How many entrepreneurs are there in South Africa? – Reflections on the launch of the South African 2013 GEM Report

How many entrepreneurs are there in South Africa? – Reflections on the launch of the South African 2013 GEM Report

photoLast week was the South African launch of the Global Entrepreneurship Monitor (“GEM”) 2013 Report.  Happily there were some positive trends noted in the report, but in total it again served to highlight the extent of the challenge if we wish to move South Africa to the full potential of a truly entrepreneurial nation.  And while the quality of our education remains one of the biggest stumbling blocks to achieving this dream, there is a more immediate opportunity to drive a concerted national effort towards building a more entrepreneurial culture in our country.

Over the last 17 years GEM has grown to be the largest annual research report on entrepreneurship in the world with the 70 participating countries representing 90% of the world’s GDP. GEM is designed to assist in understanding the overall level of entrepreneurial activity in a particular country as well as being able to make comparisons between different countries. In recent years the research model has been refined to give a better picture of the entire entrepreneurial pipeline starting with potential entrepreneurs to those reporting entrepreneurial intention before the final hard figures of entrepreneurial activity.  This gives a much more holistic picture of the total entrepreneurial pipeline.

Having attended these GEM launch events for a number of years, there was reason to be encouraged this year.  Firstly the event was well attended, which has not always been the case despite the centrality of entrepreneurship to our economic future. Secondly there was genuine government involvement from the Western Cape Government, but more importantly government involvement understanding its role as facilitating the context for entrepreneurship rather than trying to be the main player. And finally the important measure of adult Total Entrepreneurship Activity (“TEA”) had increased from 7.3% in 2012 to 10.6% in 2013¹. This is the measure of all adults in the population that are involved in early stage entrepreneurship.

But these positive developments are largely overshadowed by three much bigger entrepreneurial challenges faced by South Africa.  Firstly despite the 2013 increase, there remains the challenge of lack of entrepreneurial quantity: South Africa is the lowest of all Sub Saharan countries participating (Angola, Botswana, Ghana, Malawi, Nigeria, Uganda and Zambia) who have an average TEA rate of nearly 27%.  Part of this is because all other Sub Saharan countries are classified as factor driven economies (who generally have higher levels of less ambitious entrepreneurship) while South Africa is an efficiency driven economy, but the gap is stark, with the next lowest TEA rate being Botswana at 20.9%.

The quantity challenge then extends to a quality challenge for the quality of South Africa’s new businesses remains a concern, with the discontinuance rate increasing to 4.9%.  So while 10.6% have embarked on entrepreneurial activity, nearly half that number (4.9%) have had to exit from running a business.

But perhaps the most concerning challenge is the weakness of the South African entrepreneurial pipeline, particularly when considering youth (18-34 years old).  The pipeline of potential youth entrepreneurs in South Africa (those that believe they have both the capabilities and perceive opportunities) is 25%.  This is in comparison to a similar pipeline in Sub Saharan Africa of 60%.  Our starting point for potential entrepreneurs is 40% the size of our Sub Saharan contemporaries! There are many reasons for this but the most significant is, as eloquently stated in the GEM report, that the quality of education is “choking” entrepreneurship.  South Africans do not believe they have the capabilities largely because our education system has not given them the capabilities.

The second contributor to our diminished entrepreneurial potential is a lack of perception of opportunity.  Part of the response to this is to build a greater entrepreneurial culture.  And while progress is being made on this front in South Africa with 74% of South Africans believing in 2013 that entrepreneurship is a good career choice, up from less than 50% ten years ago, there is much more work to be done. To illustrate this weakness in entrepreneurial culture, one of the most powerful opportunities for building national entrepreneurial culture is the annual Global Entrepreneurship Week. At this event last year 1.6 million people participated in Brazil.  In South Africa the number was 1,800.

Yet the most poisonous impact on our perceptions of opportunity has been our growing reliance on government. In answer to the statement, “Where I live, working for the government is the best way to earn a good living” a staggering 67% of South African youth agree with this statement. If our youth continue to see government as their aspiration in such large numbers, we will never achieve our entrepreneurial aspirations as a country.

So what does this all mean?  In simple terms we need to start with what we can control. And the first step is at the beginning of the entrepreneurial pipeline, looking at perception of opportunity.  The level of perceived opportunity is closely related to the level of entrepreneurial culture. How can we drive a movement towards a greater entrepreneurial culture? First on the agenda is that the scale of the South Africa’s Global Entrepreneurship Week activities needs to grow exponentially.  What other suggestions do you have? I look forward to joining you in this entrepreneurial revolution.  I can’t wait for the day when I leave the South African GEM Report launch without a mild dose of depression!

