Entrepreneurship can be big business in South Africa

2016-10-17 19:31

Entrepreneurship should be big business in South Africa. There are four reasons for this. Firstly, as seen elsewhere in the world,  entrepreneurship has been and continues to be a driver of economic development and a generator of net job growth. Secondly, technology is reducing the level of capital and operating expenditures that a typical entrepreneur requires to be in business.  Thirdly, there are numerous "pain points" experienced by government, businesses and households that can be turned into entrepreneurial opportunities and ultimately, sustainable businesses.  Lastly, given high unemployment rate, 26.6% and low levels of economic activity, this is where the focus should be

Whilst one notes good progress made on funding, non financial support etc., the sad reality however, is that entrepreneurship is not big business in South Africa as yet. As an example, the 2015/16 study conducted by the Global Entrepreneurship Monitor, GEM for short, reports low levels of entrepreneurial activity, especially when compared with countries in the African continent such as Senegal, Cameroon and Botswana and when compared with other countries all over the world with comparable economies. For starters, perhaps more intriguing, South Africans, relative to the above countries, see fewer entrepreneurial opportunities around them. In addition, they do not see themselves as having the requisite capacity to take advantage of the few opportunities that they do perceive.

What is the root cause? As a start, we need to change the context. Much as the context is slightly more benign to "would be entrepreneurs" today than it was in the past, the reality however, is that there is still a long way to go. As an example, up until now, although this is changing, our education system was largely geared towards producing employees and not entrepreneurs. In addition, it is still fairly difficult to start a business in South Africa. As a case in point, in the latest Ease of Doing Business Study, South Africa ranks 73 overall, (-4 pts versus the previous study) and 120 out of 189 economies in terms of starting a business.

Over and above this, most market structures in most industry sectors are dominated by 4 to 6 players and their historical embedded ecosystems, as such are tough to crack open. In some cases, South African corporates including some state owned enterprises, have such an unbelievable reverence to foreign owned or domiciled companies even in instances where there is no noticeable difference in performance or quality between local and foreign owned companies. Do not get me wrong, I do not for one minute, suggest that we should be inward looking, but I think we owe it to ourselves to first look at what we have domestically, before we invite international players. Even when we do invite international players, we should put a premium on skills transfer and use the occasion, pretty much like the Chinese did, to build new sectors and capabilities that we can later export to the world to earn us much need foreign currency.

Lastly, we should build and nurture a culture of problem identification and problem solving as well a culture of questioning in every sphere of life. More than this however, we should not stop at that, we should build requisite knowledge and skills about building solutions and taking to those to market profitably, irrespective of type of market or profit. In other words, profit does not have to be in the accounting sense only, but could also a common good. It could be as an example, finding a lasting solution to flooding in a township street, as a result of inexplicable closure of storm water drains.

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