Entrepreneurship can foster an economically vibrant societyComment on this story
Entrepreneurship presents massive opportunities for increasing employment creation and growth in gross domestic product (GDP). The UN reaffirms this view and makes a note that entrepreneurship and job creation can reduce poverty and boost sustained growth in Africa.
Switzerland is among the countries that topped the Global Innovation Index of 2013, and policy is among the key factors that have played a critical role in enhancing entrepreneurship. Unemployment in that country averaged 3.34 percent from 1995 until last year. The current unemployment rate in Switzerland is 3.2 percent, with only 149 000 Swiss citizens currently without jobs.
While policy played a key role in enabling entrepreneurship growth in Switzerland, research conducted by the Unisa Bureau of Market Research reveals that in South Africa policy uncertainty, a poor work ethic and restrictive labour regulations have been constraining the growth of entrepreneurship and new business ventures.
Furthermore, the total early-stage entrepreneurial activity measure shows that of all the sub-Saharan African nations, South Africa has the lowest rating on perceived opportunities for starting a business in the next six months, with only 30 percent of people intending to start a business. This is well below the average of 70 percent for the region.
The latest figures from Statistics SA’s labour force survey show that of the 4.6 million unemployed South Africans, 72 percent are under the age of 35 and 600 000 have a university qualification.
On the other hand, more than two thirds (13.4 million) of South Africa’s current employment is created by small, medium and micro enterprises. This sector contributes 60 percent towards the national GDP. This phenomenon is not unique to South Africa. It is clear that entrepreneurship presents opportunities to create jobs and career paths for young people.
The Institute for Justice and Reconciliation’s findings reveal that 40 percent of young South Africans fear starting a business because they lack the skills and experience to understand the business world.
Key lessons can be drawn from countries such as Switzerland, Spain, and the US. According to the Ernst & Young Group of 20 entrepreneurship survey, the US is ranked as having the best culture of entrepreneurship and access to funding, which indicates that the country tolerates risk and failure, prefers self-employment, and celebrates self-made wealth to a greater extent than the other countries. The US also has the third-best education and training environment.
The Ernst & Young survey reveals that South Africa ranks poorly in terms of access to funding, tax regulation and co-ordinated support. South Africa was ranked sixth out of the 20 nations that participated in terms of access to funding for entrepreneurs, fifth for tax regulation, and eighth for co-ordinated support.
As the Chinese proverb says, it is better to light a candle than to curse the darkness. Therefore, instead of continuing to point fingers and stating the obvious challenges and causes, we should obsess over finding feasible and sustainable solutions. There is a need, and more importantly an opportunity, to effectively groom future business owners by cultivating a culture of entrepreneurship even at high school level.
The government, parents and businesses alike have a role to play to ensure that South Africa starts moving away from a job-seeking mentality to an entrepreneurial mindset. The National Development Plan states: “It is up to all South Africans to fix the challenges faced by our country; it is up to all South Africans to fix the future, starting today; to accelerate progress; deepen democracy and build a more inclusive society and translate political emancipation into economic well-being for all.”
There are many successful initiatives contributing to entrepreneurship. Some are worth learning from, others worth combining and some worth replicating.
As a bank that is highly involved in the communities it serves, Nedbank has various programmes aimed at enabling entrepreneurs to flourish. For instance, the Vote Small Business initiative seeks to galvanise support for small businesses. The bank also partners with sister companies Mutual & Federal, Old Mutual, Masisizane and black business partner Wiphold on the Imbizo Business Acumen Programme, which supports and nurtures the owners of micro businesses.
Introduced on the back of the successful Imbizo initiative, which continues to help ignite economic activity across rural and township areas, the Imbizo Business Acumen Programme is now in its third year and has already seen a noteworthy number of small business owners in Acornhoek (Mpumalanga), Centane (Eastern Cape) and Kliptown (Gauteng) gaining key business skills in the last four months of last year.
* Jake Oosthuizen is the head of black business partners and alternative segments at Nedbank Retail. He contributed this article as part of the “Transformation Dialogues” broadcast on SAfm in a partnership between Business Report and Nedbank. This series tackles different topics and is broadcast every last Wednesday of the month.