08 December 2015 | Bianca Jordan | Opinion
Unemployment in South Africa is spiralling. According to Stats SA, the unemployment rate has jumped to a 10-year high, and the jobless rate increased to 26.4% in the first three months of 2015, from 24.3% in the preceding quarter.
Due to high levels of unemployment, South Africans are often encouraged to become entrepreneurs, primarily because entrepreneurship is central to South Africa’s economic development and growth. Entrepreneurship plays a major contributing role in terms of decreasing the high levels of unemployment.
The National Development Plan’s vision is for an entrepreneurial ecosystem. The 2030 vision includes lowering the cost of doing business by simplifying the regulatory environment, providing entrepreneurship training in schools and for school-leavers, and providing small business support with sector-specific targeted assistance.
Specifically in rural areas and townships, industries are frequently small and there are often not enough employment opportunities. This in turn creates numerous socio-economic challenges in communities, such as alcohol abuse, drug abuse, child abuse and gender-based violence, to name a few.
While it is important to note that there are numerous other challenges which have an impact on the success rate of entrepreneurs in South Africa – lack of education and skills, access to finance, technology, mentoring and coaching and legislative obstacles – the lack of basic resources such as water and electricity poses a serious obstacle for entrepreneurs as well.
According to various media articles, five out of the nine provinces have been declared disaster areas in terms of water availability. They are the Free State, KwaZulu-Natal, Mpumalanga, Limpopo and the North West. For South Africa and the developing world, a lack of access to water and sanitation is a critical problem. With a specific focus on entrepreneurship, the economic costs of inadequate provision of water are severe. For an entrepreneur with a start-up food garden who sells fruits and vegetables to street vendors and households at a cheaper rate than supermarkets, an inadequate supply of water may lead to crop failure and, ultimately, business failure.
Insufficient water supplies will mean that the costs of production for entrepreneurs as well as consumers will increase. Indeed, the cost of doing business in South Africa is rising because of water security challenges. Tansportation costs are just one of the costs that entrepreneurs are likely to incur. In terms of consumers, the costs of products and services will increase because entrepreneurs need to cover their production costs and make a profit in order to sustain their business.
Tshikululu Social Investments – through its exposure to communities on a daily basis – has observed that water is often one of the key factors preventing sustainable community development. Companies seek areas to start up new business that avoid water-security challenges. Municipalities often do not have the resources to address water-supply issues.
With the current water crisis, research by numerous academic and research institutions has indicated that the problems are linked to the management of municipalities. According to the Public Affairs Research Institution (PARI), the shortage of water is often as much about the drought as it is about water management. In a recent press release, PARI explained that reskilling municipalities in basic technical competencies would be a good starting point.
To this end, corporates investing in communities stricken by water-security challenges might consider investing in training community members who would be able to become water technicians or engineers. While this is a long-term solution to address the current water crisis, corporates should work together with local municipalities to address this issue.