Some socio-economic aspects of African entrepreneurship : with particular reference to the Transkei and Ciskei

Abstract

This work encompasses an inquiry into the role of the entrepreneur in economic development, and a report of interviews with eighty African businessmen in the Transkei, Ciskei and some urban locations. South Africa provides a particularly interesting field for the study of African enterprise insofar as it is possible to examine the evolution of entrepreneurship in two fundamentally different environments - namely rural reserves and large urban areas. Furthermore, there has been a substantial increase in the number of African entrepreneurs during this century. The study achieves added significance in view of the wide racial income differentials which are an endemic feature of South African socio-economic existence; moreover, there is a great deal of evidence to suggest that, despite the high real growth rates during recent years, the racial income gap is widening. A corollary to this is the worsening of the relative - though not necessarily the absolute - economic position of the Black population. Hence : "the fundamental question for South Africa's economic future revolves around the income relationship between the Whites and the African segment of the non- White group." At present a great deal of pressure is being exerted on White employers to adopt more racially equitable systems of remuneration, and on the Government to relax the industrial colour bar. Although such measures would probably have a positive influence in preventing the gap from widening still further, there is reason to believe that their effectiveness would be limited. The justifications for this assertion are twofold: a) As Allister Sparks has pointed out, "as long as (Blacks) are limited to being hirelings of (Whites), their progress will necessarily remain stunted. Because of race prejudice they will not be promoted as readily as Whites of equal ability. There will not be Black managers and company directors. They will be held down by a vicious circle of disadvantages: prejudice will deprive them of promotion, which will deprive them of experience, which will provide the pretext for not promoting them. b) There is much convincing evidence to show that property ownership rather than wages is the basic factor determining income distribution. Information indicative of the extreme racial inequality of property ownership in South Africa is given by Spandau, who has shown that in 1960 'other income' (i. e. rent, interest and profits) formed 119% of work income of Whites, and only 19% of the work income of Africans. 2 In the absence of cataclysmic social change, the development of African entrepreneurial talent emerges as a possible means of escaping from this apparent impasse. This does not of course imply that even a fairly large increase in the number of African entrepreneurs would automatically result in raising the living standards of a substantial portion of the Black population. Nevertheless, it would represent a positive move towards redressing the inequalities in property ownership and facilitate the acquisition of organizational skills, which in turn implies a better utilization of human resources than exists at present