Entrepreneurship: FNB/Endeavor Report: The State of Entrepreneurship in South Africa

This article was contributed by Conor Godfrey, SAIBL Associate

This report, compiled by FNB and Endeavor South Africa, takes an honest look at why South Africa is failing to produce the number of entrepreneurs and enterprises necessary to jump start job creation.

Some Key Findings:

Educational Reform is Crucial: Only significant educational reform will drive long term transformative change in South Africa's entrepreneurial climate. Schools, primary through tertiary, do not currently impart the necessary skills to spin off high impact entrepreneurs.

Entrepreneurial Culture: Entrepreneurship, and entrepreneurs themselves, are not adequately celebrated and encouraged by South African society. Ambitious young men and women tend to pursue corporate careers as opposed to striking out on their own. "'Rock Star' worship of entrepreneurs might not be suited for South African [culture]", but society must find ways to honor entrepreneurial values within a South African cultural framework.

Access to Capital: Potential entrepreneurs do not understand the rules and regulations involved in obtaining venture capital funding, and venture capital firms rarely consider the small sized grants sought by most South African entrepreneurs.

Type of Entrepreneurial Activity: Most fund seekers and/or entrepreneurs in South Africa do so out of necessity. These 'necessity entrepreneurs "tend to employ less than one person" whereas new opportunity entrepreneurs tend to employ between four and five people".


Corporate and Government Incentives: Corporations are not adequately incentivized to seriously promote Enterprise Development (ED) as a commercially profitable endeavor. Instead, they tend to look at ED as a social program. This in turn creates a culture where SMEs can become dependent on corporate handouts as opposed to an integral part of a corporate value chain.

Companies currently rely heavily on the 'ownership' facets of the BEE codes in order to remain compliant. Revisions to the BEE codes could place more emphasis on ED as opposed to ownership when evaluating compliance. .