Realism and structured models provide solution to unemployment

Posted on March 03, 2015

"Consider a career as entrepreneur or small business person if you can’t find work, it will solve our unemployment problem!"

Many politicians, academics, economists and media role players make this statement without really taking into account the realities of the South African economy and demography, says prof Jurie van Vuuren of the University of Pretoria (UP)’s Department of Business Management. His expertise on this subject was published in the Sunday newspaper Rapport’s careers supplement on 15 February 2015.

Broad unemployment rate regarding graduate, diploma and other tertiary students

Source: Hendrik van Broekhuizen, Prof.Servaas van der Berg, Universiteit Stellenbosch 12 May 2013

According to Prof Van Vuuren, only a small percentage of the country’s youth will be able to start their own businesses, as it is actually very difficult to start a business and manage it sustainably. In the Global Entrepreneurship Monitor South Africa 2013 only 8,9% of the participants considered starting a business, compared with 40% in Brazil.

Prof Van Vuuren explains the South African reality as follows: "There are millions of unemployed young people in and around the cities with possibly only Grade 12 and with no employment prospects. They also don’t have the necessary skills to identify and exploit highly technological opportunities. The situation is the same everywhere, from Soshanguve in Tshwane to Botshabelo in Mangaung and the Cape Flats or Pacaltsdorp in George.

It doesn’t help to present the wondrous cure of small business as a career and in doing so paint that idealistic picture that the youth will create jobs for themselves. It also doesn’t help that, as is the case at present, millions of rands are spent on training that doesn’t fit into a structured model. Interventions and models that will really make a difference in South Africa should be funded. The honourable Minister of Small Business Development needn’t look to other countries for a workable solution, successful models are already being applied here.”

A model designed by UP in partnership with the City of Tshwane applies the necessary scientific principles to make a tangible difference. Prof Van Vuuren explains the model as follows: "Firstly, the best training programme for the target market is identified. Then individuals are selected through personal interviews and the most suitable candidates are admitted to the programme.

The training takes place in the communities and is followed up by a mentorship programme of six to nine weeks. The prospective entrepreneurs are then exposed to the small business empowerment environment, including financial institutions. The process is completed when the City of Tshwane offers small contracts, which is awarded to the business with the best quotation,” he says.

These small contracts include fixing potholes, maintaining parks and supplying stationary. The contract is confirmed with a letter of intent that can be presented to a supplier, thereby initiating the business cycle. Experience is obtained while the spirit of entrepreneurship is also promoted. The process is repeated and expanded to include other clients. In this way, it is possible for the entrepreneur to start and do business sustainably.

According to Prof Van Vuuren, three elements are needed for success, namely: Suitable individuals, the necessary skills and the empowerment of these individuals who do not already have a suitable degree or diploma.

“I am convinced that if all levels of government, as well as large corporations use this model, we will be able to tackle the reality of unemployment”, says Prof van Vuuren.


Click here for the article that appeared in the "Rapport" newspaper of 15 February 2015.

- Author Department of Business Management

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