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Unemployment and factors of production

12 November 2012, 20:25

Unemployment and the Missing Key Factor of Production

Why does the Government keep promising more jobs for the jobless in South Africa when they know deep in their heart that there will be no improvement of employment in the formal and to a lesser extent in the informal sector until such time they understand and address the 4 factors of production?

Politicians promise that they will create jobs – how? Where will these jobs come from?

The 4 factors of production, Labour, Capital, Natural Resources, and Entrepreneurship are key to the improvement and sustainability of any economy. Although all factors are as important as the other, it must be stressed that entrepreneurship is the vital and most important key to South Africa’s future growth and prosperity.

South Africa is blessed with natural resources and labour, capital is abundant. The only element missing in South Africa is entrepreneurship.

Just try and approach 1 of the big 4 for money to start or expand your own business – impossible.

I have a business which I am trying to expand. I also have 3 employees. The business proposal is thorough, cash flow predictions are conservative, I have a customer base, I am listed as a supplier with 1 of South Africa’s major retail chains but still the banks won’t budge until you have 50% collateral before they extend cash.

How bizarre, so in order to obtain R 500,000 you need to lodge R 250,000 as collateral. Now why would you ask for cash in the first place? I still say that in order to obtain a loan from any bank, you need to give them 20 reasons why you don’t need the loan until they grant you a loan. Please bear in mind that the big 4 annually post inflation beating profits.

Banks are on a self fulfilling mission to tell the public at large that they are there to assist small business – they are not!!

Whilst millions is poured into advertising and sport, banks are missing the point. Why not plough this money into small business.

I approached the DTI for funding, just as frustrating. When I called, the dear lady promised me she would send an email with all the avenues to funding. What a joke? – I received an email with 5 entities which provide funding. It looked like the document was compiled at the last minute and none of them can help anyway.

Now I ask you, how does the small business expand with no access to finance from the formal sector.

Until the South African Government as well as the big banks understand that the only way to grow an economy is through promoting and financing small business thereby creating employment, the jobs problem in this country will only worsen.

Stop promising jobs when you don’t know where they are going to come from for cheap electioneering.

You need to assist small business

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