<\/p>\n
JEREMY MAGGS: South Africa\u2019s latest jobs numbers have once again exposed the depth of the youth unemployment crisis, with more than 60% of 15- to 24-year-olds who are looking for work unable to find it.<\/p>\n
Small businesses are often presented as the country\u2019s best hope for absorbing young jobseekers, but that also raises another question, I think.<\/p>\n
Are we placing too much pressure on SMEs in an economy where many are themselves struggling to survive, to scale up and also access markets?<\/p>\n
I want to talk about this very important issue with Ndumiso Zulu, who is the chief executive officer of Group Social Investments at Old Mutual South Africa.<\/p>\n
Ndumiso, welcome to you. Maybe to the point that I\u2019ve just raised, are we asking too much of SMEs when it comes to solving South Africa\u2019s jobs crisis?<\/p>\n
NDUMISO ZULU: Hi, Jeremy. Thanks for having me. It\u2019s a great question. I don\u2019t think we are asking too much, but I think the question is whether there is the necessary underlying support for the SMEs to be able to live up to those very high expectations and, frankly, needs that the country has.<\/p>\n
And I think if one addresses and zooms into that particular question, that\u2019s where the real answers lie in my view.<\/p>\n
What I mean by that is SMEs have the potential to solve the unemployment issue \u2013 if for no other reason than that the law of large numbers tells you that big corporates and big businesses can only grow so much.<\/p>\n
So the greatest potential for exponential growth sits in the SMEs, but how do we help SMEs sort out their own issues and challenges for them to live up to that challenge?<\/p>\n
As you would know, access to market for them to be able to sell their goods and services is a big challenge. Access to funding sources for them to fund their business, their growth and their operations is a big challenge. So how do we begin to solve that?<\/p>\n
I think the starting point is saying, what are some of the biggest obstacles that are preventing small, micro and medium entities from being able to access those opportunities \u2013 but also being able to access funding solutions? \u00a0I think that\u2019s where the heart of the matter lies.<\/p>\n
Is there enough support for SMEs to get them ready to be funded by other parties?<\/p>\n
Because me raising money through friends and family is very different from me walking up to a stranger and saying: \u2018Here is a business proposition. There is value for you. Put your money here and you will get it back plus your required return\u2019.<\/p>\n
In our experience that\u2019s where the biggest hurdle lies: how do SMEs convince investors that this is an endeavour worthy of investing in.<\/p>\n
JEREMY MAGGS: Let\u2019s talk a little bit about simplification of support in just a moment \u2013 but to the constraints which I think are critical. Because unless we recognise those nothing is going to change.<\/p>\n
You reference weak demand, funding and red tape. It\u2019s not realistic to expect small business to absorb large numbers of young workers unless they get that right. So how then do you offer better support in order to streamline the process?<\/p>\n
NDUMISO ZULU: I think the first thing you want to do is recognise that funding readiness is a challenge. In other words, oftentimes people will approach a potential funder, saying, \u2018I would like to have funding to finance my business\u2019.<\/p>\n
But as you dig deeper into the conversation and the business plan, you quickly realise that actually we should be having a conversation around what I need \u2013 as a potential funder \u2013 to see in your business, in your business plan to be able to fund you. I find that those conversations take place too late.<\/p>\n
You have a potential client who is looking for a funding solution, and then you, as a potential funder, are actually saying: \u00a0\u2018Your financial affairs need to be in order first. Your Vat registration, your Sars affairs are not in order. Therefore I can\u2019t give you money because your Fica [Financial Intelligence Centre Act registration] is not in place.\u2019<\/p>\n
So how do we put in place mechanisms to get these things already embedded in the business plan so that they don\u2019t become a hindrance?<\/p>\n
I think funding-readiness initiatives, like the one we are running at Masisizane Fund, for example, are critical in doing that because they shape the conversation to being about the business, its value proposition \u2013 as opposed to being about red tape and paperwork, which is a frustration on both sides of the aisle.<\/p>\n
