A co-op member at Western Cape Coalition of Co-operatives headquarters in Maitland. Photo by Sibusiso Tshabala.
1 October 2013
At the centre of South Africa’s economic inequality and resulting poverty is a lack of access to economic opportunity. Small and medium enterprises have a pivotal role to play in accelerating economic growth for poor and working class communities.
The 2011 South African Census shows that women, black women in particular, remain trapped in low-income brackets and have the highest unemployment rate at 52.9%.
A few weeks ago, eyes were fixed on the controversial National Empowerment Fund’s funding of Khanyi Dhlomo’s luxury goods emporium, Luminance. A R34,1 million loan was provided for the procurement of stock (mainly from international suppliers) and the construction of a store. Detractors say the deal was serving the elite. It had no focus on developing small and struggling businesses; it was empowering the already empowered.
The NEF funds ventures such as Dhlomo’s because black entrepreneurs often lack the required capital to either self-finance business ventures or attract financial institutions for backing.
Khanyi Dhlomo maintains that nothing was wrong with the loan. Her company, Ndalo Luxury Ventures, put up R15million of its own equity for the venture.
Dhlomo’s partners are well-established businesswomen; Venetia Dhlomo (Khanyi’s mother) and Dr Judy Dlamini (wife of First Rand Bank chairman Sizwe Nxasana) are majority shareholders in the holding company.
Dhlomo believes that Luminance will function as “an upscale fashion retailer, which will fill a void in the African market”. Three black females breaking into this market should be worth celebrating. But Khanyi Dhlomo and her partners are wealthy businesswomen able to fork out R15 million.
Wouldn’t the NEF be doing better if it listened to someone like Yumna Beukes, chairperson of the Western Cape coalition of co-operatives. From a building in Voortrekker Road, Maitland, Beukes and several other women run 61 co-operatives in the greater Cape Town area.
They pool the skills and expertise of the various co-operatives to create a value chain that enhances skills development, provides employment opportunities and grows entrepreneurship. These co-operatives, all led by black women, participate in a wide range of business activities: green farming, construction, and events management to name a few.
Class and social status place them at a distinct disadvantage to Dhlomo and her partners. These women, far from the networks of social capital and power, represent the often-overlooked efforts of poor and working class South Africans.
“We want that knowledge that they have,” says Beukes. “That is the knowledge that we want. We do not want a white man to come there to our farm, and if something breaks we must go and get him otherwise we are stuck.”
Chicken on the Run, a co-operative operating in Malmesbury, has ventured into poultry farming. The window of opportunity is favorable, since poultry farming is the fastest growing meat sector in South Africa. The five women at the helm of the business have a number of challenges to overcome, such as the cost of heating and poultry feed. Over the winter season, Chicken on the Run could only produce 300 chickens. But with the right heating system and sufficient poultry feed, these women could be producing more.
The government agency tasked to assist and develop small enterprises, SEDA (Small Enterprise Development Agency) has not helped. Instead, says Beukes, SEDA has failed various co-operatives with cash-flow statements and other elements of a business plan.
Several women involved in the co-operatives shared their experiences of impolite interactions with government officials.
“When we tell them what we want to do, they say we are old and too slow,” says Beukes.
“We do not just want to buy from them [white farmers], we want to know everything. Because tomorrow, if they decide not to sell to us, [because they want the business to fail], they will just do that. That is called bottlenecking,” says Beukes.
Unlike Dhlomo and Co Yumna Beukes and her partners do not have access to millions of rands in private equity. And the bureaucracy that underpins government funding is unkind to small and struggling businesses.
To open economic opportunity for poor and working class South Africans barriers to entry need to be confronted. State agencies (such as the NEF) need to provide greater support to emerging poor and working class entrepreneurs. The 61 co-operatives are not waiting for a savior. They are determined to achieve their goal of creating 800 jobs and establishing more co-operatives.
For now, their headquarters, a nondescript building on Voortrekker Road remains a source of inspiration for struggling black female entrepreneurs.
Listen to Yumna Beukes outline some of the challenges faced by black female co-operatives here.