Enabling Entrepreneurs to Create Jobs by Paul Lamontagne (Business Report, May 5th, 2011)

Enablis South Africa reached the 1 000-member mark last month. Since its launch in 2004, Enablis SA has become the country’s leading network of entrepreneurs.

The announcement came in conjunction with the release of its annual Independent Member Survey results, which found that each Enablis entrepreneurs created 5.3 new jobs on average in 2010. Projected across its 1 000-member network, this equates to an estimated total of 5 300 new jobs.

Its rapidly growing membership, combined with the job creation abilities demonstrated by the annual survey, puts Enablis SA in a unique position to help create 5 percent of the government’s bold employment target of 5 million jobs by 2020.

Enablis Entrepreneurial Network is a member-based organisation that exists throughout Africa, linking like-minded entrepreneurs.

It was founded at the Group of Eight summit in 2002 by corporate giants Accenture and Telesystem, in collaboration with the government of Canada.

Enablis SA, a section 21 non-profit organisation, is geared at leveraging and supporting entrepreneurial talent in six provinces. Khula Enterprise Finance and FNB provide Enablis SA with annual grants to offer skills development, access to finance and professional networking that, combined, ensure entrepreneurial sustainability.

Enablis’s ethos is rooted in French Canada’s Quiet Revolution of the 1960s. This was a period of unbridled economic and social development in the province of Quebec, driven by an empowerment imperative.

A new government encouraged the Quebecois to invest in their economic future and to start ventures. For example, the Caisse de Dépôt et Placement du Québec was founded to provide capital for various initiatives in both the public and private sectors. Quebecois entrepreneurship flourished as access to financing is critical for small and medium-sized enterprises (SMEs) to develop and expand.

Today, SMEs account for the majority of Quebec businesses. They are the backbone of the economy and have been critical drivers of job creation, productivity and economic growth.

The transformation of Quebec through this Quiet Revolution is an appropriate model for consideration because its success and the comparable size of its gross domestic product to that of South Africa.

There are world-class entrepreneurs and ideas in South Africa, many of which warrant taking a risk.

The 2010 Accenture Enablis Business LaunchPad Competition recently recognised 11 winners.

For six years, this Enablis sponsored competition, now the biggest of its kind in South Africa, has provided an inspirational platform to develop and showcase business plans.

These winners, and others before them, are our drivers of job creation, productivity and economic growth.

In November 2010, Enablis was invited by the Parliament’s portfolio committee on economic development to present its unique model of entrepreneurship support and financing.

The invitation followed the release of Department of Economic Development figures that showed spending of R11 billion to create or save 20 000 jobs. This represents an average of R550 000 spent per job. In contrast, Enablis SA at its current scale spends less than R2 000 per direct full- or part-time job created by member entrepreneurs.

Enablis SA has the potential to create more than 250 000 jobs by 2020 or 5 percent of the government’s overall target, under the right conditions.

Moreover, these jobs could be created at less than R2 000 each, based upon the results of the 2010 survey and Enablis’s actual expenditures.

Enablis SA would be required to grow from its existing 1 000 entrepreneurs to 6 000 entrepreneurs by 2020, and achieve further efficiencies below R1 000 spent per job created by 2015. Total funding over 10 years of about R290 million would be needed to achieve this objective.

According to the Global Entrepreneurship Monitor (GEM) index, South Africa has lagged other countries over past years in the early stages of entrepreneurial activity. In contrast, 84 percent of Enablis SA members surveyed last year have been in business for more than 36 months, which is a critical hurdle for sustainability.

The 201 entrepreneurs included in the survey sample have a total of 1 602 employees, for an average of eight employees per business. They created 356 full-time jobs and 710 part-time jobs in 2010, which equates to the average of 5.3 new jobs per entrepreneur.

Overall results of Enablis SA entrepreneur businesses were very healthy in 2010. Seventy-two percent of respondents indicated they had steady or increased turnover in the past year. In terms of profits, 71 percent experienced steady or increased profits. Fifty-two percent had improved, extended or introduced new products.

These results show that entrepreneurial success is indeed possible in this country.

Obtaining financing presents one of the biggest obstacles for entrepreneurs today, including here in South Africa. Enablis has developed distinctive tools to address the lack of collateral and credit history perceived as risks by combining loans with programmes that build capacity.

Together, these reduce risk while simultaneously building skills. Enablis SA operates within the fabric of South Africa’s developmental finance institutions by providing development capital to qualifying SMEs. Development capital uses a venture approach with debt or quasi-equity instruments to achieve financial yields, as well as social returns such as job creation.

Results have been stellar despite the economic downturn of the past few years. In the case of the Khula Enablis Loan Fund, an innovative loan guarantee programme for Enablis SA members launched in 2005, entrepreneurs have been given access to R45m through FNB at preferred rates, while investors in the fund have made a 5 percent return. Enablis stakeholders can take great pride in a solid track record of sustainable SMEs and jobs created.

We are at an inflexion point in South Africa for entrepreneurship and Enablis SA is ready to foster the creation of 250 000 jobs. Our entrepreneurs, just like the Quebecois entrepreneurs in Canada, are emerging as critical front-line contributors to the government’s job-creation strategy.

Scaling Enablis SA’s high performance model to every province, city and community will unearth a huge store of entrepreneurs, empower them to success and thus South Africa can climb the GEM entrepreneurial activity index to the top.

Paul Lamontagne is a Canadian social entrepreneur living in Cape Town and the chief executive of Enablis Entrepreneurial Network.