CAPE TOWN: The World Bank suggests that (formal) small and medium enterprises contribute up to 45% of total employment and a third of national income in emerging economies but in South Africa, only 7% of South Africa’s adult population is involved in running their own business. This is low even when compared to other sub-Saharan African countries, where the rate of entrepreneurial activity is nearly four times higher. With South Africa’s expanded rate of unemployment fast approaching 40%, creating a supportive environment for entrepreneurial activity could easily fast-track economic growth and tackle the unemployment crisis.
The Global Entrepreneurship Monitor ranks good infrastructure and an established banking system as the two largest enablers of entrepreneurship in the country. However, it cites poor levels of educational attainment, inefficient government bureaucracy, high crime levels and rigid labour laws as key constraints to starting up new businesses. Aside from confronting these issues, South Africa also needs to address the current low perception of opportunities to start a business. In our view, the availability of technical and industry-specific training is as important in generating higher levels of entrepreneurship, as is access to financing.
