JOHANNESBURG – South African entrepreneurs are optimistic and resourceful despite the tough operating environment, as economic growth continues to lag population growth, entrepreneurship developer Seed Academy’s ‘State of Entrepreneurship in South Africa’ report showed.
The Seed Academy surveyed 1 000 entrepreneurs mostly in urban areas across the country and explored the theme ‘South Africa: A society in transition’.
Seed Academy director Donna Rachelson said the entrepreneurial ecosystem is tough to navigate, with several entrepreneurs reporting that they do not know how to access available support.
The survey highlighted the tough operating environment with revenues not increasing significantly enough, while challenges have remained the same over the past five years of slow growth, with the added burden of the impacts of load shedding, state capture, corruption, xenophobia and climate change.
The government has made encouraging entrepreneurs one of its main growth pillars, as small businesses create jobs and make South Africa globally competitive, which is why making it easier to do business is a core goal.
South Africa dropped to 84th out of 190 economies in the World Bank’s Doing Business report from 82 in 2018 and 32 in 2008.
South Africa has only implemented one single reform this year and only four in the past five years, so there is a large amount of work still to be done to create an enabling environment for entrepreneurs.
“Access to financing, corruption, inadequate infrastructure and weak governance remain the most problematic factors for doing business in Africa,” the World Bank said.
Mauritius (13) and Rwanda (38) are the only two sub-Saharan African economies in the top 50 on the ease of doing business ranking, but it is the aim of government to get South Africa back into this elite group as it was earlier this century.
According to Rachelson, the key factors to success for entrepreneurs have not varied much over the past few years and include strong personal networks, proper business planning, access to business support services and the ability to present for new market opportunities. In a similar manner, the key challenges have also remained the same and include finding customers, an inability to raise funds, wearing too many hats, a lack of guidance, slow sales, customers paying late and the unpredictability of business conditions.
“Our experience at Seed Academy highlights that business focus is a key factor in success. An interesting finding of the research is that 47% of businesses are engaged in business-to-business products and services, business-to-consumer and business-to-government at the same time – thus making market focus very difficult.”
As with 2018, public sector corruption has been flagged as a key risk factor and appears to add costs to small businesses that tender for business. Rachelson recommended that a multi-stakeholder consultative process be undertaken to improve the entrepreneurial ecosystem, both in terms of the policies guiding entrepreneurs and the current offerings and that this be widely publicised as many entrepreneurs did not know of the multitude of support services that are already available.
“We need greater awareness among entrepreneurs about how to access funding interventions. Both the development finance institutions (DFIs) and private sector funders need to develop appropriate marketing and have accessible online/digital tools to assist entrepreneurs,” she said.
Providing tools for entrepreneurs is one of the aims of the Presidential Commission on the Fourth Industrial Revolution. Google in India for instance has entered the entry-level job search market by revamping its Google Jobs platform.
Google Jobs allows users to create their profile like any other job listing platforms such as LinkedIn in digital payments platform Google Pay. The candidates are required to fulfil their educational qualifications, skills, previous work experience and any additional certification.
The platform, then recommends jobs based on the profile and the skills. Moreover, Google Jobs will also provide relevant soft skills training content through videos and articles to help job seekers prepare for their desired jobs. The platform also allows users to schedule interviews and track applications.
“If changes are implemented to support entrepreneurs, there will be more new entrants to entrepreneurship as a job choice, and the lines between full-time and part-time entrepreneurs will become increasingly blurred. For this to happen, we need economic stability and a dynamic, enabling environment,” Rachelson concluded.