At our recent CEO Engagement, Unlocking SME Growth with Founder and CEO of Discovery Group, Adrian Gore, it was emphasised that the solution to SA’s economic woes and unemployment crisis is greater entrepreneurial activity. SMEs have the potential to create the jobs and prosperity South Africa desperately requires and we need to start creating an environment where emerging enterprises are able to participate in greater market opportunities, while being supported with technical skills and innovative financing models. Adrian, together with the CEO of Bidvest Group, Brian Joffe, has been tasked by Finance Minister, Pravin Gordhan, to coordinate efforts to set up the SA SME Fund to encourage entrepreneurship in SA.
Expected to launch in Q2/3 2017, the SA SME Fund has been created to stimulate and boost entrepreneurship. To date, the fund has raised R1.47 billion and will provide high-potential entrepreneurs and enterprises with access to a strictly-governed ecosystem, comprising proprietary networks of accredited funders, professional services firms and best-of-breed mentors, the latter of which Adrian believes is more important than finance. He noted a market failure in the local VC and SME landscape saying that SA does not have a lively VC (Venture Capital) environment – start-up entrepreneurs and existing SMEs alike simply do not have access to sufficient funding – and Adrian hopes to see the fund stimulate a vibrant VC culture in SA.
Speaking to job creation, Adrian said that it is important to note that big business and government do not create jobs. He said that business cannot grow by expansion when the GDP growth rate is low. Business grows through increased efficiency which means higher outputs with less manpower, naturally resulting in less hiring or even job losses.
Looking holistically at SA, Adrian highlighted that despite prevailing negativity, SA is a richer country than it was 20 years ago. He said that we should not label the country unfairly, as this affects our long-term decisions. Acknowledging that we are faced with real problems, citing political uncertainty, inequality and unemployment as examples, Adrian reminded us that our problems are no greater than the problems faced by other developing countries and that SA has always demonstrated an amazing ability to solve its problems.
Adrian considers SA’s lack of common vision a fatal problem and said that we are more motivated by fear of loss than potential gain. He highlighted that we need to set goals and think about where we are heading – if we lack the goal, it allows noise to filter through. Adrian stressed that business leaders have a collective responsibility to take the problems of the country seriously and to, “stand up for what is right and be counted”. Referencing Nenegate, he urged business to keep the same intensity as it had then and not to recede as soon as the pressure dissipates.
The session ended with Adrian calling on business leaders to contextualise SA in the way that it deserves. He encouraged business leaders to speak truth to power as we collectively have an interest in the success of South Africa. Instead of nation doubting, we should talk about South Africa in the context of nation building and what is required to drive success. Supporting entrepreneurs and SMEs is one of the ways to encourage greater participation in our economy and ultimately, our success.