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¹Although there was surprisingly little attention given to the fact that this almost unbelievable increase of 45% in one year, when applied to the 2011 South Africa Census population data would mean that there were around one million new entrepreneurs starting in South Africa in 2013. Did we miss this in all the job loss headlines of the last year? Adcorp’s respected Employment Index suggested that we lost around 170,000 jobs in 2013. Not a great return from the suggested million new entrepreneurs. Given this level of year to year fluctuation, it is probably better not to be fixated with the current year percentage but to look at the long term trends in TEA rates which in South Africa have shown a gradual increase from around 5% in 2003 to around 10% ten years later.

Active Citizens Wanted

Active Citizens Wanted

Allan Gray Orbis Foundation-12This year, we celebrate 20 years as a democracy.  On the 7th of May 2014, South African citizens of a voting age are expected to exercise their democratic right to vote in the national elections.  A right bestowed upon each and every citizen of our country, but a right bestowed to some for the last 20 years only.

The right to vote has come to all of us as a result of the great sacrifice of those who went before us, and believed with conviction, in a better South Africa for all.

In his famous speech from the docks which he gave on 20th April 1964 before being imprisoned, Nelson Mandela said the following: “During my lifetime I have dedicated my life to this struggle of the African people. I have fought against white domination and I have fought against black domination. I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities. It is an ideal which I hope to live for and to achieve. But, if needs be, it is an ideal for which I am prepared to die”.   

We hope never again to encounter a period in our country’s future, whereby people would need to lay down their lives in order to achieve the ideals that serve the common good for all.  But for this to never happen, each and every one of us has a role to play as citizens within a democracy and as people who aspire towards upholding that which serves the common good for all.

Citizenship is described as “the status of a person recognised under the custom or law of a state that bestows on that person (called a citizen) the rights and the duties of citizenship. That includes the right to vote, work and live in the country and the right to return to the country, besides other rights.”

While we often spend time debating the rights bestowed upon this person (called a citizen) there is a tendency to neglect the duties associated with citizenship which each and every citizen has an obligation to fulfil.  Peter Parker’s (aka Spiderman) Uncle Ben , with apologies to Voltaire, is often quoted as saying that, “With great power, comes great responsibility.”

The point is that there is no freedom without an associated responsibility that goes with it.

A number of our Candidate Fellows and Allan Gray Fellows will be voting for the first time in their lives.  A responsibility which I hope each and every one of them will treat with the gravitas it deserves.

Earlier this year, Candidate Fellows were invited to explore the realms of active citizenship with Foundation Trustee, Professor Njabulo Ndebele and what this meant for each of them.  During this time, Candidate Fellow Richard Bryce got the idea that he needed to do something to engage his fellow students on campus in order for them to make an informed decision when going to vote on the 7th of May.   Richard set about seeing that his idea moved into action and rallied the necessary permissions, individuals and societies on campus in order to get as many students involved.  This has culminated in a number of workshops and dialogue sessions taking place across the campus at the University of Cape Town on 26 and 27 April.  And this, in essence, is what active citizenship is all about – understanding that as an individual, you have a role to play in your country and that you have the responsibility to ensure that you bring others along with you.

While we have come far, our journey has much further to go, and we will not make the required progress without active citizens.   It was Theodore Roosevelt who said that “The first requisite of a good citizen in this republic of ours is that they shall be able and willing to pull his own weight.”  Let us all be willing to pull our weight in whichever way we can.  Thank You Richard, Allan Gray Fellows and all other young South Africans who already feel a responsibility towards pulling their weight.

As you contemplate going to exercise your voting right on 7 May, I also urge you to think about your responsibility as a citizen, beyond just voting, as I leave you with these profound words from our Constitution.

We, the people of South Africa,

Recognise the injustices of our past;
Honour those who suffered for justice and freedom in our land;
Respect those who have worked to build and develop our country; and
Believe that South Africa belongs to all who live in it, united in our diversity.
We therefore, through our freely elected representatives, adopt this Constitution as the supreme law of the Republic so as to —
Heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights;
Lay the foundations for a democratic and open society in which government is based on the will of the people and every citizen is equally protected by law;
Improve the quality of life of all citizens and free the potential of each person; and
Build a united and democratic South Africa able to take its rightful place as a sovereign state in the family of nations.

May God protect our people.”

How else can we be genuinely active citizens?  Let me know your suggestions below. See you at the polls on the 7th of May!

Douglas Hoernle – Pursuing Excellence for the Greater Good

Douglas Hoernle – Pursuing Excellence for the Greater Good

Doug HoernleListening to Douglas Hoernle share his journey is like climbing aboard a high-speed freight train; you are at once aware of its weighty cargo and the speed at which it’s moving. Doug is a driven and highly motivated young man who is always on the move and always busy with a next big venture.

