User:Johnrbach/Equipment-based-entrepreneurship

EQUIPMENT-BASED-ENTREPRENEURSHIP

Equipment-Based-Entrepreneurship is a poverty alleviation model, propsed by John Victor Rautenbach a social work lecturer at the University of Fort Hare's  East London, South Africa  campus.

“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime” (Chinese Proverb: attributed to Lao Tzu, 6th century BC).

This paper proposes to challenge the notion that knowledge alone can contribute to poverty alleviation. In light of the above quote, teaching the poor man to fish will only change his life, if he is given a fishing rod or a net. Equipment-Based-Entrepreneurship, as seen in the streets and markets of China and Asia, may be the model which South Africa and the Eastern Cape, in particular, needs to adopt to ensure the sustainable development of the poor in a dignified manner. I believe a single piece of equipment can change a family’s destiny. Thus I seek to explore the adaptability of the Asian Equipment-Based-Entrepreneurship model to the South African poverty alleviation context.

The following summary and conclusions can be made:

Entrepreneurship in South Africa SMMEs are widely regarded as the driving force in economic growth and job creation in both developed and developing countries. The vast majority of micro enterprises are set up for reasons of necessity rather than choice. Furthermore, survivalist enterprises in South Africa are on the increase due to high levels of unemployment, retrenchment, lack of income and job opportunities.

The contribution of SMMEs to South Africa's GDP is far lower than those in Asian countries, however, as South Africa is less entrepreneurial than other developing countries. Moreover, up to 70% of small businesses in South Africa fail with in the first five years.

Thus it is evident that the present SMME economy as a whole is no vehicle to tackle the problem of employment growth. Many poor people are therefore still living in poverty for lack of sufficient access to the means of production.

Training Knowledge alone cannot contribute to poverty alleviation. Knowledge based training programmes that only focus on aspects such as stock control, record keeping, marketing and drawing up a business plan and neglect the need for equipping the entrepreneur will not be sufficient to ensure sustainability.

Government support Government's support for entrepreneurship in SA has largely been mis-directed. Costly programmes that aim to deliver finance and skills training to emergent entrepreneurs often miss their target. Many small business owners are unaware of the government’s support programmes such as Khula and Ntsika. Policies that aim to foster knowledge-based entrepreneurship to strengthen the economic basis in regions of high unemployment can be expected to fail. Instead, the poor may best be served by local policies that favour investment in equipment over knowledge-based training. In regions with a high level of unemployment, policy should focus on “low-tech” entrepreneurship.

Funding There is a very high default rate amongst those who have been lent money for entrepreneurial start-up capital. A well conceived and successfully imple-mented public policy is one that not only provides access to credit and vocational training but offers technical assistance and support of the market for second-hand equipment.

Equipment-Based-Entrepreneurship Entrepreneurs need to be equipped for success. A single piece of equipment can change a family’s destiny. Equipment-Based-Entrepreneurship may be the model South Africa needs to adopt to ensure the sustainable development of the poor. Owner-managers, those who are self-employed and subsistence workers would benefit most from an Equipment-Based-Entrepreneurship approach. Many micro businesses in China have been developed around the use of a simple and reasonably inexpensive piece of equipment. The Asian Equipment-Based-Entrepreneurship model is adaptable to the South African poverty alleviation context. Low-tech capital investment is essential to entrepreneurship development and the associated increased productivity and employment creation. This would have a positive impact on regional economic performance.

The use of bicycles and work-tricycles can be seen as a means of poverty alleviation, job creation and sustainable development. The successful entre-preneur will have to be technology-orientated and willing to adapt to the changing environment. For emergent enterprises the most common forms of equipment are simple manually operated machines which are sometimes purchased second-hand. In businesses that have operated for more than 10 years, the age of machinery corresponds closely with the age of the firm.

There are individuals in the micro-enterprise sector who are showing initiative and there are a growing number of local examples of Equipment-Based-Entrepreneurship. This trend bares testimony to the universal adaptability of the Asian model in which a family-owned business can be established around a single piece of low-tech equipment.

RECOMMENDATIONS

Development agencies and micro financiers could establish equipment libraries. In this system equipment is leased to the applicant instead of providing cash loans. The equipment is leased on probation periods, e.g. two years are allowed for micro business establishment. In addition, support services are offered, such as linking the entrepreneur to technical training, equipment maintenance and marketing. After the probation period, the equipment is sold to the entrepreneur if the business is well established, or it is repossessed if the venture is a failure. The equipment can then be leased to a new candidate and the initial investment is intact.

A further recommendation involves the role of corporate social responsibility programmes. Large businesses and industry should be encouraged to investigate their role in Equipment-Based-Entrepreneurial development as part of their corporate social responsibility campaigns. For example, if a particular piece of equipment is only used in a limited way as part of production, the corporate could outsource that function together with the equipment to a family in a nearby community. The family business would thus have one guaranteed contract for its products, but would be free to use the equipment in meeting independently acquired contracts.

The Equipment-Based-Entrepreneurship model is still largely conceptual in its application to South Africa. It is therefore recommended that the concept be extended, tested and refined. Ultimately, the fisherman should not only have access to the boat and fishing tackle, but should also gain access to the water; and then be supported enough to process his catch and profit from it in a sustainable way.

Finally, the Asian example should not only inspire South African policy makers to create the climate for macro economic expansion, it should also bring attention to the need for an Equipment-Based-Entrepreneurship model that would enable sustainability in the micro-enterprise sector.

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Johnrbach (talk) 15:19, 18 August 2009 (UTC)