Wednesday, 24 April 2013

SA’s entrepreneurial spirit is languishing

The entrepreneurial spirit fostered by the 2010 soccer World Cup has faded and is now at a new low, which the UCT Graduate School of Business attributes to the loss of an innovative spirit and to a “complicated cocktail of problems”.
Mike Herrington, the executive director of the Global Entrepreneurship Monitor (GEM), said this cocktail included the poor education system, difficult labour laws, crime, government corruption and nepotism and generally unfavourable conditions for people starting a business.
According to research, total early-stage entrepreneurial activity (TEA) dropped to 7.3 percent last year from a high of 9.1 percent in 2011. This represents almost a 20 percent drop over the year and is the lowest level in four years.
“Any impact [on entrepreneurship] of the soccer World Cup is gone,” he said, noting that there had been a boost in entrepreneurial activity, particularly of small business.
The survey was conducted in 69 countries including 10 sub-Saharan African ones. The primary measure of entrepreneurship, the TEA, indicated the prevalence of business start-ups and new companies among the 18- to 64-year-old age group.
“South Africa needs a wake-up call. If the climate for entrepreneurship is not improved, then in a very short period of time, South Africa will no longer be the number one economy in Africa – Nigeria will overtake it,” Herrington said.
This view is supported by GEM research, which shows the pool of intentional entrepreneurs is only 14 percent – far below the average of 53 percent among the 10 sub-Saharan African countries. For example, in Angola and Malawi it is 70 percent, in Botswana 72 percent and in Ethiopia 24 percent.
Of particular concern was that only 5 percent of South Africans in the 18- to 24-year age group were involved in “early-stage entrepreneurial activity”.
One of the biggest impeding factors on this activity was government policy, such as registration of a business. While there were improvements, delays “are still common and although finance exists for start-ups, this was not readily available from the public and private sectors”.
The study used 38 national experts to find solutions to the innovation deprivation, including Tarisai Mchuchu-Ratshidi, the Young in Prison director; Neren Rau, the SA Chamber of Commerce and Industry chief executive, and Catherine Townshend, the Endeavor South Africa managing director. Suggestions included beefing up market dynamics, research and development, and education.
Source: Business Report

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