But SA hesitant to take the leap
South Africa’s economy is projected to steadily grow with 2.7% in 2014 and 3.2% in 2015, and according to Kobus Engelbrecht, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, this growth will result in many opportunities for local entrepreneurs. He says that as South Africa’s economy grows, so will the amount of business opportunities available for entrepreneurs to take advantage of.
“South Africa currently offers many new and exciting opportunities for entrepreneurs. However, in order to capitalise on these opportunities, the country’s entrepreneurial spirit needs to be both promoted and encouraged amongst the public.”
The recently released Global Entrepreneurship Monitor 2013 Global report, which measures the levels of entrepreneurial activity between economies, revealed that in the Sub-Saharan African (SSA) region an average of 69% of all respondents believe that there are opportunities available to start a business, 47% have intentions to start a business and 74% are confident in their own skills to start a business.
Engelbrecht says that these figures are extremely encouraging for the growth of an entrepreneurship culture in the region, yet South Africa – ranked as the largest economy in Africa by the World Bank – achieved levels below average in these categories. He says that when taking a closer look at the attitudes and perceptions of South Africa, the report reveals that despite slight increases from 2012, perceptions of entrepreneurship in South Africa remained rather low.
“The 2013 report reveals that only 37.9% (up from 35% in 2012) of respondents believe that there are opportunities to start a business in the country, and 42.7% (up from 39% in 2012) believe that they possess the perceived capabilities to open and run a business. These figures highlight the need for a culture of entrepreneurship to be fostered as opportunities are abound and many individuals possess entrepreneurial characteristics. Awareness around how to capture these opportunities and how to develop these skills just need to be created.”
The report also revealed that SSA had the highest average of Total early stage Entrepreneurial Activity (TEA), which refers to those individuals in the process of starting a business and those running new businesses less than 3.5 years old, when compared to the other global regions.
“While SSA reported an average of 26.6%, South Africa’s TEA is however only 10.6%, and the lowest in the SSA region.”
The report also revealed that South Africa’s established business ownership rate is only 2.9%, which ranks the country last in the SSA region. When comparing South Africa to Brazil, a fellow BRICS economy, the country reported an average of 17.3% and 15.4% for TEA and established business ownership rate respectively.”
While TEA contributes to dynamism and innovation in an economy, established businesses are an important source of stable employment for the economy. Engelbrecht says South Africa’s low business ownership rate is concerning.
“These figures need to remain balanced as while it is important that entrepreneurship is promoted, it is also key to support business growth in order to ensure that SMEs survive the first three year of existence, which are the most risky.”
“Government has acknowledged that small businesses play a pivotal role in job creation and economic growth, and in order to grow both these numbers, investment into small business must be provided. As a result training development initiatives offered by Government, such as Small Enterprise Development Agency (Seda), have been put in place to assist with the development of entrepreneurs and therefore minimise risk.”
He says that the culture of entrepreneurship in the country is growing slowly and it is starting to be viewed as a legitimate career option. “The 2013 report highlighted that 74% of respondents in South Africa, believe that entrepreneurship is a good career choice.
“While many respondents regard entrepreneurship in a positive light, this doesn’t always translate into individuals actually starting a business. Fostering a culture of entrepreneurship in the country and promoting entrepreneurship as a career path, along with support and advice on how to turn an idea into a reality, is important for improving entrepreneurship levels in the country.
“Individuals starting their entrepreneurial journey do however need to be aware of the challenges they may face so that they are prepared for the ups and downs of running a business. Although they may experience bumps along the road, it will be the most rewarding challenge they have ever undertaken,” concludes Engelbrecht.