Jobs, Jobs, Jobs
How to create employment: Imagination, Boldness, and a little help
Stubborn unemployment has been both a puzzle and a point of conflict for South African policymakers, labour and business. Even when new jobs were created – which they were in the years up to 2008 – increasing numbers of people who came onto the labour market meant the unemployment rate remained high. Policy discourse has been muffled in the past decade – in spite of the National Development Plan – by a focus on accumulation by the well-connected at the expense of development. There is hope, as the Jobs Summit kicks off this week, that this may begin to change, that key challenges such as unemployment and inequality can be put at the centre of the policy table. A below-the-radar National Treasury project, the Jobs Fund, has been working quietly over the past few years to forge the social compact necessary to create jobs in innovative small businesses around the country.
When Ntshantsha Majombozi was a child in a village in the then Transkei, she was schooled in the use of herbs. “My grandmother was a staunch believer in natural healing. We grew up using these herbs at home; we wouldn’t go to the doctor for minor ailment like stomach ache or headache.”
Today Majombozi has honed her passion for herbal remedies into a growing cosmetic business, Yivani Naturals. Her main product line is a skin cream manufactured from the imphephu herb, combined with essential oils.
Born in 1966, she grew up in modest circumstances – there were 15 children reared in her grandmother’s homestead. Her mother worked in Johannesburg, paying for her education. “As early as I can remember I was shipped to a Roman Catholic boarding school, which… opened my eyes and horizons.”
She matriculated from a high school in Butterworth., “In those days you could get good jobs with matric”. Six years later, with the help of savings and bursaries, she enrolled at the University of the Western Cape from where she graduated in 1994.
An internship at Parliament – “we would pass Madiba and all the ministers in the passages “ – gave her a springboard to the private sector where she worked as a marketing manager in some pre-eminent retail companies. “But I knew it was just a phase for me to learn before I jumped up.”
Langa Sangoni, born in 1974, also grew up in the rural Transkei. From a family of Abathembu royalty (his business card describes him as Prince Dumekhaya Langa Sangoni), he graduated in electrical engineering from UCT in 1997, and worked for Eskom and then Sappi. After he’d seen Al Gore’s prescient film, An Inconvenient Truth, he left his well-paid job to start Applegreen Environmental, a waste management and recycling firm.
He was, he says, “keenly aware” of two pressing issues in the country: unemployment and environmental degradation. “Waste is everywhere. It’s a simple industry and if you want to create many jobs you don’t need a very high level of skills to get into it.”
Both companies are housed in the Riversands Incubation Hub, a partnership between a property development company and the Treasury’s Jobs Fund, a R9 billion project that co-finances public and private endeavours that “contribute significantly to job creation”.
The Jobs Fund falls under the National Treasury, an institution better known for developing macro-economic policy, budgeting and, recently, holding the line against state capture. It’s a small but energetic hub that catalyses businesses ranging from sugar producers in KwaZulu-Natal to farm projects in the Western Cape to Soweto “box shops”.
“The power of the work is found in these very practical projects,” says its head and Treasury Deputy Director-General, Najwah Edries. “It’s what is happening at the coalface.”
One programme – which attracted national attention when President Cyril Ramaphosa visited it – is a training centre set up with Mercedes Benz in East London. It resulted in the car manufacturer investing R10-billion in the local plant and an undertaking to produce the next generation of C-Class Mercedes there. “The challenge from investors has always been ‘do you have the skills’,” says Edries. “So now we have this Learning Academy.”
Mbali Sokude, 24, is an apprentice at the Academy learning how to “run the robots to build the cars”. She studied mechanical and electrical engineering at a technikon and is now studying to be a millwright (repairing machines) at the Academy. She is one of just a handful of women there, “but we are now proving we can also work these jobs”.
Many Jobs Fund projects are small, scaleable businesses such as Yivani or Applegreen, which provide training and employment opportunities. The Jobs Fund says its role is to overcome some of the barriers to job creation, including lack of skills, difficulty in accessing capital for small businesses, and poor infrastructure. Both Sangoni and Majambozi are well educated and had successful careers in the formal sector, factors that portend well in running small businesses.
But there are also those without university education for whom tactical interventions have made a life-changing difference.
One is Maria Mashiane, who was born in what was then Pietersburg in 1960. She did not complete her matric but found jobs in various fast-food chains and retailers, ending up at the major wholesaler, Metro Cash and Carry. “I worked in all the areas because I wanted to train myself in business.”
In 2003, she opened a small laundry business in downtown Pretoria, taking out a loan to buy machines and a small pick-up vehicle. “My grandpa was a business person; the first thing that I remember was that he had a tractor and a donkey. So I thought to go into business you must have transport.”