JEREMY MAGGS: It\u2019s important that you\u2019ve highlighted funding \u2013 and I absolutely get that. But I\u2019d also suggest to you that money alone doesn\u2019t guarantee survival. I imagine that support matters after the cheque is written. How do you then prioritise that support?<\/p>\n
NDUMISO ZULU: Oh, 100%. So post-investment funding, in our experience, is the make or break point for SMEs that you fund. If you give them money, walk away and expect a check at the end of the business, chances are you are not going to get that money back for any number of reasons.<\/p>\n
So how we structure our solution is the pre-investment analysis of the business itself. It tells us, when looking into the critical success factors for this business, how we support you, as our client now, to actually reach those milestones.<\/p>\n
So for example, if you require mentorship who do we partner you with from day one to enable you to receive the necessary connections or coaching or whatever the case might be if you require access to market, because maybe you have only one big client \u2013 which then exacerbates your concentration risk?<\/p>\n
Who else should you be talking to in the industry to be able to diversify your client portfolio so that you are not dependent on just one customer?<\/p>\n
Again, all of these things need to be done throughout the relationship, not just post receiving the funding. It should also be part of the building blocks to getting that funding.<\/p>\n
Our job from an investment perspective is that after we give you the money, we then monitor and support you in ensuring that you get that support.<\/p>\n
We also partner \u2013 in addition to providing you as the business owner the funding \u2013 with the underlying service providers, to ensure that they give you the support that was agreed upfront as part of the funding package.<\/p>\n
JEREMY MAGGS: A final one \u2026 In your opinion, which sectors offer the most credible opportunities for young entrepreneurs over the next couple of years?<\/p>\n
NDUMISO ZULU: Oh, fantastic. I get this question a lot. I think there are obvious ones. I think in the tech space, in particular AI in media with the rise of things like podcasts \u2013 and even TikTok where youth like to participate \u2013 I think there\u2019s a lot of opportunities there.<\/p>\n
But I also want to challenge everybody and say, don\u2019t forget the old and boring businesses.<\/p>\n
For example, we often think of waste management as something that we need to do, but we don\u2019t think of waste management as a business opportunity.<\/p>\n
If you speak to any municipality, they will tell you they are running out of landfills, for example, to dispose of waste across our cities and our towns. But we also know that some types of waste play into the renewable energy space in terms of waste-to-energy solutions.<\/p>\n
And some of those solutions don\u2019t actually require a huge investment upfront.<\/p>\n
It\u2019s a question of saying, is there an opportunity here for me as an entrepreneur, as a young entrepreneur? What is the solution I offer in the value proposition?<\/p>\n
Then the funding discussion becomes that much easier, because the solution is there, the demand is there, the customer is there.<\/p>\n
The money then becomes a very easy conversation because it\u2019s a structuring conversation, as opposed to is there actually value here?<\/p>\n
So that would be my suggestion \u2013 that young people approach business opportunities not just with a view that says what\u2019s popular and what\u2019s hip right now, but you also want to ask, \u2018Where is the problem, what is the solve, and can I make money in actually providing that solution?\u2019<\/p>\n
JEREMY MAGGS: Ndumiso Zulu, thank you very much indeed, chief executive officer of Group Social Investments at the Old Mutual Group.<\/p>\n
This interview was brought to you by Old Mutual driving the conversation on SME growth and solutions to youth unemployment in South Africa.<\/p>\n
Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.<\/p>\n
#Mutual #helps #SMEs #job #creators #country<\/p>\n","protected":false},"excerpt":{"rendered":"
JEREMY MAGGS: South Africa\u2019s latest jobs numbers have once again exposed the depth of the…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[2554,5604,974,315,3791,3616],"_links":{"self":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/6793"}],"collection":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6793"}],"version-history":[{"count":0,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/6793\/revisions"}],"wp:attachment":[{"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6793"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6793"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6793"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}