State of entrepreneurship in South Africa Essay
State of entrepreneurship in South Africa
The state of entrepreneurship in South Africa is regarded as being below what is necessary to support a consistently high level of economic growth. In the following essay I will be discussing the challenges which entrepreneurs face in South Africa and the importance of entrepreneurship. The state of entrepreneurship in South Africa has many mixed reviews, according to Sanlam’s report on entrepreneurship from 2012 they said “South Africa’s entrepreneurial activity, over the past eight years, has shown vast improvement, however the economy lags behind comparable economies and has not fully utilised the economic potential that is available in entrepreneurial opportunities”(Sanlam, 2012). Where as other sources which are more up to date have shown that South Africa’s entrepreneurial state is far below average “in comparison with other emerging countries South Africa continues to fare dismally in creating new entrepreneurs”(Timm, 2013).
The Global Entrepreneurship Monitor (GEM) is an organisation that investigates entrepreneurship in different countries and does annual reports on the state of entrepreneurship in those countries have painted a bleak picture for entrepreneurship in South Africa saying that “only 14% of individuals intend to pursue a business opportunity within the next three years, well below the 27% average for efficiency-driven countries. South Africa’s established business rate of 2.3% is once again the second lowest in the world, a consistent finding in GEM South Africa surveys. The rate is again also far below the average for efficiency-driven countries (8%). In the latest GEM study, a comparison is made between the youth in South Africa and the youth in nine other sub-Saharan countries: Angola, Botswana, Ethiopia, Ghana, Malawi, Namibia, Nigeria, Uganda and Zambia. South Africa’s rate of perceived opportunities for its youth is 39% – the lowest of the sub-Saharan African countries that participated in GEM. The average for the region is 70% ”(Graduate school of business newsletter UCT, 2013).
South Africa need to address the issues facing the state of entrepreneurship by getting the basics right by fixing the education system. This will ensure that a more able youth has the choice of entering the workforce or starting businesses. The importance of entrepreneurship in South Africa is of huge important, as more countries see that entrepreneurship is a huge economic development which helps economies with a number of factors that lead to sustainability, job creation and a improved GDP. Countries have started initiatives for entrepreneurs to start new businesses and promote economic grow and development within there countries. According to Chinmoy Kumar entrepreneurship is important as it promotes “capital formation, creates large-scale employment opportunities, promotes balanced regional development, reduces concentration of economic power, stimulates wealth creation and distribution, leads to increasing gross national product and per capita income, leads to improvement in the
standard of living, promotes the country’s export trade, induces backward and forward linkages and facilitates overall development”(Kumar, 2012). The challenges that face Entrepreneurs in South Africa are large, the country not only needs more entrepreneurs but they need an injection of foreign investment into the countries economy to stimulate the economy and promote entrepreneurship. “South Africa presents both strong opportunities and barriers to success for local entrepreneurs”( Cheryl-Jane Kujenga, 2013). The challenges that South African entrepreneurs face is a massive unemployment rate which is in a large part based on the lack of education that young South African have been unable to acquire. “The overall environment for South African entrepreneurs is one of relative extremes. It is relatively quick and cheap to start a new business, but getting the necessary registrations and compliance in place is difficult”(Cheryl-Jane Kujenga, 2013).
Entrepreneurs need to be innovative as changes in technology and the way people conduct business is always changing. Entrepreneurs need to back themselves on there ideas, decisions and goals, a lack of self belief will make it harder for the entrepreneur to be successful. In closing I feel that the state of entrepreneurship in South Africa is slowly getting better and that over time there will be more people looking at starting there own businesses, its up to government intervention and awareness to help entrepreneurs start up and succeed. South Africa has infinite potential and great opportunities for entrepreneurs to become successful, its just a matter of time before we see the affects of entrepreneurs and how they are helping the economy we live in.
Cheryl-Jane Kujenga, 4 October 2013 South Africa: a land of extremes for
entrepreneurs http://www.howwemadeitinafrica.com/south-africa-a-land-of-extremes-for-entrepreneurs/31005/ Graduate school of business University of Cape Town, Research newsletter. SA must take entrepreneurship seriously or else… 31 May, 2013 http://www.gsb.uct.ac.za/Newsrunner/Story.asp?intContentID=707 Kumar, Chinmoy, 1 November 2012. Entrepreneurship promotes economic development in South Africa. http://www.networkrecruitment.co.za/our-blog/entrepreneurship-promotes-economic-development-in-south-africa/ Sanlam , 28 August 2012 The state of entrepreneurship in South Africa http://www.fanews.co.za/article/people-and-companies/12/news/1163/the-state-of-entrepreneurship-in-south-africa/12442 Timm ,Stephen. 26 Apr 2013 Global entrepreneurship report puts SA below average http://mg.co.za/article/2013-04-26-00-report-puts-sa-below-average