”WHAT ONE DOES IS WHAT COUNTS NOT WHAT ONE INTENTIONED TO DO” – Pablo Picasso
Here is a simple question can you name one successful Zambian Brand that came as a result of Empowerment Funds?
Here is another one, when you go to the ”Success Stories” page of the Citizens Economic Empowerment Commission page, Can you recognize a single company there or business that you, even as a consumer or Labour market participant has ever engaged with?
Just something to think about…
This weekend the hot topic discussion has been youth empowerment funds specifically the launch of a K470million mega youth empowerment fund on Saturday 15th of August 2020, which was officiated by President Lungu himself. Now, I must categorically state that I do not take joy in the failures or imminent failures of President Lungu and his administration because I believe that when you are on a plane you HOPE FOR THE PILOT TO SUCCEED. However, should the pilot be showing signs of reckless endangerment, then one has to call it out for the safety of the passengers. Unfortunately looking that the way this has been put together the government is better suited taking the same K470 MILLION pilling it together, pouring gasoline on it, and lighting it on fire as a bonfire because at least it will serve one night of use as warmth. I can confidently say the economy and the people will derive no value from this fund at all.
As well-intentioned as Government Managed Empowerment Funds Tend to be, they always fall short because of the few simple inherent flaws in their structure:
- Inefficient Deployment and Dispensation of Capital
- Use of other people’s funds and not personal capital creates a bad incentive for excessive and miscalculated risk-taking
- The Failure to comprehend that +67% of the critical support that early-stage entrepreneurs need is Non-Financial.
According to a combination of the 2018 Citizen’s Economic Economic Empowerment Fund Annual Report and 2018 Auditor-General’s Parastatals Report approximately K300m has been deployed in business empowerment loans and 50% of that is sitting as non-performing loans leading to the statement that the companies are either failing or non-functional. It looks like this new iteration of empowerment funding is simply doomed to follow in the graveyard of its ancestors and predecessors.
The truth is no matter how much money is pumped into Government Empowerment Funds their failure to succeed is driven by structural factors not financial ones.
If you have ever had the chance to watch ”SHARK TANK” or its alternative ”Dragons Den”, you will see something remarkably different and you will see a much higher success rate with Shark Tank Businesses than any Government-Backed Empowerment Funds anywhere in the world.
The website Company Inc did an analysis of Shark Tank Companies that were invested and found the following outcomes;
– $143million in capital investment has been deployed
– 600 companies have received investments
– 56% of Applicants to Shark Tank Recieve investments
– Investments are experiencing significant revenue growth
– 75% of businesses are profitable
– 95% of companies are Operational
Shark Tank’s success is based on a few simple factors;
- THE SHARKS ARE INVESTING THEIR OWN MONEY and this leads them to invest wiser, more carefully and objectively and offer greater support to guarantee their returns. When an investor is using their personal money they tend to be more objective and less corrupt.
- THE SHARKS ARE SUCCESSFUL ENTREPRENEURS THEMSELVES so having gone through the entrepreneur’s journey themselves, they know how to spot a good business and talented and passionate entrepreneur and can offer mentorship and guidance.
- THE SHARKS OFFER MUCH MORE THAN MONEY – When you get a shark you don’t just get the money you get a partner who sits on your board and offers a lot more than money. They offer mentorship and guidance, business structuring, business systems, new business relationships, new markets, supply chain renegotiation, and Valuable Brand endorsement. Venture capital studies and analytics show that most companies in the early stages are valued by management, ideas, and social/relational capital while total monetary capital is only valued at a maximum of 35%.
These are all factors that are missing from the Zambian Government Empowerment Funds which tend to serve more as a political sideshow than an investment vehicle.
The usual Lazy response in Zambia will be that Shark Tank is American and this is Zambia and that would be the easiest way to dismiss success while subtly state that one has low expectations of Zambia [which is quite racists to be honest] and Dismissing Shark Tank’s and Dragon Den’s success in Canada, Japan, England, South Africa, and Australia.
When Asked what Shark Tank Investors are seeking in an Entrepreneur they stated the following:
- Passionate and Determined Entrepreneurs [THE MOST IMPORTANT FACTOR]
- Growing Sales or visible potential grow sales
- A solid business model and value proposition
Instead of just being a nagging citizen I would like to offer a possible solution because I was once told it is easier to find consensus on Solutions than it is to complain about a problem. Therefore I would say the government of Zambia is better served to support the following initiatives:
- A reduction of Regulatory requirements for startup enterprises and guidance on micro standards, for example, a micro food processors guideline that is easier to comply with
- Removal of Regulatory Bottlenecks giving problems to startups such as decentralization of product testing from ZABS to private hospitals
- Raising of the Turnover Tax Threshold to K10 MILLION in annual revenue
- Allowing Young Entrepreneurs to access loans equivalent to 35 percent of their Personal cumulative NAPSA contribution from Private Banks with NAPSA Deposits as Guarantees
- Â Incentives the Development of private industrial incubators and hubs that train people on Business Model Development, Value Models and Brand Models
- Introduce Seminars to young people on how to startup business in a lean fashion and fly in speakers and entrepreneurs from around the world to talk to them and teach them
- Â Support for Business Mentorship program that incentivizes successful local entrepreneurs to mentor young entrepreneurs
- Turn PACRA into a CLOUD BUSINESS SYSTEMS HUB where people can access cheap-cloud bases interconnected business systems.
- Encourage the reading of Business Books by successful brands from around the world to help them understand and possibly get inspired.
- Encourage young people to start businesses and enterprises in areas they are passionate about.
