I boarded the BA jet for Johannesburg and discovered the airline had put Trevor Manuel and I next to each other again.  He groaned when he recognised me, but thankfully with a smile on his face.

The conversation over the next two hours ranged from why cabinet didn’t move MPs out of those cream-coloured plywood houses in the burbs into town, to how to grow the economy. I put it to Trevor that we need a vehicle in SA to turn those one-woman spaza “shops” or tomato-and-potato stores into “Greek style” corner cafés. I suggested government should support these mini-entrepreneurs by helping them up to the next level through training and perhaps micro-loans and so on. Each corner café could employ three or four people instead of one and cumulatively, across the country, if you do that with kerbstone hairdressers, backyard mechanics, and so on… it results in a small business revolution which unlocks a portion of our giant unemployment problem.

Trevor disagreed: “The skills needed for a small business are quite different to those employed by hawkers, shebeens and spaza owners.”  And therein lies the profound difference in approach to economics and the South African unemployment problem.

Of course Trevor is partially correct. Different skills are needed and going up a level means more than just more stuff. It involves a whole new way of managing. But the real difference between Trevor and I on this issue is the approach. I believe it can be done and that government is essential in creating the environment. He does not… at the moment.

I have run or helped run two small businesses. As a child I always wanted to and my dad was a bit nervous that I could go bankrupt, so I started when I was much older. I wasn’t always successful, but I have realised that I now no longer trust people who have never failed. They don’t know how to deal with those who struggle and you never know what they will do in a crisis. I did learn what the basics of business are all about. I remain quite convinced that the basics of small business can be taught to someone who has taken the first step and started a little something. I am not sure that you can teach the will to try, but you can certainly steer a moving ship in the right direction.

It’s rather like the one-day MBA or the one-volume MBA. You can essentially package the principles of an MBA like that because the basic principles are simple. In the same way you can develop a basic business kit for a one-man business to grow it into something bigger and more stable. South Africa has many great minds and developing such a kit is the easy part. In fact, most business schools already have the makings of such a kit – it’s essentially an MBA students varsity assignment.

Elements are simple: sales, managing cash, managing stock, bulk buying, managing credit, limiting expenses and finding improved premises.

The question is whether government should be involved in all or any of these - and that’s a question of policy. Generally I favour less government interference. The less regulation of small- and micro-business, the better. If we could cut red tape for small businesses, we will make it much easier for tiny spaza shops to become corner café’s without lots of documentation to fill in, taxation laws to abide by and the like. Government should, therefore, cut its involvement at that level. Let micro-enterprises simply comply with occupational health and safety requirements and register as a business – which could be one form and no more. This means no skills levy, no VAT registration at low levels and so on.

The area where I believe government should be more involved is with the education and micro-finance type of support, but in as direct a way as possible. We don’t need another wasteful Seta-style bureaucracy. We do need a quick way to obtain mini-courses on turning your spaza into a corner café or your kerbstone hairdresser into a small salon and quick, simple access to micro-finance to get it going. Perhaps the old style Small Business Development Corporation mini-office or mini-retail space could also be incentivised by the state in township areas.

Walking the streets of Alexandra, in Johannesburg, I see entrepreneurs all over the place. The last time I noticed a trailer with row upon row of wire cages with live chickens for sale. Standing rather like a bank of television sets in a hi-fi and appliance store, one can choose one’s live lunch and make a purchase or have it gutted. Imagine if we could help this type of businessman get a lift to the next level? Of course, many of these store owners currently illegally use electricity, water and so on.

But this is actually a global phenomenon as Stewart Brand says in his article on urban squatters:

“But the outlaw citizens find themselves in a cash economy at last, and it is vibrant. Every lane among the shacks teems with food stalls, cafés, hair salons, clothing racks, temples, health clubs, and mini-shops selling everything. Cell phones abound. Most of the economy is ‘informal’—no deeds, no licenses, no taxes. Everyone works, including the children, many of whom are also getting some education, often from private informal schools. Rupee by rupee, shilling by shilling, peso by peso, real by real, squatter families are working their way up in the world.”

Now, imagine if the government brought them into the small-scale formal economy and provided some basic business training? I am sure we will convert Trevor eventually. Now where do I send that party membership form?

The former National Party government delivered infrastructure in South Africa and maintained it at an adequate level, but delivered those services mostly to a small racially delineated population. The NP had to go. The new ANC government had many competing and complex priorities and sometimes a lack of understanding what the limit of the countries resources were. In the past 17 years, it has delivered services to many who never had them before. A trip to Soweto will show you the tarred roads, electrical infrastructure, new parks (often constructed in 24 hours by City Parks), a million new trees (small, 1.6m saplings) and the makings of a new Bus Rapid Transit system called Reya Vaya – “We are going!”

Unfortunately, the long-term planning of new infrastructure and maintenance of existing infrastructure has been handled on an ad-hoc and uncoordinated basis. Trevor Manuel, Ebrahim Patel and Colins Chabane were supposed to address this problem. Unfortunately, they seem to be looking at this from a high-level, ideological viewpoint and through the lens of examining policy, legal frameworks and the structures of local government.

