In late 1989, when Clem Sunter was head of corporate affairs at Anglo American, he was sitting in his office when he received a phone call from the police.
“My obvious reaction was, what on earth have I done,” he said. He answered and was told that a prisoner wanted to speak to him.
He replied that he didn’t know any prisoners. “You know this one,” the voice said.
So, in early January 1990, Sunter met with Nelson Mandela. Sunter said he expected the discussion to be about Anglo and the company’s role in the mining industry.
But Mandela wanted to speak about the country’s future and how you become a winning nation in the global economy.
It was a topic Sunter was well-versed in as he had travelled the country, presenting the high-road and low-road scenarios that modelled possible futures for the country.
In one scenario, South Africa would negotiate a political settlement and build an inclusive and growing economy which would send the country on a path to prosperity.
However, a failed political negotiation and stunted economic growth would send the country down the path of becoming a wasteland.
He told Daily Investor that the Anglo scenario planning team always spoke about two important crossroads with the high-road and low-road scenarios that were central to which path was taken.
“The first one is a political crossroads where you have to negotiate a new political dispensation – you can’t just impose one, and thank heavens De Klerk and Mandela got together and did the job.”
“But we always said that going with that is the second crossroads which is making sure we have a high economic growth rate with an inclusive economy because if we don’t, we will undo all the good work done by the political negotiations.”
“That’s where we are at the moment,” he said.
South Africa has potential
Sunter said it has become clear over the last 30 to 40 years that big business will no longer create the level of employment needed to accelerate economic growth.
“The days of Anglo American and other big companies having hundreds of thousands of people are gone. Big business is never going to be the major new employer again. It’s going to be the small and micro business.”
Sunter said the way to create 5 million more jobs in the country has to be to create 1 million new businesses.
The key to building a growing and inclusive economy is igniting the informal economy’s entrepreneurial flame.
Sunter said the country has talented entrepreneurs, but “they hit the ceiling very quickly because our economy has so many barriers and red tape”.
His opinion is backed up by the most recent data from the Trade and Industrial Policy Strategies (TIPS) Small Business Report for 2023.
Small businesses comprised 30% of total employment in South Africa, even though only 6% of South Africans are self-employed employers. In middle-high income countries, 20% of people generally own an enterprise that employs people.
TIPS estimates that small businesses contribute a third of the total value added to the economy.
The reasons why small business seems to be stunted in the country are not obvious. The way to encourage the growth of the sector also isn’t obvious.
This is because almost nothing is known about the way the informal economy works, said Sunter.
“Before one starts saying these are the five or six things that should be done to encourage entrepreneurs, I feel that we have got to know more about the informal sector.”
Informal sector shrouded in mystery
Sunter said that when he visits business schools in South Africa, he always asks whether research has been done in this area or whether there are any PhDs on these topics. “The answer is usually no,” he said.
His impression is that very good money is made in the informal economy.
He cited Kazinomics author GG Alcock as one person lifting the lid on what’s happening in the informal economy.
Alcock estimates that the Muti market is worth R3 billion and has 27 million consumers. The goat trade is worth millions of rands.
He argues that the real unemployment rate is close to 12% as many individuals working in the informal economy are excluded from official statistics.
While this is good insight, Sunter’s point is that we don’t know enough about township economies to effectively empower the sector.
“I want somebody who is knowledgable to say these are the five things we could do to ignite a new entrepreneurial flame in South Africa,” he said.
“I don’t know what they are because I haven’t started my own business, and other people have done so – I have worked at Anglo American all my life.”
Lack of will
Sunter said there is a lack of will by political parties to champion the interests of small businesses.
“The ANC has done absolutely nothing really for small business,” he said. “I know they have a ministry of small business and all that stuff, but there has been no active encouragement of that sector and it’s a real shame.”
According to Sunter, the position is not much better in the opposition party.
“I have said to the DA as well – you guys should do more to promote your difference in terms of this particular policy to show that you support entrepreneurs.”
Sunter’s commitment to unlocking the potential is not under question.
“I guess it’s my final mission in life. To try and persuade people that we do have the talent – we do have the talent – but we need some enthusiasm and some changes.”