Mphahlwa said the state had stabilised the South African economy with measures like reducing public debt but "now the economy needed to start working efficiently". The micro issues like promoting small and medium enterprises will help create jobs and promote foreign as well as domestic investment. We need micro-economic reform," Mphahlwa said. Mphahlwa emphasised that skills development was a key area the government was looking at.
Share via Email Microcredit has funded many new spaza shops — but are they drivers of sustainable development? Proclaiming that it would rapidly bring new jobs, incomes, empowerment and dignity to the poorest black communities and townships, expectations of rapid progress ran high.
However, the microcredit medicine applied to post-apartheid South Africa has turned out to be a deadly one. It is now increasingly clear that the much-lauded market-driven microcredit model has inflicted untold damage on the South African economy and society.
Concerned investors are rapidly leaving the bloated microcredit sector, with many users arguing that it is on the verge of a self-orchestrated collapse.
The economy of South Africa is the second largest in Africa, after Nigeria. It is one of most industrialized countries in Africa. South Africa is an upper-middle-income economy by the World Bank – one of only four such countries in Africa (alongside Botswana, Gabon and Mauritius). Since. Microeconomics also deals with the effects of economic policies (such as changing taxation levels) on the aforementioned aspects of the economy. Particularly in the wake of the Lucas critique, much of modern macroeconomic theory has been built upon microfoundations —i.e. based upon basic assumptions about micro-level behavior. When South Africa emerged from the apartheid era in it had an urgent need to complement its political liberation and its openness to global trade and investment with economic growth that would benefit all members of the population.
The microcredit-induced problems that emerged in South Africa are two-fold. First, microcredit per se is actually an "anti-developmental" intervention. For one thing, it exists on paper to support the smallest income-generating activities, but in practice is increasingly all about supporting consumption spending.
In South Africa, the microcredit movement has created an incredibly risky and expensive way to support the immediate consumption needs of the very poorest.
With few poor individuals possessing a secure income stream that might ensure full repayment of a microloan — unemployment is now higher than it was under apartheid — many of the poorest individuals have been forced to repay their microloan by selling off their household assets, borrowing from friends and family, as well as simply taking out new microloans to repay old ones.
For far too many now "financially included" individuals in South Africa, using microcredit to support current spending has been a disastrous and irreversible pathway into chronic poverty.
Going further, of the very small percentage of microcredit that actually does go into supporting income-generating microenterprises as per the original modelthe fact remains that the business activities that emerge are simply not the drivers of sustainable development and poverty reduction.
The rafts of new street traders, barrow boys, spaza shops and the like have generated very little, if any, positive impact in South Africa's poorest local communities.
Centrally, late-apartheid South Africa already possessed a very large informal economy in the black townshipsone that was composed of exactly such simple low-capitalised no-growth activities.
Among other things, this existing capacity helps to account for the high rate of job and income displacement that emerged afterwhen new microcredit-supported informal microenterprises took demand, and subsequently income, away from the rafts of already struggling businesses in the black communities.
This was not microcredit's intended poverty reduction so much as the intensification of povertysuffering and deprivation among the very poorest communities forced into informal sector work.
Even worse, social tensions were greatly exacerbated thanks to hyper-competition and the aggressive taking of clients away from existing businesses, while ethnically-motivated business turf wars inevitably began to rear their ugly head too.
Perhaps most importantly, the growing dominance of the microcredit model has meant that South Africa's scarce financial resources have essentially been diverted away from more productive and sustainable business activities; notably away from formal manufacturing-led SME development, which the country desperately needs.
Microcredit institutions that successfully mobilise savings, remittances and public and private investment funding, and then profitably channel this largesse into microcredit applications, effectively de-fund the very enterprise sectors most closely associated with sustainable local economic development and poverty reduction.
Just as in microcredit-saturated Latin Americathe programmed diversion of South Africa's scarce funds into microcredit applications has been a first-order development disaster in the post-apartheid era.
The market-driven microcredit model in South Africa has progressively helped to destroy the important economic, social and institutional foundations that underpin a healthy local economy. A further intractable problem with microcredit in South Africa is related to the extensive commercialisation that was introduced into the global microcredit industry in order to make it financially self-sustaining.
Like Alan Greenspan and Ben Bernanke, far too many high-profile microcredit supporters and policymakers also naively bought into the myth of the free market, including its particular aversion towards robust regulation.
There was hope that for-profit microcredit institutions would dutifully stick to their allotted mission and responsibly lend to the poor. However, just as in the wider economy, where the actions of the financial institutions on Wall Street brought on a global recession, the widely-held assumption that private banks and microcredit institutions would be responsible also proved to be spectacularly wrong.
Only now are people realising that the real aim of the private banks and microcredit institutions in South Africa — exactly as in the case of Wall Street's infamous sub-prime lenders — was not to help their poor clients, but to extract as much value from them in the shortest time possible before leaving the sector and moving on to other fields of business.
Unfortunately, the very worst impacts of microcredit in South Africa have taken place in the poorest and most vulnerable regions, especially around the mining district of Rustenburg.When South Africa emerged from the apartheid era in it had an urgent need to complement its political liberation and its openness to global trade and investment with economic growth that would benefit all members of the population.
South Africa has a highly developed economy and advanced economic infrastructure.
The African National Congress has dominated politics since the end of apartheid in THE SMALL, MEDIUM AND MICRO ENTERPRISE SECTOR OF SOUTH AFRICA Executive summary This report presents a broad statistical overview of the Small, Medium and Micro Enterprises (SMMEs) of South Africa.
The Department of Trade and Industry (DTI) domestic, as well as global economy, changed significantly. The global financial crisis followed. What the price of prostitutes can teach you about SA economy – Marius Oosthuizen EDINBURGH — Life has been tough under Jacob Zuma.
High unemployment rates, a symptom of an ailing economy, have meant that many young people find their only source of income in selling their bodies. MicroFinance South Africa (MFSA) is a representative body of registered and legal MicroFinance Credit Providers in South Africa.
Meetings & Events MFSA strives to keep their members informed with the latest industry changes and news. "The South African government needs to go beyond the macro-economic issues and focus on economic stabilisation to get the economy working. The micro issues like promoting small and medium enterprises will help create jobs and promote foreign as well as domestic investment.