State-owned enterprises (SOEs), municipalities, development finance institutions (DFIs) and the leverage provided by policy directives “must enhance industrialisation, which leads to job creation, through the revival of entrepreneurship”, says Nelson Mandela University Infrastructure Development and Engagement Unit (ID&EU) associate Bongani Mankewu.
He explains that, critical to African economies, is the ability to develop a self-sustaining model, known as “autarky”, anchored by entrepreneurship as "a totem of a wide-ranging society".
This, he says, is necessary as a result of the prevailing inability of society to optimise the available institutional instruments towards self-sustenance.
The environment shows an inadequacy to mobilise demand at an institutional level for the entrepreneurship that is capable of wealth creation, Mankewu laments.
He stresses the importance of creating demand, with a focus on judiciously identified sectors of the economy as “linchpins to create spillovers to the downstream of the economy".
Considering that these economic sectors ordinarily require huge sums of investment, Mankewu emphasises that “a refined model is essential to ensuring SOEs, municipalities and DFIs ease the resourcing of megaprojects in selected sectors with the help of academic centres of excellence and other professional bodies".
“Under conditions of adequate demand with supportive industrial and/or entrepreneurial structures of the nascent industries, including small and medium-sized enterprises (SMEs), the commercial risk associated with the entrepreneur is likely eliminated for DFIs to supply finance or funding,” he explains.
He notes that this convergence “can be easily achieved” by exploring the leverage provided by policy directives with the necessary tools, including an enterprise development architecture, being employed in the model.
However, the identification of sector value chains must be clustered to build capacity, Mankewu says. He believes these economic clusters will facilitate the state of readiness for the available markets and the ease to provide institutional support from industry, academia and DFIs.
“These clusters will develop sector-specific models through the help of industry professional bodies and academic centres of excellence.”
It is for this reason that Mankewu says there is a need to mobilise institutional support by the authoritative governing bodies to be part of the business lifecycle of the revival of entrepreneurship through nascent industries and SMEs.
According to Mankewu, the institutional support is needed to refine these businesses to meet market needs, finance and/or funding requirements and ensure general compliance.
“This can be achieved through the very same exploitation of policy directives and professional support from industry bodies and academic centres of excellence,” he notes.
Therefore, critical to the self-sustaining “autarky”, a careful and well thought out mechanism to mobilise demand and eliminate the commercial risk of the nascent industries and SMEs is required.
This model should create an environment that can nurture growth of entrepreneurs within the industrial layers of the identified sectors.
The leveraging of policy directives through DFIs can also make a distinction between funding and financing for both the megaprojects to facilitate demand and the downstream industries to create spillovers that can “champion real value chains in the economy”.
Self-sustenance can in time be achieved with competitive industries being built to access global value chains through a well-defined institutional model, Mankewu says.