With the vehicle she could collect and deliver laundry but although she managed to get contracts with local government, she faced stiff competition in the city and often (because of late payments) had cash-flow problems. “Sometimes I only made R200 a day, or maybe less, sometimes nothing.”
So in 2010 she found a more promising opportunity in a residential estate north of Pretoria, occupied by mainly young black professionals. She thought – correctly – there would be market for laundry as many of them were away from home all day. She also realised that with the nearest shopping centre about 5km away, there would also be a need for basic household goods so she opened a small spaza shop in the grounds.
But soon customers were asking for services such as airtime and prepaid electricity.
She searched for the technology to support these sales, and eventually bought a machine for R30 000. “But it didn’t suit my type of business.” She had to print the vouchers, then go to the bank to deposit the money. It meant lengthy spells out of her shop. Then she saw an advert for an integrated point-of-sale device about the size of a tablet managed and distributed by A2Pay, a Jobs Fund Partner (JFP) for the past five years. It revolutionised Mashiane’s business. With it she can sell airtime, bus tickets, electricity, even Lotto tickets and because there is an electronic loop to the bank, the transactions happen in real time.
She can also track her stock – including theft – and identify her most popular items, as well as her most profitable (not necessarily the same). A2Pay’s COO, Tina Mason, says the device is designed with spaza shops in mind. Most spaza shop owners, she says “are astonished at the turnover they are achieving; this system gives direct line of sight into their business numbers and performance”.
A2Pay, says Edries, has “built a technological platform, like a little kiosk or ATM, that you can locate anywhere in the spaza shops or on a pavement, and people don’t have to leave the township to get electricity or airtime or any of these things. It’s a technology backbone that’s built into the operation of spaza shops and it’s making owners more competitive.”
It’s also giving new life to small businesses in established township economies, says Edries. One spaza shop owner from Orlando West went from a start-up he began with half his pension money to an enterprise that makes him more than R1-million a year in profit.
Mason says the technology helps small retailers to improve their business management and increase turnover.
“Spaza shops were born in secret,” she says. “They were born in the apartheid era, so there is a long legacy of guys who’ve been tenacious and determined but have never had the collective power of buying, and never had the power to differentiate their stock.”
It costs small shop owners R200 a month to lease the technology and it comes with some conditions: the beneficiaries must be South African, they must complete the training, pay the license fee, and employ a South African youth. Already about 820 have been installed in Gauteng and KwaZulu-Natal and another 150 are earmarked for the Eastern Cape.
The mandate of the Jobs Fund is to catalyse the creation of new jobs in overlooked spaces. A2Pay, it says, can create jobs in small enterprises by boosting businesses; it also employs 40 people itself, including 25 first-time workers from the jobs-placing agency, Harambee – another Jobs Fund Project.
Langa Sangoni’s waste recycling business employs 105 people, about three-quarters of them in waste sorting. He plans to expand to his home village of Qokolweni, near Mthatha to build a waste recycling plant there. With a new road from Mthatha to the depot, planned by the DTI in partnership with the municipality, the project is expected to create 500 jobs in the area.
Ntshantsha Majombozi pic
Majombozi employs 10 people, full- and part-time.
But even for the successful, there are major obstacles. For small entrepreneurs such as Mashiane, Sangoni and Majombozi, access to capital is one. For Majombozi, the reliability of the postal service and the costs of freight are a particular frustration.
As she sells most of her cosmetic products online, she has to ship them to customers. She once used the courier service of the post office to send products to a customer in Mozambique, “and it took three months – I’m not lying to you – I’ve given up on the postal service”.
Because the essential oils were considered “hazardous”, she once paid R19 000 for an air-freight consignment but now she has different packaging and has reduced this cost.
Sangoni, for his part, has set his sights on creating 1500 jobs and capturing 10% of the R16-billion waste management market in the next few years.
“We have a massive opportunity because the problem of sustainability is big,” he says. “By the time my kids are grey like me, there will be another two billion people in the world, so just to have breakfast we’ll need another two billion tons of cereal. … But the planet is the same surface area, with the same resources.
“So our big question is how do we grow our business today, while conserving the natural resources and the environment?”
The Jobs Summit will grapple with how to dent the country’s stubborn unemployment rate. The Jobs Fund may be a small part of that quest but Edries says it shows it’s possible for the private and public sectors and civil society to “collaborate, share risk and achieve greater social impact by implementing innovative models for job creation.” DM
Pippa Green is a journalist working for the Research Project on Employment, Income Distribution and Inclusive Growth (REDI3x3), an independent research project based at SALDRU at UCT,funded by the Treasury.
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