The State of Entrepreneurship in South Africa

The State of Entrepreneurship in South Africa

Entrepreneurs are always going to face challenges. That much is a given. But what about entrepreneurship itself? Are we, the stakeholders who are trying to create fertile ground for individuals who choose this route, destinated to have a similar struggle?

The answer to this question is critical, because it reveals much about the state of entrepreneurship in South Africa. And, at present, it’s an answer that gives cause for concern.

Never in South Africa has there been such a crying need for entrepreneurs who not only succeed, but who have the ability to positively impact and transform their community. However, at the same time, it’s clear that these people are not receiving the support that would allow this to become a reality.

This was highlighted during the State of the Nation Address given by President Cyril Ramaphosa during February. Although Mr Ramaphosa admittedly had a number of challenges that required urgent attention, the omission of entrepreneurship as a national priority was a glaring one. Unfortunately, this concept remains a “by the way” – and, as long as this is the case, our entrepreneurs will continue to struggle.

This is evidenced by the rate of growth in South Africa. Quite simply, the outcomes of entrepreneurship do not keep pace with the inputs.

Compare our playing field with that of other African countries, for example. By all accounts, we are to be envied: it appears as though our efforts and successes in the area of entrepreneurship exceed that of our peers in many instances. However – and this is the crux – our entrepreneurs seem doomed to fail. Yes, we record an impressive number of start-ups, but few of these translate into sustainable jobs. In fact, only 15% of our start-ups go the distance.

This means that entrepreneurship in South Africa is failing in one of the key areas where it is intended (and where it is sorely needed) to have the most impact: job creation.

One of the reasons for this failure is the lack of alignment between skills and ideas. Our entrepreneurs may have outstanding insights that allow them to identify niches with potential to become lucrative businesses, but they don’t have the skills to take the business from point A to Point Z.

At first glance, it may appear that the existence of such a gap is absurd, given the significant array of resources that have been established precisely to provide entrepreneurial support in South Africa. However, the resulting ecosystem is fragmented: yes, there is a wealth of information and infrastructure out there, but none of it addresses the entire spectrum of entrepreneurial support, from end to end.

Moreover, many entrepreneurs aren’t aware of where they are in their journey. Which source do they consult, if they don’t know where they are in their entrepreneurial career trajectory, and what this means in terms of their support requirements and potential company growth? These are not questions that can be answered with a quick reference to company profitability, business valuation and market size, because the entrepreneur’s experience is typically a dynamic one characterised by change, adaptation and iteration – all of which create complications when it comes to accurately predicting company growth. In an ideal world, an individual with entrepreneurial potential would have clear guidelines regarding the support sources available, and which would be the most appropriate and best placed to provide advice and skills based on their current and future developmental phases. But this is certainly not the case at present.

Government’s current focus on FET-related skills poses is a further obstacle. While this is, indeed, a progression from the notion that a professional career is the only (or, at least, the best) option for every individual, regardless of their aptitude, progress in putting in place a future-ready curricula that boosts critical thinking, creativity and emotional intelligence in addition to fast-tracking the attainment of digital and STEM skills that will enable the workforce of the future to participate in the digital economy – has been stagnant. After all, the digital economy is where the greatest opportunities for today’s entrepreneurs reside, and it is therefore crucial to ensure that they have the requisite skills to take advantage. Our present model does not allow for this, however.

Currently, we don’t have a clear picture of knowledge and skills acquisition as they relate to employment, and how these can be best harnessed to drive rapid innovation and optimise industrial growth. Consequently, the majority of skills development initiatives in place in South Africa are geared towards bolstering existing, established industries and trades – but, since a future shaped by Artificial Intelligence holds very little certainty for any industry, we have to acknowledge the need to take risks on unknown quantities. One way of doing this, is seeking out industries that have the potential to enable, derail or disrupt existing sectors. Difficult though this is – it is, after all, almost impossible to imagine a world that currently exists only in terms of “what ifs” – tools like systems-thinking and design thinking may help us identify the gaps and opportunities offering the greatest potential for entrepreneurial action.

Education is failing our entrepreneurs in other areas, too. We cannot ignore the coming impact of the Fourth Industrial Revolution on our world; nor can we close our eyes to the fact that the industries which will prove most productive in the years to come probably don’t exist at present.

