base of the pyramid economic development small business

Informal business industry body celebrates 30 years

This year marks the 30th anniversary of The African Council of Hawkers and Informal Business (ACHIB). Having being formed in 1986 during the height of Apartheid, to serve and protect the interest of hawkers, spaza shops and other informal businesses. These businesses were constantly harassed by the then Apartheid municipalities and police force.

To date it has over 110 000 members, countrywide. ACHIB has achieved numerous victories, including the removal of restrictions of hawking in the entire country.

As part of the reforms which were implemented by the Apartheid government in 1991, all laws that prohibited the economic activities of hawkers were abolished and replaced with the Business Act. This act outlawed the confiscation of hawkers’ goods and it also helped the spaza shops in the townships to flourish.

Currently over 3 million people are either involved in hawking or are spaza shop owners.

In future, ACHIB will work to ensure that hawkers and spaza shops have collective buying power that will enable them to sell at competitive prices.

As ACHIB turns 30 it will ensure that there is no new legislation that will be brought back to criminalise hawking and informal trading.

The ACHIB will host celebrations as follows:

4th February 2016: KwaZulu Natal, Richards Bay

17th February 2016: Eastern Cape, East London

24th February 2016: Gauteng, Johannesburg

2nd March 2016: Limpopo, Sekhukhune

16th March 2016: Mpumalanga, Nelspruit

23rd March 2016: Free State, Bloemfontein

6th April 2016: North West, Klerksdorp

13th April 2016: Northern Cape, Kimberly

20th April 2016: Western Cape, Cape Town

National celebrations will be held on the 18th of May in Johannesburg. The National Ministry of Small Business, Trade and Industry, Provincial Premiers and MEC’s will also be part of the celebrations. Fraternal organisations which are in the same industry including international players will be in attendance. For further details contact:

– Press statement from African Council of Hawkers and Informal Business

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Keepin’ it real in Rio

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Awethu! Unleashing the power of youth entrepreneurship

Christopher Pienaar (entrepreneur) & Yusuf Randera-Rees (founder)

Saturday afternoon in a big, Italian-style restaurant in Rosebank: it is noisy – what with clanging cutlery and high energy Jozi conversations competing with non-descript music.  And the waiter is grumpy. But that won’t get us down at this corner table upstairs. I am meeting with the founder of the Awethu Project, Yusuf Randera-Rees, and two of the organisation’s entrepreneurs, Sekhabile Lekgoate and Chris Pienaar.

Founded by Yusuf Randera-Rees and Ryan Pakter, Awethu aims “to ignite a youth entrepreneurship revolution in under-resourced communities across South Africa.” The organisation is a for-profit venture that identifies entrepreneurial potential and backs it with money and resources. I appreciate the fundamental optimism of this model – this is not about the traditional charity or corporate social responsibility approach to enterprise development. As Yusuf explains it, there is no reason to believe that under-resourced communities lack talent.
When I first heard of Awethu, I immediately warmed to the idea, but I could also see the challenges it might face. Such as endeavour faces selection challenges in separating good candidates from possibly high risk individuals who couldn’t crack it in the labour market. It could also provide the wrong incentives as it appears to extend finance and resources to  entrepreneurs who are not taking that much risk in their personal capacity. But the two young men sitting across the table exude talent, motivation and determination.  
During Awethu’s intense screening process, young applicants are taken through a series of practical challenges and psychometric tests to determine if they have the ability and the commitment it takes to build a business.  After the first round of tests, only 30 out of a 1 000 applicants made it to the next stage.
The Awethu Project raises important and unsettling questions about what we think about young South Africans, especially black ones. This is a country where the commentariat likes to talk about lost generations. They said this about the 1976 generation. It’s being said about today’s youths too, given that at 51% (the South African Institute of Race Relations as cited by Business Day), South Africa faces one of the highest youth unemployment rates in the world.
Words like unemployable, uneducated and unskilled are thrown about carelessly. But as Yusuf points out, living and thriving in a typical township environment can bring out leadership and problem solving skills in an individual. Sure, you need expensive, formal training to produce engineers and mathematicians, but the entrepreneurial skills set can emerge develop in many kinds of environments. Yusuf believes that it should take about three years for mentees to become fully fledged entrepreneurs that are independent of the support that Awethu provides.
Sekhabile first heard about Awethu on the radio. A graduate of the Tshwane University of Technology, he was once a foreman at a construction company. Marking time in a big firm didn’t suit him so he started an Internet café in Soweto. That first venture, didn’t work out so well. Then he went into catering, selling wors outside nightclubs.
The chisa nyama experience

Sekhabile appreciates the fact that the project acknowledges an individuals’ potential and willingness to work hard. Bra Wor, the enterprise he founded, brings the chisa nyama experience to office parks, such as Constitutional Hill. A classic township chisa nyama usually involves a barbecue stand serving meat, music playing in the background and perhaps a car wash service. Bra Wor recreates some of this experience through its mobile stands and also offers a catering service for events. Being part of Awethu has given Bra Wor access to finance and connections.

