During the recent Global Entrepreneurship Week we noted the release of 2016 Global Entrepreneurship Index which provides a comprehensive overview of the health of a nation’s ecosystem through the development of an index methodology linking countries entrepreneurial framework conditions with individual level entrepreneurial attitudes, abilities and aspirations. The GEI not only ranks more than 130 countries on their entrepreneurial ecosystems but also provides a framework for understanding how those countries measure up against neighbouring ecosystems. Distinct from both output-based entrepreneurship indexes (i.e., new firm counts) and framework-based indexes (i.e., comparisons of countries’ policies and regulations), the GEI is designed to profile national entrepreneurial ecosystems. As stated by Zoltan Acs, founder of the GEI “In entrepreneurship, quality matters more than quantity. To be entrepreneurial, a country does not necessarily need the most entrepreneurs. They need the best. We must look to the countries with entrepreneurship-rich ecosystems to discover best practices and strengthen the world’s entrepreneurship ecosystem.”
This index makes for much better reading than most other South African entrepreneurship measures. As in the 2105 Index South Africa is the best performing country in Sub Saharan Africa. It is also the best performing of any of the BRICS countries. After the consistently depressing news coming out of the annual Global Entrepreneurship Monitor reports it is a source of encouragement to end the year reflecting on the GEI 2016 results.
But it is not all good news. While retaining our top position in Africa, South Africa’s overall score has dropped from 40% in 2015 to 38.5% in 2016 (in simple terms GEI suggests that we are operating at 38.5% of our entrepreneurship capacity, compared to the top country USA, which is operating at 86.2% of its capacity) Furthermore of the 14 pillars that make up the GEI, our weakest areas remain people related: start up skills and human capitals. While the people challenges in South Africa are well know, it is interesting to note the third area of weakness is risk capital and this has shown a strong downward trend. It is evident that gaps in certain levels and types of funding is constraining the South African entrepreneurship ecosystem. Although as noted in our post from the ANDE annual conference there is an undeniable link between the financial capital invested and the level of human capital able to absorb that finance. So maybe even the risk capital deficit is also people related.
Finally the GEI has started to identify more far reaching implications of entrepreneurship. As Jonathan Ortmans, president of Global Entrepreneurship Network notes “Of particular significance to policymakers, this year’s edition of the Index offers evidence that entrepreneurship is a “global good” as it is highly correlated with bigger-picture human welfare goals such as increased economic growth, reduced income inequality, enhanced environmental quality, and wider political stability and security. The data provides evidence that entrepreneurs are a force for peace, equality and expanded human welfare.” Entrepreneurs as a force for equality is exactly the intention behind the Foundation’s vision in fostering responsible entrepreneurship for the common good. It is exciting to read confirmation of this aspiration in such a well-researched context.
The full GEI 2016 Report can be downloaded here