Entrepreneurship in South Africa – A Solution by Judian Govender
View of entrepreneurship in South Africa
South Africa’s national development strategy along with numerous other countries strategies, view small business development and enterprise empowerment as an imperative for economic growth.(ACT102, 1996). Worldwide there is an acknowledgement that entrepreneurship is an economic workhorse and catalyst.(GORMAN, 1997) Entrepreneurship is seen as empowering and is a requisite for emerging countries such as South Africa to progress and globally integrate. South Africa acknowledges this and given its extremely high unemployment rate, South Africa has a mandate to foster an entrepreneurial nation.(Malik Fal, 2010) The 2012 SADC report for Doing Business, ranks countries on the ease of doing business with regards to ten aspects: opening a business, allocating permits for construction, connecting electricity, property registration, acquiring credit, investor protection, tax processing, cross border trade, imposing contracts and insolvency resolution.(Business, 2012). South Africa ranked 35th of the 183 participating countries for having an hospitable business environment. This is a striking achievement with regard to SADC average rank of 114 of the 183. South Africa is also ranked 50th of 142 countries on the 2011 – 2012 global competitiveness report(GCR) this put SA highest ranked in Sub Saharan Africa and 2nd among the bricks nations.(Mike Herrington, 2011) South Africa has unsurpassed regional performance for start-up cost for new ventures, construction permits, acquiring credit and protecting investors. Starting a business in South Africa would take approximately 6 procedures and 19 days.(Booyens, 2011) In spite of the above accolades South Africa’s Total Entrepreneurship Activity (TEA) is far lower than expectations considering its GDP per capita, South Africa’s established business activity ranks 52nd of 54 countries.(Mike Herrington, 2011) Considering the abovementioned high unemployment rate of 25.5% it becomes rather worrying as to why so little individuals in South Africa chose entrepreneurship as a career path. (Mike Herrington, 2011) Business environment changes have positive or negative effects on the growth or failure of small and medium enterprises in Africa.(Bank, 2006) These environments can be divided into external and internal environments. Prodding onto these South Africa business environments, this review will attempt to uncover the issues and concerns plaguing South Africa’s business environment. For the external the review of South Africa’s environment this paper focuses on: corruption and crime and infrastructure and labour. For internal culture, government and private sector support, enabling policy and process efficiencies, availability of finance, competencies with regards to training and education and Incubators and business networks. Corruption and crime:
South Africa is in the world top 5 most murderous nations according to the United Nations Offices of drugs and crime (UN, 2007) South Africa’s poor security has become an impediment to entrepreneurial growth. South Africa is ranked 136th of 142 countries for the business cost of crime and violence. Private security has increased as there is an underlying sense that the police is unable to provide protection making SA unable to contribute to an environment that nurtures competitiveness. SME owners aren’t actively seeking opportunities to grow market share to move ahead of competition, they are instead utilising this energy on operations related to the high crime rate according to SMME survey 2008. (Siemens, 2009) Furthermore cost of security and preventative measures is a high expense for a start-ups. Corruption in both private and public sectors is on the rise in South Africa. (Unknown, 2008) SME’s involved I corruption is likely to have risen from regulatory compliance and bureaucracy issues. (Siemens, 2009) Government involvement in...
Please join StudyMode to read the full document