In a talk about why government investment doomed Professor Burton Folsom of Hillside College stated the following-
”Sustainable Economic Growth Comes from entrepreneurs risking their own money and not from politicians risking Taxpayers money”
Watch the full Video on the PragerU Youtube Channel
I agree entirely. Without even asking them, I can confidently say that Edgar Lungu has consulted none of the experts available at his beckoning on this issue of empowering the youths of our country. And they would never ever recommend wht he is doing. This is the problem of thwarting policy debate, discussion and implementation while u hv time. Lungu spent the time he had flying around the world at great cost to the public purse and campaigning in endless by-elections. Real work of service delivery was neglected.
I don’t understand these theories.
I believe that money being worsted for buying votes from youths can be given to women who already have vegetable had to buy agricultural inputs.
Video is about America. You always want to copy.
This is not youth empowerment this panic buying of youths becoz they have been recognized as the biggest block of would be voters why so suddenly and towards elections.
This is not a youth empowerment fund but a vote buying fund bcoz youth have been discovered as the would be biggest voting block so ECL is scared of what they would do why all a sudden and towards elections it is youth this youths that .
imwe who is that pf cadre who was snitching on a police officer, ukuzala ba officer ati balanda ati #TAKAPITE.
No. 8 baba, the only recommendation in relation to PACRA is that they need to come out from the shadows and start taking a proactive role in intellectual property development by conducting seminars in institutions of higher learning. You can’t build a proper entrepreneurship ecosystem minus patents. Brands are built around patents. Check the position of Zambia on the global innovation index, I doubt if we are even there and yet we talk of industrialization. PACRA has to split if anything with one arm handling intellectual property completely. No VC will invest in a ka ntemba.
Very noble undertaking for a caring government , but I’m very worried that 90%of the targeted youths simply don’t have neither the in depth expertise, experience nor the burning passion to run any form of business. I would have been as happy as I’m grateful if only the government had given this exercise a “must win (succeed) approach” by holistically providing for key business success requirements. May be let’s Haut this until we identify the competent beneficiaries
But you are right that Edgar just wasted his time and money to launch this fund. The president should be channeling his energy in spearheading entrepreurship hubs around the Country not giving handouts. Entrepreneurs are drivers of growth and development not govt. Explore areas like biotech but first you need clusters of like minded, young, energetic and ambitious go getters. Give them a cathedral where they can congregate. But as usual with Edgar politics is the only prism through which he views everything. Master campaigner, terrible manager of public assets.
I am a youth but a very sharp one. Do you think youths in Zambia don’t think, the youths have languished in Zambia for 9 years of your rule and in the ninth year you discover suddenly that there are elections in the coming year and you start dangling things. Sorry you have fished a dry one
Ask yourself how fizzle the promise of 500,000 jobs to the youths never got delivered. Either Zambians are dull or Lungu is too clever for the lot of us, we need to hold to account what a leader promises or dismiss him outright.
Lungu’s so called Youth Empowerment Fund is nothing but a bribe to try and buy Youth Votes for next year’s election. K470 million divided by 150,000 Youth is equal to K3,000 each. Now you tell me. What kind of meaningful business can someone start with that paltry sum of money? Hello? This is clearly a bribe. What the youth need to do is take the money, but vote AGAINST LUNGU and his fellow PF criminals, who have had no time to care about the Youth for the 9 years they’ve been in power, and have just now realized that the Youth plan to turn up in large numbers next year to vote them out. Corrupt Lungu and his minions are criminal failures who should be voted out next year and thrown in prison where they belong.
You cannot please or satisfy politically charged opposition cadres masquerading as youth. These are paid to criticise the ruling party irrespective of what is done for them. So we don’t take such clowns seriously.
Thank you for your article which informative and substantive.Your suggested initiatives are on point.While I would urge the youths to get the funds and invest in viable businesses chances of failure of almost guaranteed.Many of the youths have never engaged in aspects such as network marketing,marketing intelligence,neuro marketing.Therefore starting up a business in the current environment is like walking in a storm with your eyes open.The most important gift to youths is business skills relevant in the modern world.
Good article but this advice will fall on deaf ears. Remember RB’s mobile hospitals! 350m USD flashed down the toilet for 2011 election campaign reasons. RB was told to build permanent mini hospitals in rural areas. His answer: Nindalama zanyoko? The country still has to pay the loans for the dilapidated mobile hospitals lying on scrap yard somewhere in Western province while RB has had his permanent retirement home built and getting his retirement wages and fringe benefits. Zambian politicians are a disaster. People need to read the violent post independence history of Ghana and Nigeria to understand where the are taking this country to.
Prophet of doom.. preach it. This is the problem of always looking for the west/USA for validation. Inferiority complex is a disease.
Indeed KZ – nobody takes the corrupt PF regime of Edgar China Lungu seriously. In all the years they are in power the economy has gone down the drain, there are more potholes in the roads and more youths are unemployed. Only Edgar China Lungu’s cronies – such as you – have profited from the corrupt leadership. Not for long though: 2021 is around the corner and the dungeon is deep!
Apa peve bailasha ba Kaizer namuzake
Trying to corrupt the youth now won’t work at this late hour. Where were you all these years?
Hamiles hamulenga, come 2021 you and your tribal leader will cry again. Remember how you ran to courts only to be dumped by your lawyers Haha you forgot easily.
Hamiles hamulenga, come 2021 you and your tribal leader will cry again. Remember how you ran to courts only to be dumped by your lawyers Haha you forgot easily. This time we will ensure that you are beaten air bad that you will all retire from politics
Hamiles hamulenga, come 2021 you and your tribal leader will cry again. Remember how you ran to courts only to be dumped by your lawyers Haha you forgot easily. This time we will ensure that you are beaten air bad that you will all retire from politics. Don’t say kaizar never told you so
Youths take the money as it is rightfully yours but VOTE WISELY…ok !
Interesting read, hopefully things will take a turn for the best.