Governments, world-wide, commonly promise that economic growth will follow their efforts to “stimulate the small business sector.” The reality is thus totally ignored!
Small businesses will not save stagnant or declining economies unless they enjoy the freedom to grow, and the legal support, which were available to entrepreneurs when the world’s great economies were developing.
Currently, developing countries face strong pressures to control their small business sectors. These constraints did not exist a hundred years ago. Small businesses, worldwide, face punitive regulations, some of which are well intended, but many are imposed by established businesses.
Thereby competitiveness is often squashed, and seldom encouraged. Zimbabwe is no exception. A young person hoping to set up a small manufacturing business in Zimbabwe, for example, will face the following requirements:
- A rental contract for premises
- Health certification
- Employment contracts
- Tax registration and accounts preparation for income tax purposes
- Facilities for hygiene and many more burdensome requirements.
The new proprietor can expect at least two visits per week from various officials seeking payments on threat of closure of the business.
Everywhere in the world low paid officials supplement their incomes with informal payments and gifts from proprietors, who pay them to ease the pressure of doing business. There is usually a network of minor corruption which provides the seeds for further such behaviour should the struggling proprietor eventually climb over the barrier into the formal sector.
Freedom for small businesses The major objection to small business liberation offered by international academic theorists on economic development is that economies which allow the free development of businesses without the regulations that have been imposed in recent years do not offer sufficient protection to the informal employee.
However, which is better, to allow an employee to have a job and to provide for self and family or to protect a potential employee by denying the opportunity to work? In effect a few are protected from exploitation, and the masses remain unemployed.
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Not having a job is a horrific experience, as any reader who has ever been unemployed will know. It may be surprising that work is actually needed and enjoyed. During our evolution formal work was seldom available. However effort was always needed as part of the struggle for survival, and the outcomes of such exertion can be enjoyable, relaxing and beneficial for society as a whole.
Accordingly, it would be far better for governments to open up economies for general development and take the risk that, here and there, humans being humans, there will be a degree of unfairness. One would need to ignore the suffocating platitudes of the International Labour Organisation and their virtue signallers, the well fed academics, and open up opportunities for the boys and girls of the country, and for the older unemployed who have been waiting so long for opportunities denied by obfuscated officialdom. Zimbabwe’s population is highly talented, as shown by psychometric assessments across cultures and countries, by the successes of Zimbabweans in the Diaspora and by their academic achievements in tertiary education worldwide. Let’s give them a chance to grow and contribute to political harmony and economic development in their own country.
Extraordinary persons needed A special type of person is needed as proprietor. He or she must be persistent, successful with staff, customers, and officials, able to understand regulations, and able to save against the needs of the business.
In particular this important person must be capable of delaying gratification because, during the early stages of establishing a business it is simply not possible for the proprietor to “get into the till” in order to meet the requirements of his or her possibly starving and probably disadvantaged family members, and other dependents.
In South Africa the average successful entrepreneur has failed in three or more previous attempts. Persistence is crucial.
Zimbabwe , in particular While it can be considered positive and praiseworthy for politicians to aim for business growth that will absorb 350 000 school leavers and the existing unemployed into employment within a few years, that is not feasible as an objective. Even with an annual growth rate of 15% GDP no country can do it, and no country will! All countries face growing populations of dissatisfied unemployed.
Ethics, politics, humanism, economy The alternative to starting a business is to remain informal, technically illegal, and to avoid the regulations and barriers, or to join the illegal sector, which I showed in a participant observation research study some years ago to be widely dispersed throughout society, massive, and operating mainly at night. In those conditions such businesses are seldom assessed by international researchers on economies, who work during the day and typically record only those businesses which operate in daytime.
How can politicians, anywhere, seriously hope to encourage economic development by confronting populations with conditions such as those outlined above. Employment growth is ethically desirable, politically essential, and a superb humanistic objective. An excellent medium-term objective, requiring an interim palliative.
An interim solution It should be the task of governments to provide constructive activities for all citizens. These could be achieved via a network of competitive events and exhibitions showing the skills and talents and efforts of the youth and unemployed, centrally managed by government, publicised by the media, responded to by the general public, and by a very enthusiastic formal sector who would provide prize money and prizes.
This is not a pipe dream, as there are many examples which can be found of such activities in Zimbabwe. For example, we have a very successful Harare Athletics Club which runs regular athletic events for relatively small prize money but with massive enrolments of enthusiastic runners who travel from far and wide in the country to compete in these events.
In preparation they train by running on the roads and in the countryside, thereby augmenting their health.
Their reactions are also entirely positive. They look forward to the next occasion. There are further examples. Zimbabwe has enjoyed previous success in running small business competitions which have encouraged massive entries, great enthusiasm and some really remarkable instances of creativity and talent in the products of the leading entries.
I have recommended liberalising support for the small business sector to get the growth in employment that is needed politically, socially and ethically, supported by an interim measure to provide hope, motivation, activity and progress for the youth and unemployed — because no economy can achieve sufficient formal growth in time to avoid trouble.
- Harrison is the Managing Director and Senior Consultant with Human Resources (Pvt) Ltd.
- Tel: 024 2700867, 2700643 Mobile: 0772 400 220
- Email: [email protected]
- Website: www.hres.co.zw