His entrepreneurial flair can be traced back to primary school where, at the age of 10, he sat daydreaming in Grade 3 Maths class about starting a business before leaving high school. And that is exactly what he did. He made his first big profit selling rubber bracelets to his mates at St Stithians College. They were an emblem of school spirit and bore the school colours: white and blue. It was Doug’s first taste of entrepreneurship, but his parents made sure that it would also be his first taste of social entrepreneurship. They encouraged him to donate his profits to charity. He ended up doing a little bit more than that. With the help of some friends and Habitat for Humanity, Doug built a house for a woman in Ivory Park, a township outside Johannesburg. The experience left an indelible mark and the joy of making a difference is still what motivates him years after.

All Doug wanted to do was start businesses after high school. He gave no thought to studying further until, of course, his paths crossed with the Foundation. He vividly recalls the image of a snowboarder jumping off a mountain in the Foundation’s video presentation. This idea of entrepreneurship as a life of taking risks and embracing thrills resonated with him and he applied for the Fellowship.

Once he was awarded a Fellowship, he elected to study Business Science Finance (Honours) at UCT. Set on making the most of his time in the Winelands, he signed up for wine-tasting courses and became involved in the wine society at UCT. In time he became the go-to guy on campus for affordable wine with personalised labels and glasses and soon after that he launched the City Bowl Wine Market in Cape Town. His passion for the finer things in life – food, wine and spirits – continues to inspire him. He is currently in the process of setting up a craft distillery for producing craft South African gin.

The businesses Doug started during his varsity years and his involvement with the Fellowship laid the foundation for the future he was busy shaping – a future that sees him starting many more small businesses and using the stories of these startups to inspire more young South Africans to become entrepreneurs. He attributes a big part of this shaping process to his mentors, Pug and Joubert Roux, who continually encourage him to dream big and reach further. Just a few minutes in Doug’s presence reveals that he takes their advice seriously – always striving to do better and bigger things, and more than that, make an impact where it matters.

This passion for making a difference is most evident in his approach to our country’s pressing need for innovative education solutions. He first started thinking about business opportunities in education when he started a tutoring business with his brother. They lectured about 150 learners from surrounding high schools and soon noticed the lack of online education tools. Before long, he conceptualised and developed Rethink Education, an e-learning platform that allows high school learners to access content using a social platform while giving teachers the ability to track, monitor and observe the learners’ progress. He has already signed up a handful of high-profile schools like St Cyprians, Wynberg Girls’ High School, Groote Schuur High, Ridgeway College and Teach South Africa. His next step will be to take it to under-resourced schools once he has proved its viability.

For someone who has already achieved so much as a young man, Douglas Hoernle has his feet firmly on the ground. When asked what he is most proud of, he simply says, “I strongly believe that I have only put the first dot on my life’s page and still have the entire canvas to colour in.” He epitomes the Foundation Pillar of Achievement Excellence defined by the Foundation as the on-going pursuit of excellence with a tangible and specific focus on setting goals and a motivation to make a difference and leave a mark. Doug is well on his way to shaping a brilliant future for himself and his fellow South Africans. The Foundation is honoured to have been part of that shaping process and wishes him the very best with his future endeavours.

Written by Alexa Anthonie
Kholofelo Moyaba, developing a Spirit of Significance

Kholofelo Moyaba, developing a Spirit of Significance

Kholofelo Mayoba High Res

As a schoolboy in Sheshego, Kholofelo Moyaba used his love of art and poetry to make some extra money. He made greeting cards and birthday cards on request and on special occasions, like Valentine’s Day or Mothers’ Day, he would make them in bulk and sell them for 50c each. He wasn’t aware of it then, but these were the beginnings of a future shaped for creative and entrepreneurial thinking.

Today Kholofelo is still doing creative things. With a degree in engineering, focused on computers, it is no wonder that he was involved in the development of the GoMetro Android app that was launched in 2013. This app allows users to better plan their commute by giving them up-to-date train times and announcements. It has been downloaded more than a thousand times and has also won first place at Vodacom’s AppStar competition for South Africa.

Looking back Kholofelo realises that he would never have guessed that one day he would be involved in entrepreneurship. In fact, the idea of ‘entrepreneurship’ wasn’t even on his mind when he applied for a Foundation Fellowship back in 2009. He was merely exploring another avenue for funding his tertiary studies. Little did he know that in addition to getting funding, he was about to embark on a life-altering journey; one that would lead him to self-discovery, self-empowerment and living a life devoted to serving others.

