Entrepreneurship in South Africa sucks
While 73% of adults in South Africa see entrepreneurship as a good career choice, and half believe they can start a business, only one in 10 (9.2%) go on to do so.
This is according to the Global Entrepreneurship Monitor (GEM) 2015 Global Report, published this week.
In 2015, 62 economies around the world participated in the study including eight African economies – Botswana; Burkino Faso; Cameroon; Egypt; Morocco; Senegal; South Africa; and Tunisia.
Top performing African economies with regards to entrepreneurship are Botswana and Senegal. Both of which exhibit an upward trend year-on-year in terms of the number of adults starting new business 33% and 38.6% respectively.
While not the worst performer, South Africa’s TEA rates continue to be lacklustre at just 9.2%.
Botswana and Senegal also have one of the highest stated rates of entrepreneurial intentions with over 60% of adults in those countries reporting that they intend to start a business over the next three years.
The global average for this across all 60 participating economies in 2015 was 21%. South Africa scores just 10.9%.
High intentions to start a business are generally consistent with high opportunity and capability perceptions – meaning that people are optimistic that they have the skills to start a business and believe that there are good opportunities to do so. They also have a low fear of failure.
In Senegal and Botswana fear of failure rates are less than 20% while in South Africa they are at 30.9%.
But despite the variation in TEA rates, entrepreneurial intention rates and fear of failure rates, the GEM data show a persistent imbalance between the rate of early-stage entrepreneurship in all of these countries and more established businesses.
While Botswana has one of the highest TEA rates in the sample, established business ownership is less than 15% of the TEA level. South Africa’s established business ownership rate is at 3.4% making it one of the lowest out of all economies in the sample.
Mike Herrington, executive director of GEM, said: “Whether these numbers are due to societal values, individual attributes and /or components of the entrepreneurship ecosystem – policy makers need to understand what is causing this so it can be addressed.”
Over 80% of entrepreneurs in factor- and efficiency-driven economies project adding one or more jobs to their economies, besides employing themselves, making them an important economic force.
“In South Africa, there seems to be a growing optimism around entrepreneurship, but we are not seeing this translate into numbers of new and established businesses. It is critical that we get the enabling framework for entrepreneurship right in that country to allow untapped entrepreneurial potential to emerge,” Herrington said.
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