South Africa needs to introduce and enhance initiatives aimed at ingraining entrepreneurship into its culture to drive future economic growth.
That is the view of Christo Botes, executive director at risk finance firm Business Partners, who says though the culture of entrepreneurship is promoted to an extent in South Africa, there is more that can be done.
Botes says entrepreneurship is moulded by intention, opportunity, skills and resources, which together derive entrepreneurial activity, which involve an individual identifying an opportunity and then using their ability and motivation to grow their business.
“However, in South Africa, a disconnect between these elements remains, which can largely be attributed to the lack of entrepreneurial culture,” he says.
According to the 2015-2016 GEM South Africa report, 40.9 per cent of South African adults perceived good entrepreneurial opportunities, and 45.4 per cent perceived they had the capabilities to start a business, yet in 2015 only seven per cent of entrepreneurs were engaged in early-stage entrepreneurial activity 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.
Meanwhile, 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,” Botes says.
While extremely rewarding, he warns that 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,” he said.
“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, Botes says, remains that small, medium and micro-enterprises (SMMEs) are faced with numerous challenges that cannot be ignored, such as red tape, rigid labour regulations, inability to access finance and 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,” he says.
“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.”
He also says more emphasis should be placed on business and entrepreneurial-based education in schools via formalised programmes and additions to the national curriculum.
“Relying solely on the tertiary education sector to instil the enthusiasm for entrepreneurship in graduates is unrealistic,” Botes says. “Given the country’s high unemployment rate, many people turn to entrepreneurship out of necessity. If ingrained enough in our culture, more South Africans could turn to this career path out of opportunity instead.”