JOHANNESBURG, South Africa – Hipster Sifiso Dlamini turned his passion for sneakers into a small business; but like many South African entrepreneurs, he’s fighting to find financing to expand.
For 6 years, he has followed his heart’s passion by making trendy sneakers that are a hip-hop staple in his country.
“We take our time and make sure that everything is put together,” the 24-year-old said in his workshop filled with spools of thread, pots of glue and scraps of leather.
“It’s more resistant, lasts longer,” he said of his shoes. “I would say it’s magic.”
Dlamini’s clients are largely fashionistas from Soweto, the Johannesburg township that styles itself as the epicenter of South African pop culture.
Shoes from his label Eish Hade — slang for “Oops, sorry” — cost up to 600 rand (US$72), a price that lets men “feel like a king” and gives women a way to walk “sexy, not in a hurry, but just relaxed,” he said.
Orders are coming in, but Dlamini can’t keep up.
He works hard, but he only has two sewing machines and two assistants whom he pays 2,000 rand a month.
Dlamini certainly can’t afford to open even a small shop in downtown Johannesburg, the stomping ground for the city’s creative types.
In 2011, he tried to get a bank loan for 100,000 rand (US$12,000) but failed.
“Obviously I need capital to buy machines. I think people don’t want to believe in this business because it is too small. They just want to see if we are making a profit,” he said.
“People like Sifiso, there are hundreds of thousands (of them) in South Africa,” said Lumkile Mondi, chief economist at the Industrial Development Corporation, a company that helps businesses with loans of the million-rand scale.
“They don’t have capital and it’s a problem. So you finance yourself by your family until you make money… Unless you have an affluent family, it’s difficult,” he said.
The irony is that South African corporations are sitting on cash reserves of more than 500 million rand (even though interest rates are at 30-year lows) rather than investing in new businesses.
Business leaders blame the uncertain global outlook.
Mondi said South African companies are only willing to take a chance on new ventures in technology or financial services.
The government has tried to step in, creating the new Small Enterprise Finance Agency in April, with 1.4 billion rand in funding to loan to small businesses over the next 3 years.
“Government has done its part, but people don’t know about the institutions” created to help them start businesses, Mondi said.
When entrepreneurs approach banks for loans, they often don’t know how to speak in the terms that bankers want to hear — such as market size or commercial plans, he added.
Small businesses employ an estimated 65% of the 13.8 million South Africans who have jobs. Growing small businesses are seen as ways to beat down an unemployment rate mired at around 25%.
South Africa has set a goal to create 5 million new jobs by 2020, a goal that “neither government nor big business could possibly meet,” said Clem Sunter, head of the AngloAmerican Chairman’s Fund, the mining giant’s charitable arm.
“Our goal for 2020 should be to create one million new businesses rather than 5 million jobs,” he said, warning that South Africa needs to stop sitting on the success of its mining past and start embracing new businesses.
“It is the only way to create that number of jobs,” he added.
For now, Dlamini is keeping all his receipts to start formally keeping his books. But he’s still selling his shoes by word of mouth or on Facebook.
He hasn’t hired an accountant or started paying taxes. – Claudine Renaud, Agence France-Presse
There are no comments yet. Add your comment to start the conversation.