Entrepreneurship is a risky pathway – the Social Employment Fund helps cushion that

3 Oct 2023

South Africa’s Social Employment Fund is not only creating employment in communities, it is also spurring entrepreneurial ventures. The programme represents an underused opportunity for economic innovation.

The notion that entrepreneurship is the secret recipe to solve unemployment has gained the attention of chefs in South Africa’s political kitchen.

Politicians, business leaders, technocrats, trade unions and civil society have coalesced around this recipe, enticed by its potential to not only create jobs but also to stir the pot of economic innovation and social mobility.

However, while entrepreneurship has whet political appetites, entrepreneurs face many obstacles. The failure rate is high, and this is not a realistic pathway that all 11.5 million unemployed people can take.

While it’s important to recognise these limitations, it’s also important to see the opportunities that do exist – and to find new ways to support this potential and mitigate the risks for those willing to enter the kitchen.

The Social Employment Fund (SEF) is exploring how public employment might contribute to this agenda. Set up as part of the Presidential Employment Stimulus and managed by the Industrial Development Corporation, the fund has already supported over 65,000 work opportunities in over 1,000 civil society organisations.

Participants work on community-driven projects from urban agriculture to public art and early childhood development programmes to the protection of biodiversity. Along the way, they earn an income, acquire valuable work experience and become familiar with the social and solidarity economy – a diverse ecosystem of formal and informal organisations committed to both economic and social goals.

This multifaceted approach offers a breeding ground for livelihood opportunities that simultaneously tackle local challenges.

Making entrepreneurship less risky

The reality is that entrepreneurship is a risky pathway with low odds of success. Evidence shows that between 70-80% of small businesses in South Africa fail in the short term, making entrepreneurship a precarious endeavour without built-in social protections.

There is also a strong link between unemployment and poverty. Yet it is precisely this demographic that is expected to magically become entrepreneurs without a safety net or capital.

Participants in the Social Employment Fund work part-time and earn about R1,700 per month. For some participants who have the appetite for entrepreneurship, this modest cushion of financial stability has allowed them to experiment and test the waters in entrepreneurial activity, like Elias Nkuno in Bela-Bela.

Inspired by childhood memories of assisting his aunt in planting trees, Elias used his earnings from social employment to start Ntivo Seedlings, an organic nursery.

Balancing his part-time shifts with entrepreneurial pursuits, Elias has found a market among local smallholder farmers and households – contacts he originally made during his placement at the Seriti Institute.

For Elias, who had entrepreneurial ambitions, public employment provided financial stability and an initial market to engage in his venture.

Beyond financial security, work experience gained from public employment pays dividends in the form of skills acquisition and networks that can improve entrepreneurial success.

Participants in the SEF programme don’t just clock in and clock out; they are immersed in a high-quality work experience designed to impart soft skills that are essential in any form of employment or entrepreneurial venture.

Thandeka Mashinini in Nelspruit worked part-time as a timekeeper in Mpumalanga. She credits the leadership, interpersonal skills and income she gained through social employment in realising her dream: opening a beauty spa at the Khayalami Hotel.

Whether it’s time management, professional conduct, planning or communication skills, these are more than just buzzwords: they are the building blocks of employability and entrepreneurial capacity.

Self-employment isn’t the goal of public employment – nor should it be.

But for people like Elias Nkuno and Thandeka Mashinini with entrepreneurial dreams, it can provide stability and skills to turn ambitions into reality.

New avenues for (social) entrepreneurship

But there is another intimidating hurdle that aspiring entrepreneurs need to clear: in South Africa, traditional pathways to enterprise or livelihood activities are severely restricted.

In rural areas – where unemployment is most severe – corporate consolidation in agriculture and food processing has squeezed out small producers. Giant supermarket chains bypass local markets, denying opportunities for local entrepreneurs to eke out a living.

And if you shift your gaze to townships and cities, decades of repressive policies have criminalised and stifled informal enterprise activity. All of this reveals a hard truth: traditional entrepreneurship pathways that would otherwise be a source of opportunity are blocked.

The social and solidarity economy opens new avenues of innovative, socially conscious business models. This is where the Social Employment Fund can act as a catalyst for innovation.

The fund gives participants a unique insight into social enterprise models.

For instance, the Siyakholwa Group – a strategic implementing partner in the Social Employment Fund – identifies unemployed people in communities and trains them to become early childhood development practitioners.

Using the SmartStart model, these newly trained individuals receive educational toys, a stipend and ongoing support to launch their enterprises within their communities.

With 1.3 million children between the ages of three and five not attending any form of early learning, the need for more practitioners and facilities is an urgent social need – especially in rural communities.

Social employment also addresses another crucial barrier to entrepreneurship: sector-specific knowledge and practical skills.

On-the-job training and formal educational modules serve to augment the skill set of each participant, opening new doors for income-generating activities.

In some instances, this training is directly aligned with areas of urgent social need, thereby creating a virtuous cycle of personal and community upliftment.

Strategic partners like Seriti contribute to this dimension by offering specialised training – in this case, Multifunctional Agriculture which exposes participants to all roles in the agri-food value chain.

The work addresses community challenges like food security but also opens local economic opportunities. By training participants to manage and run seedling nurseries, Seriti aims to cultivate a new generation of agrarian entrepreneurs.

And this is just the tip of the iceberg.

Across the social employment fund, participants are being exposed to new ideas and opportunities in their communities: food gardens, recycling ventures, digital inclusion and more.

On-the-job training expands their skill sets to make these new possibilities for livelihood activities feasible.

Leveraging this mechanism, the Social Employment Fund has the potential to incubate micro-social enterprises, addressing both local needs and offering sustainable livelihoods.

The Social Employment Fund illustrates that public employment programmes have untapped potential for supporting future entrepreneurs and change-makers that political actors are so desperately calling for.

By equipping individuals with skills and a safety net – and placing them in sectors with real social needs – these programmes aren’t just patching holes in the economy – they are weaving an entirely new fabric of opportunity. DM

Zak Essa is a programme analyst supporting the Presidential Employment Stimulus.

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South Africa

Making entrepreneurship less risky

New avenues for (social) entrepreneurship