Friday, February 12, 2010

The difficulties of entrepreneurship

Today, BusinessDay released an article on a start-up bakery business in Alexandra. Agrineth Shiburi, the entrepreneur, explained how difficult it was for her to raise the capital to finance her start-up business.

She said of the big banks, “They couldn’t assist me at the time. They wanted surety, which I didn’t have. They just didn’t believe it would work out. I requested R500000. They couldn’t even do R100000. They saw us as a risk. They couldn’t see the potential.”

The bakery eventually got off the ground because Shiburi "approached friends and family members to help out with parts of the funding. Her mother took out a second bond on her house in East Bank, Alexandra."

How lucky she was. Had Shiburi's mother not been in a position to remortgage her home, her dream may never have been realised.

In South Africa, where many citizens live on government land and therefore own no property, it is no surprise that entrepreneurship is so limited. Such citizens have no collateral against which to obtain loan finance from banking institutions.

The South African Government should strive to ensure that every citizen owns land directly or is part of a family or community that owns land. If we are serious about reducing poverty and inequality our country, we should demand this from our government. *

* Note: this conclusion was rushed - see my first comment for a clarification!


  1. I am quite interested in the sentiments behind this article. It suggests that you're far less libertarian than both the blog name and the first post suggest. How would the government ensure that every citizen should own land?

  2. I think I am far less libertarian than this blog title suggests, but I won't know for sure until I have thought and written enough. Watch this space.

    On this issue however, I think my view is libertarian even though it hasn't quite come across that way in the final paragraph. In my view, the government should not dispossess citizens of land in informal settlements by retaining ownership of such land. By transferring title deed in some way or other to the residents of informal settlements the government will enable such people to lift themselves from poverty.

  3. Hi David, thank you for taking an interest in our blog. The irony is that one of South Africa's foremost libertarians, Leon Louw, has been making this point for over 20 years. I think it's a travesty that most black people still have inferior property rights compared to white people. I strongly encourage you to read the following articles to see what I mean:

    Transfer land from the state to the people now
    Leon Louw, 13 June 2007

    Myths about land reform
    Leon Louw, 23 June 2009

    Vested interests ‘blocking’ switch to freehold
    STEPHAN HOFSTATTER, 26 June 2009, Business Day

    Communal Land Rights Act needs to be revised
    Laura Grube, 3 February 2009

    Land reform: Going nowhere slowly in Alexandra
    Laura Grube with Vakele Richard Mbalukwana