Stimulating entrepreneurship is the key to igniting economic growth and job creation in South Africa. However, when compared to other global economies, the country’s entrepreneurial ranking is slipping and is significantly lower than what would be expected from an economy like South Africa’s.
This is according to Nimo Naidoo, Project Manager of the Sanlam / Business Partners Entrepreneur of the Year ® competition, who points to the 2012 Global Entrepreneurship and Development Index (GEDI), which measures a country’s entrepreneurial strengths and weaknesses, which reveals that South Africa’s global ranking has fallen from 39 in 2011 to 45 in 2012.
“Historically, entrepreneurship serves as a catalyst for economic growth and national competitiveness, and for an emerging economy such as ours this ranking is simply too low,” says Naidoo.
According to the latest GEDI rankings, of the 79 countries surveyed, South Africa has in the space of a year lost ground on nations such as Colombia and Peru, which have significantly smaller GDPs. “Losing pace with smaller nations is troubling, especially when the quality of South Africa’s commercial infrastructure should set it apart from other comparable economies.”
Naidoo says that most economically competitive countries in the world have significantly higher levels of entrepreneurial activity. “The way a nation perceives and supports this group defines a country’s culture of entrepreneurship and additionally, indirectly influences its economic growth. According to the 2010 State of Entrepreneurship in South Africa conference, South Africa’s society has a culture that neglects entrepreneurial activities, especially individuals who have failed in the past.
“For example, in the United States entrepreneurs are encouraged and respected and in 1790, 90% of the American population were self-employed entrepreneurs. It is commonly believed that this culture laid the foundation for building one of the world’s largest economies.”
Citing a more recent example of a growing economy sustained by entrepreneurial activity, Naidoo points to latest data gathered by Endeavor Brazil, which reveals that SMEs are responsible for 96% of the jobs in Brazil and represent 98% of all companies in the country.
“Rapid job growth stems from rapidly growing companies. Therefore, only when fast-growing new companies offer new products and services will developing countries such as South Africa be able to provide enough jobs for its rapidly growing population.”
She explains that promoting a culture of entrepreneurship is the responsibility of both the public and private sector. “It is essential that each party works together to create an environment within society that serves as a sustainable platform for a positive entrepreneurial culture to grow. Government also plays an important role in ensuring that policies and programmes are aligned with fostering entrepreneurial growth. However, it is important that the private sector satisfies the entrepreneurial demand by providing vital elements, such as financial support, research and development.”
Naidoo says that an initiative such as the Sanlam / Business Partners Entrepreneur of the Year ® competition, which promotes entrepreneurship in South Africa by celebrating entrepreneurial excellence, is crucial in the development of this sector. “It is important to showcase successful entrepreneurial role models in order to inspire future entrepreneurs that can actively contribute to growing our economy,” concludes Naidoo.