South Africa

Institution: Faculty of Commerce, University of Cape Town
Survey Vendor: Nielsen South Africa
Funders: Small Enterprise Development Agency (Seda)
Key Indicators
TEA: 7%
 
Total early-stage Entrepreneurial Activity: percentage of 18-64 population who are either a nascent entrepreneur or owner-manager of a new business
Established Business Ownership: 2.7%
 
Percentage of 18-64 population who are currently an owner-manager of an established business, i.e., owning and managing a running business that has paid salaries, wages, or any other payments to the owners for more than 42 months
Perceived Opportunities: 37%
 
Percentage of 18-64 population (individuals involved in any stage of entrepreneurial activity excluded) who see good opportunities to start a firm in the area where they live
Perceived Capabilities: 38%
 
Percentage of 18-64 population (individuals involved in any stage of entrepreneurial activity excluded) who believe they have the required skills and knowledge to start a business
Entrepreneurial Intention: 10%
 
Percentage of 18-64 population (individuals involved in any stage of entrepreneurial activity excluded) who are latent entrepreneurs and who intend to start a business within three years
Fear of Failure: 25%
 
Percentage of 18-64 population (individuals involved in any stage of entrepreneurial activity excluded) who indicate that fear of failure would prevent them from setting up a business

An alarmingly low level of entrepreneurial activity in spite of high unemployment


Most recent data: 2014


South Africa’s rate of entrepreneurial activity is very low for a developing nation – a mere quarter of that seen in other sub-Saharan African countries. Unemployment is around 40% of the adult population; despite this, the number of people starting businesses due to having no other option for work (necessity entrepreneurship) is low.

Entrepreneurial activity in South Africa, although very low, has increased marginally over the last 10 years, but in 2014 dropped by a staggering 34% (from 10.6% to 7%). There has been an increase in women’s entrepreneurship primarily due to government support, but the perception of opportunities to start a business, and confidence in one’s own abilities to do so, remains alarmingly low compared to other sub-Saharan African countries.

The level of business discontinuance still exceeds that of business start-ups, resulting in a net loss of small business activity and subsequent job losses. Like elsewhere in Africa, many of the businesses cite lack of finance and poor profitability as the main reason for shutting up shop.

The typical South African entrepreneur is male, 25 – 44 years of age, lives in an urban area, is involved in the retail and wholesale sector and has a secondary or tertiary level of education.



Enablers and Constraints


A good infrastructure and banking system are the biggest enablers of entrepreneurship in South Africa. Major constraints are an inadequately educated workforce, inefficient government bureaucracy, high levels of crime and onerous labour laws.


Initiatives Supporting Entrepreneurship


There are very few government initiatives that are contributing towards improving entrepreneurship. The most successful ones are supported by private companies, such as Anglo American’s Zimele programme, and South African Breweries KickStart initiative, to name just two.


Trends Over Time


Entrepreneurial activity in South Africa, although very low, was increasing marginally year on year over the last decade - however, in 2014 this trend was severely reversed by a huge 34% drop.


Challenges for the Future


The main challenge is to provide jobs and/or opportunities for the youth, where the estimated unemployment level is in excess of 60%. This can be assisted through education; however, the level and quality of education in South Africa is one of the worst in the world. The level of maths and science education in the country, as assessed by the Global Competitiveness Report (2014/2015), puts South Africa at #144 of 144 countries.

Regulatory requirements make it very difficult for people to start businesses; this is further exacerbated by onerous labour laws and the low efficiency of the labour force. Corruption starting at the highest levels of government remains a major challenge, together with high levels of crime.


South Africa Reports

Name
Report information
pdf
  • Year of publication: 2016
  • Category: National Reports
  • Language: English
  • Upload date: 2016-05-25

  • Data from the 2015 GEM survey (the 14th in which South Africa has participated) confirm South Africa’s persistently low levels of entrepreneurial activity relative to other countries participating in GEM. Although 2015 sees an encouraging increase in the number of South Africans who believe there are good opportunities for starting a business in their area, as well as those who believe that they have the necessary skills, knowledge and experience to start a business, this has not translated into higher levels of entrepreneurial intention.
  • URL: http://www.gemconsortium.org/report/49537
GEM South Africa 2015 - 2016 Report
Report information
pdf
GEM South Africa 2014 Report
Report information
pdf
GEM South Africa 2013 Report
Report information
pdf
  • Year of publication: 2013
  • Category: National Reports
  • Language: English
  • Upload date: 2015-03-27

  • As entrepreneurial activity is best seen as a process rather than an event, the 2012 GEM South Africa Report for the first time provides considerable focus on each phase of the entrepreneurial pipeline, namely: potential entrepreneurship (first phase), entrepreneurial intentions (second phase), early-stage activity (third phase) and established business ownership (fourth phase).

  • URL: http://www.gemconsortium.org/report/48565
GEM South Africa 2012 Report
Report information
pdf
  • Year of publication: 2013
  • Category: National Reports
  • Language: English
  • Upload date: 2015-03-27

  • Sub-Saharan Africa is in the midst of an entrepreneurial revolution that is invigorating the region with new opportunities, increased employment and a robust rise in gross domestic product to one of the highest in the world. The GEM 2012 Sub-Saharan African Regional Report reveals that the entrepreneurial landscape is changing rapidly, with the region becoming a mecca for business development and growth.

  • URL: http://www.gemconsortium.org/report/48810
GEM 2012 Sub-Saharan Africa Regional Report
Loading...