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[Opinion] How BEE kills black entrepreneurship by Vusi Thembekwayo

May 31, 2014

3 reasons why BEE is killing entrepreneurs

I have pondered on this article for some time now. For a simple really, I don’t know if I want to be the one to say this. However having pondered this, I have realized that writing the article and sharing with you may help us address the issues I am going to raise.

We know South Africa needs more “entrepreneurs”. We know South Africa needs more medium-sized businesses. We know South Africa has amongst the lowest rates of entrepreneurial activity in the world according the tea report on entrepreneurship in the continent. Perhaps our president can ponder this fact: we are even lower than Malawi.

Why?

Are we lazy?

Are we too scared to fail?

Do we not have the drive?

Do we not have the education?

The answer is all of these and none of these. Yes our education needs some work. You know that. Yes, we need to address the issues of work ethic amongst young professionals, you know that too.

But here is my reason: BEE. And here are 3-reasons why.

1. Tame lions

The greatest crime of BEE as a principle is that it has made young, hungry and intelligent black youth opt for “access not excellence”. So the measure of early success now is no-longer how well you can do something but rather who you know, who knows you and what doors you can open. Access drives success. Not the business, the innovation, the idea or the individual. Access!

Many corporate (who of-course are white) have practiced BEE or enterprise development from the highly paternalistic “ag shame” perspective. The narrative is around “the poor black entrepreneur who will never make it unless we help them”.

There are 2-injustices here:

They believe this to be honestly true: so they take the approach of helping businesses to the point of incapacity. That is why even though we spend hundreds of billions every year on education, we have little to show for it. We don’t teach entrepreneurs how to stand-alone rather that we will always be there for them. We teach dependency.

We too believe it to be the honest truth: because the example of the entrepreneur that has conquered outside the BEE construct is so rare, we (black entrepreneurs) begin to believe the above narrative. So Richard Maponya is celebrated as an exception & Cyril Ramaphosa as a rule.

2. Lowered “desirable difficulty” levels

Ask any entrepreneur and they will tell that their early sufferings were the periods most critical in their business success. You see suffering drives “necessity-thinking”. So entrepreneurs develop skills like cash flow management, innovation (strategy and execution of business model) and most important tenacity.

All entrepreneurs have 1-thing in common, they believe in themselves. They developed that belief through these years of early suffering. Once you believe you can, you can!

What BEE has done is lowered the threshold of suffering (the price you pay at the door of success so that you can enter the “club”) by making it easier for entrepreneurs to get in and make money. Whilst the ideology means well, it completely defeats its own objectives.

All entrepreneurs regardless of race have to endure these desirable difficulties so that when the going gets tough, and it will, they have sufficient emotional capital (invested in the “self-belief” bank account) to whither the storm of impending doom.

3. Framed & limited our ambition and role models

All societies and population groups that succeed have a singularity in truth; their youth had role models. Human beings emulate other human beings.

So why are most Asians (Indian in SA) studying commercial subjects and now more recently the CA stream? Because they grew-up in the cash and carry environment watching mom and dad sell Chappies for 5c to make a 1c profit. They would spend their holidays in the store behind the till keeping a count of the transactions: money in must be greater than money they learnt. In essence, the learnt financial literacy before they even got to high school.

My ex-girlfriend, Natalie – and yes she is Greek – used to tell me the story of how many days she spent in her fathers’ restaurant during her formative years watching him manage his business. When she grew older she was assigned to operating the till and then stock management – without pay. Today he is amongst the most successful entrepreneurs in South Africa having gone on to list his business. She too is equally successful. She runs a media sales business and makes silly money.

Why? Well each of these societies had “true entrepreneurship” being role modeled.

Creating a few very well connected individuals who form part of the global elite and uber-rich may assist Johan and his team at Bentley sell more cars in the short-term, it may even get Fabiani to hit record sales in Africa since inception but it will not develop and grow a culture of entrepreneurship in South Africa.

So, otherwise talented, black entrepreneurs today register a company and get a tax clearance certificate before they even open a bank account, a website or a business card. Why? Think about it?

We need a higher standard. We need to model right. We need to reward and develop true entrepreneurs.

Where are the risk-takers, the mavericks, the wide-eyed hopefuls?

Where are the “I will not be defeated”, “I will not give up”?

Where are those that see opportunity in squalor and hope in deprivation?

Where are the entrepreneurs?

Vusi Thembekwayo is a business speaker, listed companies director and private equity partner. See: http://vusi.co.za/

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From → BBBEE, Opinion

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