In the years 2010 to 2014, 5,1 million children were enrolled in grade 2 in South Africa. This is an average of just over a million per annum. Of these over 5 million learners only 2,6 million wrote matric examinations of whom about 1,9 million passed. This means that South Africa has “lost” 2,5 million children in 5 years who have no formal matric certification. Add to this number over 700 000 matriculants who have failed their matric examinations. This means that about 6 million young adults will really struggle to find suitable jobs which will add significantly to the large pool of unemployed. By comparison, the number of enrolments at tertiary education level has increased significantly. In the years 2007 to 2012 there were 3,1 million enrolled at contact institutions (as opposed to distance learning) of whom about 525000 graduated. Given an average three-year degree, the success rate stands at about 23% of those who enrolled compared to those who graduate. So about 75% of these potential graduates are in the marketplace with only a matric certificate or some tertiary experience. These troubling statistics contributes significantly to the deepening economic woes and its impact can be wide ranging. This means that over these years there are about 5,6 million unschooled or untrained young people. As a percentage of the current population of about 55 million, this represents a whopping 10,1%. The financial burden and socio-economic impact on the nation can be summarised as follows: • Every one of these young people has had a per capita cost attached to their education, both in the primary/secondary phase and the tertiary phase. This investment is lost. The Education Department since 1994 would have spent about R2 trillion on educating SA’s children. • There is a direct correlation between the level of national skills and economic growth. South Africa’s hovers around 2%. It needs to be operating at the 7% to 8% level to have any influence on the standard of living of the nation and the eradication of at least abject poverty. • South Africa’s general productivity and subsequently its output are seriously compromised because an untrained workforce adds significantly to the cost of production. • This additional burden makes SA completely uncompetitive in most sectors in a global market that shows no emotion when shopping for goods and services. • The pressure to remain financially viable on many companies means exploiting the “cheap” available labour to keep shareholders happy. One of the key components missing in the education and training sector is the emphasis on creating an attitude that encourages self-support and independence. The notion that the state will manage everything on behalf of its population will provide short-term relief but is not sustainable over longer periods. There are enough failed states around for any further elucidation. It is this mind-set change that means people take control of and design their own career path and therefore their future that needs to be considered urgently. One key area that has hauled many nations out of this predicament has been an emphasis on entrepreneurship training. India and China today are showing huge growth in every sector because of the support lent to nascent businesses established by those who have a good understanding of the basic principles of trading, managing finances, looking for markets and cost accounting. This assists greatly in the reduction of risk when entering into this territory. Long-term research has shown that start-ups are a major source of job-creation. Whilst international conglomerates may employ thousands of people, once they have reached their job numbers to match the scale of their operations, the numbers effectively remain static. Very few new jobs are created subsequently. Whereas start-ups and small to medium enterprises are constantly looking for new, innovative ways of doing things, the larger businesses focus on automation and staff reduction. It is at this point that entrepreneurship training becomes almost a compulsory component of nation building. Whilst South Africa spent about 0,76% of GDP on research and development (R&D) in 2010, most nations who are flourishing spend about three times this amount on keeping ahead of the curve. Entrepreneurship training is one such area that needs constant input to make sure that the nation remains competitive and can aggressively meet, and beat, the GDP of other sub-Saharan nations. By encouraging schools in particular to have their teachers trained to be more aware of the importance and efficacy of both entrepreneurship and the deep and far-reaching impact its understanding will have on outcomes post school, South Africa will carve a path towards ensuring that an independent nation, less reliant on hand-outs, will emerge. Singapore managed to do this within one generation. To be effective, entrepreneurship training needs to be supported by state organs, the private sector and other NGO’s. This combined approach is critical. And to actualise this strategy perhaps needs a common forum where all stakeholders and role-players combine their understanding and skills to chart a new way forward. The fact that South Africa now has a Ministry of Small Business shows that there is an urgency about creating opportunities that would make South Africans less reliant and more independent of state sponsored social support programmes. The University of Cape Town has understood the importance of creating a culture of entrepreneurship. It has launched a special programme for all registered students to avail themselves of materials and lectures that will give them an insight into the world of business and the opportunities it presents whilst they are engaged in their academic studies. This hopefully would allow for some, if not many, to migrate towards start-ups whilst studying and continue in this direction post graduation. The cost-benefit of such an approach in the medium to long term will far outweigh the reduction in annual central government budgets for indigent people. It is correct that people by default want to be interdependent and independent and less reliant on hand outs if the opportunities are created and the regulatory regime is supportive of their attempts at carving a way for them to feed themselves and create opportunities for others. It is critical not to treat entrepreneurship as a one-day wonder. Shabodien Roomanay Head: South African Institute for Entrepreneurship Academy Observatory, Cape Town
