DA’s plan for SA entrepreneurs
Democratic Alliance (DA) shadow minister of finance, Tim Harris says that, while entrepreneurs are positive about starting up businesses in South Africa, the country still compares poorly to other nations where entrepreneurship is thriving.
“Low rates of new business ownership and low survival rates for new enterprises show that South Africa is not yet a place where entrepreneurs can thrive,” Harris said in a statement.
However, citing The Global Entreneurship Monitor (GEM) Global Report for 2013, the DA MP noted that South African entrepreneurs are “still upbeat” about opportunities to start a business in the country.
According to the report, 43% of South African respondents believe that they have the skills and knowledge to start a business – up from 40% in 2012 and 35% in 2009.
Further, 68% of entrepreneurial businesses indicate that their product or service is new (versus 57% in 2009 and 66% in 2012), pointing to increased innovation in the market.
“Whilst these indicators are improving, they still remain too low to ensure that small businesses can fulfil their potential as job-creators,” Harris said.
“They also compare poorly to entrepreneurship indicators in Sub-Sahara Africa and for other countries where entrepreneurship is really contributing to economic growth.”
Tim Harris
Of particular concern are the following areas, Harris said:
- The percentage of new entrepreneurial businesses that expect to employ at least five people five years from now has decreased from 32% in 2012 to 28% in 2013;
- The informal investment rate (percentage of respondents who have provided funds for a new business, started by someone else, in the past three years) is still very low at 2%;
- Entrepreneurial intention rate (those planning to start a business within three years) remains very low at 13% (33% below the average for Sub-Sahara Africa at 46.8% and just more than a third of the average for Latin America at 32.5%);
- At 38%, the perceived opportunity rate is the lowest in Sub-Sahara Africa (average for the region is 68.9%, Brazil is at 50.9% and Chile at 68.4%);
- At 3%, the established business ownership rate is less than a fifth of the regional average (which is 15.4%);
“The bottom line is that too few South Africans are planning to start up an entrepreneurial business and too few of those businesses that are started survive,” Harris said.
DA’s plan of action
Harris said that the DA’s plan of action would be best to combat these concerns, by:
- Establishing Opportunity Centres where small businesses can access support and conduct all their business with government;
- Rolling out small business incubators
- Giving small business owners an Opportunity Card that they can use to access free or discounted training, business support services and business advisory services.
- Working to reduce the red tape
- Making it easier for small businesses to win government contracts by breaking up big tenders into smaller contracts;
- Establishing a National Venture Capital Fund to provide initial funding for start-ups and early-stage businesses;
- Recognising and embracing the informal sector and its role in job creation.
“The GEM Report shows that government is not doing enough to support entrepreneurs. A national DA government will put small business at the centre of its economic growth plan,” Harris said.
More on entrepreneurship
DA wants to fund start-ups in Gauteng
SA’s dismal entrepreneurial record
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