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!

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Welcome to the South Africans for Liberty (SA4L) Blog, a mouthpiece of SA4L. SA4L is an institution created by like-minded individuals from the University of Cape Town to promote the discussion of liberty in a South African context. Liberty is defined very broadly and may relate to such fields as Sociology, Politics, Law and Economics.

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