Following his application, Kholofelo was invited for an interview with the Fellowship Selection Team. He recalls leaving that interview feeling confused – why so many penetrating questions? He was still thinking in terms of a straightforward bursary application.  When he met other Candidate Allan Gray Fellows at the selection camp, however, things clicked into place. They were a diverse group of energetic, sophisticated and intelligent young people that were all about starting businesses and impacting Southern Africa. He was in awe of them and at the same time painfully aware of his own inadequacies.

A year into the Fellowship and his studies he acknowledged that his self-confidence was lacking and that it was the result of endlessly comparing himself with his fellow Candidate Fellows. He didn’t know as much as they knew and couldn’t speak the way they did – using big words. At one point he even asked a Foundation Talent whether there had been a mistake because he didn’t belong here. Rachel’s simple but powerful response had him in tears. He remembers her saying, “Instead of comparing yourself with others, focus on nurturing the potential we saw in you.”

Like a pendulum swinging from one extreme to the next, Kholofelo first had to experience the extreme of overconfidence before balancing out. He started thinking of himself as awesome to such an extent that when he wrote a test badly he would still expect to pass because “Kholofelo always passes” or so he would tell himself. That mantra didn’t last too long and when the reality of a failed Maths test hit home, his ego was cut to size. Reflecting again on Rachel’s words he realised that having potential didn’t mean he was special. It required, instead, that he work hard to discover and develop that potential.

There was one more realisation that Kholofelo had to make on this inner journey of his. He needed to see that by keeping his ideas to himself he was paying a disservice to the world. Beyond having ideas and writing them down, he needed to do something with those ideas. He needed to develop them in service to the world.

Kholofelo’s journey is so characteristic of the Spirit of Significance, a Foundation Pillar defined as a weight of personality that comes from living a life of passion and integrity. It is a recognition that personal satisfaction comes from empowering oneself in order to serve others. The Foundation is very proud of Kholofelo’s commitment to his self-development and looks forward to seeing many more of his creative ideas in service to the world.

Written by Alexa Anthonie
Shape the Future Series: Charlie Munger

Shape the Future Series: Charlie Munger

IMG_5571In our previous post we outlined one of the 5 Pillars of the Foundation, namely, Intellectual Imagination.  For this Shape the Future Series post we look at the attitude of Conceptual Ability which forms part of the Synthesising mindset under the pillar of Intellectual Imagination.

The 3rd of May , as many in the investment and financial services industry will know, is the Berkshire Hathaway annual general meeting in Omaha.  Many investment professionals will make the annual trek to Omaha to have an audience with not only Warren Buffet, the CEO of Berkshire Hathaway but also with his slightly lesser known partner, Charlie Munger.  It is Charlie Munger, who for us, personifies the attitude of Conceptual Ability.

Conceptual Ability is the attitude of working comfortably within the realm of ideas, being able to build, stretch and manipulate them into new and different forms.

Munger is the Vice-President of Berkshire Hathaway and Warren Buffet calls Charlie Munger his “partner” for good reason.  During the period 1962 to 1975 Munger’s investment partnership generated compound annual returns at more than three times the average of the New York Stock Exchange.

Charlie Munger is not a celebrity or household name.  He hasn’t won the Nobel Prize or the Pulitzer Prize.  He’s never been a great writer, a rousing speaker or a legendary sportsman.  As he says: “I was very lucky in my life, because every place I looked, at the pinnacle there was a guy better than I was”.  And yet, Charlie Munger is a polymath, defined as a person of great learning in several fields.

Munger puts his investment success down to his “latticework of mental models”.   This really is another way of saying his “conceptual ability”.  Munger’s conceptual ability has led to him being the inspiration for a book on thinking called “The Art of Thinking Clearly” by Rolf Dobelli as well as a collection of Munger’s speeches in the book by Peter D. Kaufman called Poor Charlie’s Almanack.

Charlie Munger is a strong proponent of what he calls elementary, worldly wisdom.  What exactly is elementary, world wisdom?  In Munger’s own words: “Well, the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ‘em back.  If the facts don’t hang together on a latticework of theory, you don’t have them in usable form.”

Through this latticework of theory or mental models, Munger says that you are then able to “make the mind reach out to the idea.”  In other words, the more you know, the more you are able to spot opportunities or efficiencies which lead to more ideas which lead to more solutions which again leads to more questions, both in a good way and a bad way depending on the outcome.

And before I ponder my way into what Munger calls the Lollapalooza Effect whereby all that I know about entrepreneurial learning actually makes me create a viewpoint based on my own biases and leads to more questions, I will stop!

And leave you to ponder the realms of your own conceptual ability with his wise words, “Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.”