Entrepreneurship: Why does South Africa Lag Behind its Peers in Terms of Entrepreneurship?

This article was contributed by Conor Godfrey, SAIBL Associate

What does an entrepreneurship enabling environment look like? Unfortunately, not a lot like South Africa in 2010. With a TEA index (Total Entrepreneurial Activity of population between ages 25-65) measurement of 7.8%, South Africa trails almost all its developing country peers including countries such as China, Brazil, India, Mexico, and Colombia. (Source page 7)

In an article on f3fundit.com Jacek Grebski breaks down the ‘Road Blocks to South African Entrepreneurship’ into four categories—bureaucratic hurdles, deficient business infrastructure, skilled labor shortages and inadequate financing. To be fair, the government has launched a variety of enterprise development initiatives including the SME development Program, the Foreign Investment Grant, the Skills Support Program, and an SMME hot-line. (Source/Source)

In collaboration with organizations such as the South African Institute for Entrepreneurship (SAIE), Entrepreneur Magazine South Africa, the University of Capetown, and numerous new incubation centers around the country, the South African government is looking for ways to tap into the job and wealth creation potential of South African entrepreneurs. To date, the government has yet to find the magic formula for spurring entrepreneurial activity. (Read Mr. Grebski’s article)

However, the salient factors hamstringing South Africa’s would-be entrepreneurs might be cultural rather than political. To paraphrase a 2010 FNB Commercial study, failure is not a badge of honor in South Africa like it is in Silicon Valley, and ambitious young men and women in South Africa pursue corporate careers rather than start small businesses.

Stay tuned for a series of articles on fostering entrepreneurship and addressing the structural impediments to entrepreneurial activity in South Africa.