The extent of the problem is large and diverse. The Eskom crisis is an obvious one. We focus on the lack of new capacity, but there has also been a massive maintenance backlog. Often power stations operate way below capacity due to preventable breakdowns. The water crisis has many aspects too. The acid mine drainage problems in Johannesburg and elsewhere could have been predicted and limited earlier, but that is just the tip of the iceberg. The water pipes in the City of Johannesburg lose 40% of the water purchased from Rand Water before it ever reaches the taps. The majority of sewerage treatment plants around the country are in need of major repair or replacement and the droughts in the western provinces and floods in eastern provinces can only be addressed by the construction of new dams, canals and pipelines. The maintenance of roads, other than national ones maintained by Sanral, is not being performed and road surfaces are deteriorating at an alarming rate. Visit Mpumalanga or Free State if you have any doubts, and drive anywhere off the national roads. The state of some of the road infrastructure will shock you. The rural Eastern Cape is telling.

Yet we have a large unemployment problem. Therein lies an opportunity to address - to a degree - both problems simultaneously. Instead of more presidential and provincial call centres, what is required are more artisans and maintenance crews out on the roads. Government is unable to complete maintenance on existing infrastructure and continues to roll out new infrastructure projects such as the Gautrain, the BRT system, the soccer stadiums and the upgraded national highways system. As we build new structures, the old ones are collapsing behind them.

We need a complete change of focus. If we don’t want the infrastructure to collapse, government should focus on two new priorities:

1. Retaining skilled workers who can complete maintenance of infrastructure. We need more plumbers, electricians, welders, engineers, environmental experts and so on. They need to perform two key functions: Predict maintenance failures and perform all the routine maintenance that keep the systems going. In the case of the City of Johannesburg, these plumbers and engineers would pay for their own salaries through the water saving. All the water is paid for and only 60% is recovered. Recover the other 40%  by preventing leakage and salaries are recouped very quickly.
2. Outsourcing contracts. Where the skills cannot be retained by a particular government entity because the skill is not constantly required, you can outsource the project to an SMME, thereby helping them expand and employ more workers. Government needs to concentrate on becoming more efficient at managing outsourced contracts. This creates jobs in the private sector, while maintaining infrastructure.

All of this sounds quite simplistic, but many of the jobs created by constructing the Gautrain, football stadiums and so on are temporary. Experts are sourced from all over the world to complete these complex projects and, on completion, they move elsewhere. However, maintenance will always be required and SA is currently experiencing a maintenance crisis in a number of fields. These jobs will be more permanent, as maintenance will always be needed. Investing in maintenance ensures we do not have these crises and creates reliable services for new businesses in the future. Reliable electricity provision was one factor in the Alcan decision in Coega. How many other companies have begun to wonder about the future reliability of electricity and water supply? The labour laws and reliable infrastructure are the two factors companies consider when deciding whether or not to locate a future plant in South Africa and it just so happens that by securing reliable services through regular maintenance, we will create thousands of permanent maintenance jobs.

Now, why has government not done this sufficiently in the past 17 years? Well, therein lies an interesting political discussion...

• Employment Services Bill and Memo
• Revised Employment Equity Amendment Bill
• Revised Basic Conditions of Employment Amendment Bill
• Labour Relations Amendment Bill
  

The Labour Committee oversight visit to the fishing industry of the Western Cape was indeed controversial. Company bosses seemed shocked at the accusations leveled at them and the behaviour of the committee. Shop stewards also were often castigated without opportunities to respond. Surely there is a better, more constructive way to engage with business and labour than this shock troupe type approach. It is difficult to engage people when emotions are whipped up and then the parliamentary bus soon departs, leaving unions and company bosses left to clean up the mess.  The DA would certainly do this differently. The Newspaper extract below gives one journalist's view of the visit.

I am speaking at this conference and have posted some valuable documents below:

• Basic Conditions of Employment Amendment Bill - 10 May 2010
  
• Labour Relations Amendment Bill - 12 April 2010
• Employment Equity Amendment Bill - 10 May 10
• Employment Services Bill - 10 May 2010

For more information please go to the conference website here.

ANC MP Mr. B.K. Zulu today, in the National Assembly, read  a statement congratulating the ANC on the Expanded Public Works programme of giving temporary jobs to unemployed people and paying them a minimum wage of at least R545-00 per month. The double standards contained in the ANC's behaviour in this regard however, defies logic. If any private sector company were to pay their employees R545-00 per month, the ANC and their alliance partners would go into overdrive protesting the "slave labour" and unsustainable wages offered to the unemployed. This is hypocritical in the extreme. Why are small businesses and householders not able to pay low wages in order to take on additional staff, when the ANC government is able to do this on a very short term basis through the EPWP? Most of the individuals given work in the EPWP are back on the street in a few weeks and are again unemployed.