Entrepreneurship faces many challenges in South Africa, but now, for the first time, a consolidated view of the state of entrepreneurship in South Africa has been collated and published with input from business, academia and government.
First National Bank (FNB) Commercial Banking today launched "The Entrepreneurial Dialogues: State of Entrepreneurship in SA", the first in a series of co-authored reports, sponsored by FNB, aimed at stimulating and encouraging public and private sector collaboration that will result in accelerated growth and the enablement of entrepreneurs.
The report, compiled by the Gordon Institute of Business Science (GIBS), is the outcome of a series of engagements and dialogues held in November last year between policy makers, entrepreneurs, academics and funding providers.
It provides the country with a platform from which challenges and obstacles facing entrepreneurs can be overcome.
Entrepreneurial activity in South Africa still lags significantly behind many comparable countries, and the economic retraction in 2009 appears to have hit the entrepreneurial sector hard. South Africa's Total Entrepreneurial Activity (TEA) has dropped to just 5% - which less than half of India, Brazil and Mexico.
Commenting on the findings, FNB Commercial Banking CEO, Iris Dempsey, says, "Lack of respect and recognition for the contribution that entrepreneurial activity makes towards the country's GDP and for the initiatives that encourage entrepreneurial activity were highlighted as stumbling blocks."
Acknowledgement was given to the FNB-Endeavor partnership, government's Small Enterprise Development Agency (SEDA), the Rupert family, academic institutions such as University of Cape Town, Gordon Institute of Business Science and the University of the Witwatersrand.
"However, the fragmented nature of programmes was identified as a reason for the limited overall impact. Emphasis needs to be placed on high-impact, high-growth entrepreneurs who would utilise the assistance mentioned above more efficiently," adds Dempsey.
The fact that entrepreneurial skill is severely lacking was also debated. Much more needs to be done to nurture entrepreneurial skills in both the formal and informal educational structures. "FNB Commercial is involved in a series of pilot entrepreneurial programmes within schools and universities, but other stakeholders need to get involved and help find innovative and effective ways to address the challenge," says Dempsey.
The country's financial and operating environment was also found to be unsupportive of entrepreneurs. In particular, regulation, policies and access to capital were identified as prohibiting the growth of small business.
Another interesting point arising from the dialogues was the battle that aspirant entrepreneurs in the townships faced with starting a business. While access to capital is certainly an issue, the point was made that many very successful businesses started with only a very good idea and very little money.
The lack of women entrepreneurs in South Africa was also a factor to consider. It was proposed that women that do become business owners often do so for lifestyle reason, rather than a passion for the business and an aspiration to drive it to grow and succeed.
"The paper is a truly inclusive and collective effort from all stakeholders. It is also, "open source", meaning that it will be distributed freely with the intention of reaching everyone that could participate in the common solution.
Entrepreneurial spirit runs deep in the FNB and FirstRand Group and the success of South Africa depends on entrepreneurial activity. FNB Commercial is committed to taking the recommendations and insights gained from the Entrepreneurial Dialogues and developing better mechanism to support entrepreneurs in South Africa," concludes Dempsey.
Endeavor South Africa is a non-profit organisation that supports high-impact
entrepreneurs in 11 emerging countries. "Together with FNB it is our hope that the first edition of this paper will achieve its objectives of creating a useful collaborative platform for South Africans who are interested in enhancing the level of entrepreneurial activity in the country," concludes Endeavor SA MD Malik Fal.