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ENTREPRENEURSHIP: Disappointing Entrepreneurship Rates Weaken SA Economy


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The most recent Global Entrepreneurship Monitor (GEM) report highlights the alarming state of entrepreneurship in South Africa. Although the GEM’s measure of total early-stage entrepreneurial activity shows that South Africa’s rate in 2011 (9.1%) remained constant (8.9% in 2010), this rate was, again, far below the average of comparable economies around the world.

Septi Bukula, Director of the 2012 International Small Business Congress (ISBC), believes that the biggest problem facing entrepreneurs in South Africa is market access. “The structure of the South African economy, with the dominance of large firms in virtually all sectors of the economy, is a major barrier for entrepreneurs, which is why strong competition policy is a necessity. Other challenges include late payment and, in some instances, a lack of appropriate financing mechanisms. Entrepreneurs and SMEs also face internal challenges due to weak financial management.”

While the Government already offers a number of support programmes aimed at small businesses, continues Bukula, more needs to be done. “First and foremost, the education system needs to be steered much more in the direction of inculcating a spirit of enterprise and entrepreneurship among learners at all levels. The government also needs to work relentlessly on creating an environment where it’s easy for entrepreneurs to start, grow, downscale or close a business. A culture that is more welcoming of entrepreneurship and entrepreneurs needs to be developed through measures such as celebrating entrepreneurial success.

“From a macro-economic point of view, governments need to create a monetary policy that ensures a low and stable inflation environment, a stable exchange rate, and affordable interest rates. The economy should also produce the right kind of skills - both technical and entrepreneurial.”

It is a well-established fact worldwide that small businesses, especially new and growing companies, create the most jobs in any economy. With its high rate of unemployment, South Africa needs to focus much more energy and effort on fostering a higher level of entrepreneurship. African countries that are taking the lead in entrepreneurship include Ghana and Angola, while amongst our BRICS counterparts, Brazil and China are leagues ahead of South Africa in their entrepreneurial endeavours and support mechanisms.

Bukula advises would-be entrepreneurs to look for business ideas within their own communities. “Ask yourself - what problems are people facing‘ What solutions do they need‘

One of the most practical ways in which an entrepreneur can enhance their likelihood of success is to interact with experts in the field, as networking with like-minded individuals gives fledgling entrepreneurs and other parties the opportunity to exchange ideas on approaches, experiences and lessons learnt in implementing policy measures and support programmes.

Catherine Swift, Chairman of the Canadian Federation of Independent Business (CFIB) and the international President of the ISBC, explains that the Congress is a unique international forum for discussion of public policy and practices to promote small business domestically and in a global context. “The fact that Congresses are attended by such a wide variety of participants – policy makers, advocates for small business, academics, government representatives and business owners – provides a great opportunity to share experiences about which small business policies and practices have worked well – and which have not – in the many ISBC member countries around the world. The focus of ISBC Congresses has always been very business-oriented, such that participants will come away with practical ideas to apply in their domestic economy.”

As this year will be the first time in the history of the ISBC that it is held on African soil, it will be a rare opportunity for South African entrepreneurs to engage with local and international experts in their fields. Given that the prevalence rates for established business owner managers remains extremely low in this country, with a rate of just 2.3% in 2011, there has never been a more pressing need for all those involved in entrepreneurship – from SMEs to government bodies – to come together to re-commit themselves to fostering growth in this important area.

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