The skills required to gain mastery over these industries are, naturally, very different from those which served previous generations. But, then again, the people who will work in these industries have shown themselves to be very different, too. Just as workplaces were initially challenged to accommodate the personalities and tendencies of millennials – the pioneers of the ‘slashie’ or gigging generation, for whom it is commonplace to invest time and energy in a number of different jobs rather than pledging loyalty to an organisation – it’s likely that further adjustments will need to be made if we are to optimally harness the strengths of Generation Z.

On the one hand, and working in our favour, is the intrinsic entrepreneurial flair that seems to come naturally to many of this generation. However, they are also hampered by short attention spans. They are, moreover, more global in their thinking, and more individualistic, than any generation before them.

If we are to help them on their path to successful entrepreneurship, we need to take these differences into account and, perhaps most importantly, end our view of entrepreneurs as one-dimensional people.

At a more pragmatic level, entrepreneurial training in the future will need to go beyond focusing on the basic skills that are essential for starting a business. We will also need to tap into the values and motivations of individual entrepreneurs, while helping them leverage their social networks; perhaps one of the most important tools they’ll have at their disposal.

In other words, we need to steer clear of a blanket approach to teaching, and strive instead for methods that resonate on a more individual level. More than anything, we need to get young entrepreneurs thinking: not about the ventures that are most likely to succeed in financial terms, but which are most likely to solve the challenges currently facing our communities and societies.

The Allan Gray Orbis Foundation’s Fellowship programme has been carefully designed to address as many of these challenges as possible. Our chief differentiator, distinguishing us from other initiatives aiming to support entrepreneurs, regards the individuals selected to take part. Rather than honing in on people who have already established startups and require resources to ensure sustainability or take them to the next developmental phase, we target individuals who have displayed entrepreneurial flair, or who have the propensity to become an entrepreneur. We consider the metamorphosis – from potential entrepreneur to actual entrepreneur and, ultimately, entrepreneurial career – to be one of our greatest successes, because it means that people who otherwise would have followed traditional career paths (and thereby entrenched the current status quo) are instead given a chance to realise their full entrepreneurial potential.

That said, the Fellowship programme is neither prescriptive nor restrictive. It recognises that the most fulfilling careers are based on an “either and” rather than an “either or” mindset, and that career paths evolve over time. We accept that for some, entrepreneurship is a goal in itself; for others, it is a milestone that is part of a greater journey. We encourage participants to adopt a similar understanding of their careers, and the open-mindedness which develops as a result is a powerful motivator when it comes to taking risks and engaging with the process of starting a business. This milieu has allowed some Fellows to acquire the work experience required to establish their own start-ups, while others use their learnings from this environment to create a clearer idea of what kind of business they would ultimately like to create.

One of the instruments we have employed to nurture this mindset is the Dual Track Programme, introduced in 2018. Cognisant of the struggle for the many entrepreneurs who do not want to concentrate solely on academics or the theoretical side of entrepreneurial training, this initiative provides support for those who have already launched their own businesses, allowing them to take a sabbatical from their studies for a year to extend their degrees. The remarkable take-up of this programme pays credence to our belief that although entrepreneurship may well be an inherent skill, it can also be developed, provided the individual receives appropriate inputs, including opportunities for collaboration, personal mastery, networking and lifelong learning.

We have set up a variety of other tools to fashion a safe environment where they may flex their entrepreneurial muscles without fear of failure. These include the Ideation, Validation and Creation programme, our Accelerator programme and our annual jamboree, all of which are platforms for developing essential entrepreneurial skills and networking.

We have, furthermore, consolidated our learnings over the past 14 years, tweaking our curriculum to ensure a greater chance of success for our programme participants. Of most significance here is the abundance of information regarding entrepreneurship that has become available since the Foundation was first established in 2005. From being a relatively unknown quantity, entrepreneurship has become far better documented. Consequently, we have more accurate insights regarding the characteristics of successful entrepreneurs, and how best to leverage these.

As a result, our programme has become considerably more structured. We have also adjusted the criteria of our Selection Camps to accommodate potential high impact entrepreneurs whose previously limited exposure may disadvantage them. In this, we have worked towards greater objectivity and consistency. With this in mind, we have, moreover, reviewed our successful profiles and application forms.

While these triumphs speak to the efficacy of our programme, we regard them not as our own successes, but as successes for the field at large – and, hopefully, we will see them create a springboard to boost entrepreneurship in future years.

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