In the years 2010 to 2014, 5,1 million children were enrolled in grade 2 in South Africa. This is an average of just over a million per annum. Of these over 5 million learners only 2,6 million wrote matric examinations of whom about 1,9 million passed. This means that South Africa has “lost” 2,5 million children in 5 years who have no formal matric certification. Add to this number over 700 000 matriculants who have failed their matric examinations. This means that about 6 million young adults will really struggle to find suitable jobs which will add significantly to the large pool of unemployed. By comparison, the number of enrolments at tertiary education level has increased significantly. In the years 2007 to 2012 there were 3,1 million enrolled at contact institutions (as opposed to distance learning) of whom about 525000 graduated. Given an average three-year degree, the success rate stands at about 23% of those who enrolled compared to those who graduate. So about 75% of these potential graduates are in the marketplace with only a matric certificate or some tertiary experience. These troubling statistics contributes significantly to the deepening economic woes and its impact can be wide ranging. This means that over these years there are about 5,6 million unschooled or untrained young people. As a percentage of the current population of about 55 million, this represents a whopping 10,1%. The financial burden and socio-economic impact on the nation can be summarised as follows: • Every one of these young people has had a per capita cost attached to their education, both in the primary/secondary phase and the tertiary phase. This investment is lost. The Education Department since 1994 would have spent about R2 trillion on educating SA’s children. • There is a direct correlation between the level of national skills and economic growth. South Africa’s hovers around 2%. It needs to be operating at the 7% to 8% level to have any influence on the standard of living of the nation and the eradication of at least abject poverty. • South Africa’s general productivity and subsequently its output are seriously compromised because an untrained workforce adds significantly to the cost of production. • This additional burden makes SA completely uncompetitive in most sectors in a global market that shows no emotion when shopping for goods and services. • The pressure to remain financially viable on many companies means exploiting the “cheap” available labour to keep shareholders happy. One of the key components missing in the education and training sector is the emphasis on creating an attitude that encourages self-support and independence. The notion that the state will manage everything on behalf of its population will provide short-term relief but is not sustainable over longer periods. There are enough failed states around for any further elucidation. It is this mind-set change that means people take control of and design their own career path and therefore their future that needs to be considered urgently. One key area that has hauled many nations out of this predicament has been an emphasis on entrepreneurship training. India and China today are showing huge growth in every sector because of the support lent to nascent businesses established by those who have a good understanding of the basic principles of trading, managing finances, looking for markets and cost accounting. This assists greatly in the reduction of risk when entering into this territory. Long-term research has shown that start-ups are a major source of job-creation. Whilst international conglomerates may employ thousands of people, once they have reached their job numbers to match the scale of their operations, the numbers effectively remain static. Very few new jobs are created subsequently. Whereas start-ups and small to medium enterprises are constantly looking for new, innovative ways of doing things, the larger businesses focus on automation and staff reduction. It is at this point that entrepreneurship training becomes almost a compulsory component of nation building. Whilst South Africa spent about 0,76% of GDP on research and development (R&D) in 2010, most nations who are flourishing spend about three times this amount on keeping ahead of the curve. Entrepreneurship training is one such area that needs constant input to make sure that the nation remains competitive and can aggressively meet, and beat, the GDP of other sub-Saharan nations. By encouraging schools in particular to have their teachers trained to be more aware of the importance and efficacy of both entrepreneurship and the deep and far-reaching impact its understanding will have on outcomes post school, South Africa will carve a path towards ensuring that an independent nation, less reliant on hand-outs, will emerge. Singapore managed to do this within one generation. To be effective, entrepreneurship training needs to be supported by state organs, the private sector and other NGO’s. This combined approach is critical. And to actualise this strategy perhaps needs a common forum where all stakeholders and role-players combine their understanding and skills to chart a new way forward. The fact that South Africa now has a Ministry of Small Business shows that there is an urgency about creating opportunities that would make South Africans less reliant and more independent of state sponsored social support programmes. The University of Cape Town has understood the importance of creating a culture of entrepreneurship. It has launched a special programme for all registered students to avail themselves of materials and lectures that will give them an insight into the world of business and the opportunities it presents whilst they are engaged in their academic studies. This hopefully would allow for some, if not many, to migrate towards start-ups whilst studying and continue in this direction post graduation. The cost-benefit of such an approach in the medium to long term will far outweigh the reduction in annual central government budgets for indigent people. It is correct that people by default want to be interdependent and independent and less reliant on hand outs if the opportunities are created and the regulatory regime is supportive of their attempts at carving a way for them to feed themselves and create opportunities for others. It is critical not to treat entrepreneurship as a one-day wonder. Shabodien Roomanay Head: South African Institute for Entrepreneurship Academy Observatory, Cape Town
