Culture shift required to boost SA's entrepreneurship levels

Christo Botes

Economic growth in South Africa has, for the last few months, been in the spotlight – especially as ratings agencies keep a close eye on developments in the country. Given entrepreneurs’ significant contribution to GDP, reported at 42%1, the expectation remains for entrepreneurs to bolster growth in the country. As we review our heritage this Heritage Month, the question however remains, is a culture of entrepreneurship being promoted in South Africa?

According to Christo Botes, executive director at Business Partners Limited (BUSINESS/PARTNERS), the answer is ‘somewhat’. “To drive future economic growth, South Africa needs to introduce and enhance initiatives aimed at ingraining entrepreneurship into its culture.

He explains that entrepreneurship is moulded by intention, opportunity, skills and resources. Together these elements derive entrepreneurial activity, which involve an individual identifying an opportunity, and using their ability and motivation to navigate the market environment and grow their business. “However, in South Africa, a disconnect between these elements remains, which can largely be attributed to the lack of entrepreneurial culture.”

Botes points to the 2015-2016 GEM South Africa report figures to support this statement: 40.9% of South African adults perceived good entrepreneurial opportunities, and 45.4% perceived they have the capabilities to start a business, yet in 2015, only 7% of entrepreneurs were engaged in Total Early-stage Entrepreneurial Activity (TEA) and had taken the steps to start a new business. “This demonstrates that recognising entrepreneurial opportunities and possessing the necessary skills doesn’t always translate to entrepreneurial output.”

Botes says that the 2015/2016 South Africa GEM National Experts’ Survey reported a low mean score of 2.8 in relation to the statement - ‘In South Africa, the national culture encourages entrepreneurial risk-taking’. “This highlights the link between perceived failure and entrepreneurial intention. In order to create synergies between the entrepreneurial elements, South Africa needs to develop a culture of entrepreneurship, and one way to do this is to create a culture accepting of failure and encouraging its youth especially to learn from it.”

He explains that while extremely rewarding, entrepreneurship is a tough career path. “The reality is that the majority of small businesses fail within the first year of operation, and many potential entrepreneurs that witness this failure aren’t prepared to take the risks, and instead assess their opportunities against employment opportunities.”

Botes adds: “Many individuals are risk-averse, and society tends to frown on those who have failed. We should therefore be highlighting that failure is part of the process, and that some of the world’s greatest entrepreneurs didn’t succeed on their first attempt.”

The reality remains that small, medium and micro-enterprises (SMMEs) are faced with numerous challenges that can’t be ignored, such as red tape, rigid labour regulations, an inability to access finance and a lack of skills development and business support. “However, if Government and corporate South Africa can successfully stimulate a culture of entrepreneurship – one that is enabling and supportive – celebrating it as part of our heritage, entrepreneurs will be better equipped to start and grow a business.

“Given that the SMME sector has been identified as a key vehicle for addressing low levels of unemployment and economic growth, more needs to be done to foster a culture that drives entrepreneurial output,” says Botes.

Botes says one initiative that can drive entrepreneurship is the recently announced R1.5 billion SME Fund, created to assist with funding and mentorship of local entrepreneurs. 

More emphasis should also be placed on business and entrepreneurial-based education in schools via formalised programmes and additions to the national curriculum, adds Botes. “Relying solely on the tertiary education sector to instil the enthusiasm for entrepreneurship in graduates is unrealistic.

“Given the country’s high unemployment rate, many people turn to entrepreneurship out of necessity. If engrained enough in our culture, more South African could turn to this career path out of opportunity instead” says Botes.