For Chris, Awethu has been a reality check. His ambition is to make a lot of money but he says he has had to take a few steps backwards to learn about the nuts and bolts of running a business such as financial management and the importance of sacrifice. His company, Straight to your Door started as a bread delivery service in Alexandra. It has now extended into offering research and distribution services to corporates wanting to trade in Alexandra.  
On the vexed topic of barriers to entrepreneurship in South Africa, Sekhabile doesn’t think that money is the most significant challenge. Most times, one can find interesting sources of finance to kick start a business. Rather, the key issue facing aspirant entrepreneurs is how to deploy those limited resources to make a profit.

I suggest to the table that tapping into low-income markets represents an important opportunity for entrepreneurs in South Africa. I put forward C.K. Prahalad’s proposition that ‘the next big thing’ in business is to find and exploit the fortune in low income communities in Africa. I am met with a tepid response from a group of entrepreneurs that I imagined would be best poised to realise such opportunities.
We kick this topic around, and finally come to some sort of consensus. The opportunities at the base of the income pyramid have to do with socio-economic upward mobility and the emergence of a middle class in developing countries. I agree. There may be opportunities in bringing innovations to the market that make products cheaper and accessible to more people, but the real story is about people emerging from poverty and becoming attractive markets for businesses. It will always be easier to make money in middle to upper markets. In fact, some of the Awethu businesses are well suited to bridging the gap between the township and surbubia. Straight to your Door helps corporates crack their low income distribution challenge. Bra Wor repackages a classic township experience for an office environment.

Awethu Project featured on Play your Part 
The Awethu Project received an Echoing Green fellowship in 2011, a $60 000 award that also comes with mentorship and support. This places Awethu in a league of prestigious social enterprises such as Teach for America and SKS Microfinance, an Indian microfinance company that scored a $1.2 billion stock exchange listing.  Other Awethu businesses include Free Oranges and Ek Se Tours. The underlying businesses have achieved significant turnover growth, from almost nothing, and some are meeting their profit targets. Sekhabile sees his future at the JSE, just not serving lunch.

TV coverage of the Awethu Project (Play your PartPart 1 Part 2
Business Day on youth unemploymentImages: Awethu Project, SABC
Text: G. B. Makhaya

base of the pyramid public policy Video Vision 2030

Mass entrepreneurship – a key component of Vision 2030’s proposals

The National Development Plan, Vision 2030, is quite clear about its ambitions for entrepreneurship in South Africa. It is right that it should be so given that the National Planning Commission estimates that 11 million jobs have to be created in the next 20 years if the country is to reach full employment of the economically active population. And as the plan acknowledges, new jobs tend to come from the entry of new firms into the market and the expansion of such firms. Old, established firms don’t create as much net new jobs. Small and expanding firms are expected to create 90% of new jobs.
The National Planning Commission’s channel on YouTube (cool animation technique)
The Plan
Various themes emerge from the Plan’s chapter on Economy and Employment. These themes present a challenge to the private sector (and particularly to entrepreneurs I would say) to produce innovative products and services that will unlock growth in the economy. Below are some of these themes with top of the mind ideas about what I think areas of opportunity for the private sector might be:
           Lowering costs of production: developing local inputs for key industries such as mining and retail, using lower cost (and hopefully labour intensive) technologies
           Lowering costs faced by poor households: new ways of distributing products and services to poor areas (developing affordable “last mile” distribution solutions for healthcare, daily groceries etc.), organising households to aggregate their buying power, bringing poor households into the internet economy
           Community based production in areas such as house-building, small scale agriculture
           Enabling access to finance for small and expanding firms: risk mitigation plays that make the extension of financial services possible to new borrowers
           Enabling access to markets for small and expanding firms: the business advisory space seems to be dying for skilled consultants and advisors, innovate curriculums for business training, institutions that co-ordinate activities across value chains and help new businesses to crack into mature  corporate and public sector supply chains
           Developing regional supply chains: this applies to many value propositions that could be extended to serve the regional market, thus realising economies of scale and revenue growth. However, dealing with multiple regimes is always a challenge in SADC.
           Labour matching services to reduce the costs of employment searches for the unemployed and preparing applicants for the labour market: this calls for a new philosophy towards staffing solutions at the low income end of the market, with a move away from commoditised, short term placements to solutions that are socially innovative and meet the specific needs of companies and individuals.
Reading the plan, I find I am filled with optimism about the opportunities that exist to build a new economy that is better oriented to the needs and the realities of the majority of the population. What remains to be seen is whether and how the “social partners” – business, labour and government will fall behind this plan to make a more prosperous nation a reality.