Black economic empowerment is preventing skilled black people from starting their own businesses, and by doing so, entrenches white domination of business ownership.
The hard-hitting Entrepreneurs’ Report, the second of five reports coming out of RamsayMedia Research Solutions’ TopEnd 2013 Survey into South Africa’s economic upper echelon, says BEE has encouraged skilled black people to take the safer, more secure route of working in the formal sector rather than start their own businesses
The survey tapped into 1.6 million top-earning households to reveal their profiles, attitudes, brand preferences, spending habits, investments behaviour, and media consumption.
“If BEE had done one thing, it has diluted the natural supply of entrepreneurs by absorbing them into the easier and more lucrative path of buying into existing businesses on preferential terms,” says Alan Todd, research head of RamsayMedia Research Solutions.
Todd says the European Union’s Entrepreneurship Action Plan, which aims to encourage economic growth in response to the debt-driven crisis in Europe, believes more needs to be done locally to teach entrepreneurial skills and the value of starting one’s own business.
“The role of entrepreneurs is critical in any society – their ability to bring new products services and entities to market creates jobs, which grows demand, which in turn stimulates economic growth. The South African education system is producing too few entrepreneurs to make a difference – our research shows that only 17% of the TopEnd segment, a total of only 272 000 people, are self-employed,” Todd says.
The TopEnd 2013 Survey into the country’s well-heeled – those with a personal income of R25 000 or more a month – shows that the self-employed sector is dominated by white, middle-aged men – 72% of entrepreneurs are white compared to only 20% black. And almost 80% of the entrepreneurs who responded to the survey are male, while 84% of them are 35 or older.
The survey shows that political strategy has had a significant impact on the self-employed sector, Todd says, as the self-employed are wealthier than their employed counterparts. They are more likely to own several properties, both residential and commercial – 18% own three or more properties, compared to 8% of wage earners. They are also more likely to own shares and unit trusts.
Entrepreneurs are far more inclined to have some sort of sideline income stream than employees. Not only do they own their own businesses, they boost their earnings by dabbling in opportunities that come their way – they are opportunists.
The Entrepreneurs’ Report is the second of five reports coming out of RamsayMedia Research Solutions’ TopEnd 2013 Survey into SA’s economic upper echelon. The first report, which revealed invaluable insights into South Africa’s millionaires, was released in April. The remaining three reports, which focus on TopEnd housewives (the people who actually spend most of the household income), TopEnd black South Africans (those with a personal monthly income of more than R25 000 a month) and TopEnd technology and online activities, will be released in coming weeks.
TopEnd 2013 was conducted in partnership with Caxton, Edcon, DStv, Pick n Pay, Nando’s, YFM, Toyota, Lexus and Sanlam.