After the impossibly beautiful nestled-between-the-sea-and-hills views of Cape Town and the primordial right-out-of-Planet-Earth feel of our Kruger Park safaris, Chazen South Africa landed at our final destination earlier this week: the commercial capital of South Africa, Johannesburg.
Johannesburg was built from scratch around neighboring gold mines—unlike the other big commercial cities of the globe, it has no natural advantages such as river or sea access—so it was fitting that the question occupying us during our business visits here was how new businesses in South Africa can similarly be built from scratch. That is, what exactly is the state of South African entrepreneurship?
We visited a man called Sizwe Nxasana, perhaps one of the most inspirational business leaders any of us have met. Sizwe was one of the first six black accountants in apartheid South Africa. Considering all the odds against black businessmen before the country became a democracy in 1994, he managed to co-found his own accounting firm in 1989 that today is the fifth largest in the country after the global Big Four auditors.
A born career-switcher, Sizwe then went on to become CEO of the state-run telecom company in 1998. Though he knew nothing about telecom, he understood that telecommunications would be the way to help poor blacks reach into the new century. He helped partially privatize the company, list it on public bourses, and cut its bloated staff by half. If that wasn’t enough, the restless Sizwe switched again—leading one of the nation’s largest banks. Now semi-retired, he devotes his whole time to an education nonprofit he founded Sifiso Learning Group, with the goal of improving both quality and access to education.
Are there lessons from Sizwe’s own story? He humbly says he just happened to be at the right place in the right time, one of the few black South Africans with a business background who could help Nelson Mandela’s post-apartheid state rebuild. But he is worried that entrepreneurs across South Africa are today getting squeezed by the triple pincers of Big Government, Big Business and Big Labor.
The government highly regulates many parts of the economy—in education, for instance, there are lots of mandates about what can be taught, and even rules governing the hours of the school day. Meanwhile, the budget deficit is worryingly rising, sucking capital that could otherwise be deployed to the private sector.
As for Big Business, they probably like the rules that erect barriers for newcomers. Lastly, unions throw up problems for hiring. Teacher unions are some of the most vocal opponents of the education reform Sizwe and others want, for example. At this rate, it’s difficult for South African entrepreneurs to break out.
The good news is that it is possible for a homegrown South African business to become a powerful global brand. To witness that, we visited Nando’s, the casual dining chain famous for its spicy Mozambican chicken.
Nando’s was started by two South African entrepreneurs in the late 1980s, and grew because of its tasty product (which is a local staple in neighboring Mozambique); its impeccable quality control of its chillies from local farmers; and a plucky brand that gets attention through provocative advertising campaigns. Nando’s isn’t that big in the U.S. yet (there are just 40 locations), but it’s become a cultural staple in the U.K., and is growing quickly in the Middle East and India.
Entrepreneurship is hard in most parts of the world. But it’s even more so in South Africa, given the pressures governments, big businessmen and unions apply. Perhaps the consolation here is that the entrepreneurs who do make it have to have such velocity to escape the harsh gravity of this economy, that they truly zoom onto the world stage.
~Abheek Bhattacharya ’18