A new era of dialogue between government and business leaders is essential if we are to thrive as a nation.
A successful partnership between government and the private sector that is founded on the belief that one plus one equals much more than two can bear results. Entrepreneurial and business incubation programmes are some of the most fruitful when it comes to such partnerships.
Offering subsidised and affordable spaces to entrepreneurs can transform unemployed individuals into productive, contributing members of society. Promoting such opportunities through public–private partnerships is an effective method of creating a thriving economy.
In line with this, National Treasury launched the Jobs Fund in June 2011 to address the challenge of unemployment in South Africa. Since then, the initiative has funded 126 projects, with R6.7-billion in grant funds allocated and R9.5-billion committed by private sector and NGO partners. So far, 225 981 sustainable jobs have been created. This has been accomplished, in part, by unlocking potential economic activity in areas where there are few local jobs.
While government can create the policies that encourage greater investment and create the platforms for other organisations to build upon, it is unrealistic to expect government to solve all of the social challenges we face. By implementing programmes that offer mentorship and support services to small, medium and micro enterprises (SMMEs), public–private partnerships can boost entrepreneurship and encourage small-business ownership.
With the diverse range of small businesses and industries in South Africa, it is essential that public–private partnerships are not created with a one-size-fits-all approach. These initiatives must rather actively seek to collaborate with government agencies, corporates, academics, civil society and individuals to leverage these platforms to support small business.
Big for business
What’s good for the country is good for business. Corporate South Africa can lend its skills and financial sponsorship, provide access to supply chain opportunities for SMMEs and give small businesses a fighting chance of making it through those crucial first years. The corporates also benefit as their investments into the public–private partnerships qualify in terms of their B-BBEE scorecard requirements.
In the past two years, corporate South Africa has become more involved in economic development. This renewed energy, spearheaded by the CEO Initiative, has seen the formation of the SA SME Fund. This groundbreaking programme is a collaboration between government, labour and business to fund promising small businesses and the Youth Employment Service (YES), which aims to get young people placed in their first jobs.
While there is incredible corporate goodwill, there is still not enough support for small business in terms of procurement spend. A major issue here is that big business does not believe that small businesses can be fitted into a corporate supply chain. However, while incorporating small business into a supply chain does have its challenges, these are not insurmountable. Added to this, there are huge benefits for the corporate from the agility that a small, hungry firm can offer.
The challenges we face in South Africa, however, will not be solved by the government or private sector working alone. The current economic climate means that the state will need the help of private enterprise more than at any other point since 1994. In many cases, government can create the environment where private companies that serve the public good can thrive. There should be incentives for private companies that serve the public good.
Building relationships, growing returns
Globally, infrastructure development is the major beneficiary of the public–private partnership model. This will continue to be the case. But public–private partnerships need not all be large-scale infrastructure projects. There are creative win-wins to be found from existing resources.
Collaborations always introduce something new into the mix. Take, for example, the recent partnership announced by Johannesburg City Parks and Zoo that will see the Truffles on the Park restaurant contribute to the upkeep of Mushroom Farm Park in the centre of Sandton. The restaurant will be the first to be located at a public park and will showcase how public-private partnership can help maintain and upgrade public spaces. Here, a voluntary conversation levy of 2% on every guest bill, matched by the restaurant will raise funds for further park displays.
This is one example; there are countless other ways in which government and the private sector can work together. The important ingredient is that government (from national department to municipal level) should be open to considering solutions and involvement from the private sector.
Public–private partnerships based on mutual trust and respect are essential. Successful partnerships have three things in common: a commitment to a strong partnership beyond the terms of the contract, built-in mechanisms to share perspectives about the project (especially problems and concerns), and effective ways to overcome challenges to deliver.
PUBLIC–PRIVATE PARTNERSHIPS IN ACTION
Riversands Incubation Hub is situated north of Johannesburg, adjacent to Steyn City and a stone’s throw away from Diepsloot. The Hub was catalysed by a partnership between Century Property Developments and National Treasury’s The Jobs Fund.
The hub opened its doors in September 2015 and the 40 000 square metre property is today home to 157 businesses. More than 1 000 permanent and 2 000 short-term jobs have been created on the campus and in the precinct.
Riversands offers office and manufacturing spaces from 50 to 200 square metres that are highly subsidised and significantly more affordable than commercial letting. Leases are flexible: an entrepreneur can scale up their space requirement or scale down or move out with less than one month’s notice.
These entrepreneur-friendly lease rentals give small businesses access to formal working space without any penalties should the business not succeed. In this way, Riversands de-risks the inherently risky venture of entrepreneurship.