For David Morobe, executive general manager of impact investing at Business Partners Limited, November is an important month. Not only is the Global Entrepreneurship Week taking place from 13 to 19 November, but this month will also see the relaunch of Business Partners Ltd Entrepreneur of the Year® competition which has been in hiatus since the Covid-19 pandemic.
“There is no better time to reintroduce the Entrepreneur of the Year® competition because, now more than ever, we need to appreciate the importance of entrepreneurship as the path towards a better South Africa, and to celebrate the successful entrepreneurs who are getting us there,” says David.
State of entrepreneurship in SA
Entrepreneurship, the process through which ordinary people start, manage and grow their own businesses, and branch out to fill gaps in the market, is the life force of a prosperous economy.
“In South Africa entrepreneurship is often mentioned as the solution to our dire unemployment problem. This is true – only through private enterprise creation will the economy be able to absorb the masses of unemployed youth, but it goes way beyond job creation,” says David.
“Entrepreneurship is what keeps our economy competitive and dynamic, able to adapt to changes and challenges in the world. Entrepreneurship is the dynamo through which the latest technology is applied so that everyone benefits from it. It drives social changes, uplifts people from poverty and spreads wealth throughout society.”
This November is therefore a good time to reflect on the state of entrepreneurship in South Africa. Given the enormity of the challenges of the past few years – the devastating effect of the pandemic and its restrictions, the destructive protests and floods in KwaZulu-Natal, the disruptions of loadshedding, and the global uncertainties caused by war in Ukraine and the Middle East, the word that comes to mind when thinking about South African entrepreneurs is “resilient”, says David.
SA entrepreneurs are bringing solutions
Notwithstanding these challenges, there are entrepreneurs in South Africa who have held up remarkably well and have proven their worth. The rapid expansion of solar power in South Africa is an answer to the failure of Eskom. Since March 2022 no less than 3 500 megawatts of solar power have been installed on rooftops by thousands of small and medium contractors, pushing the total amount of the nation’s solar power to more than 4 400 megawatts. No other sector, neither state, corporate nor parastatal, has been able to move that fast, says David.
The Entrepreneur of the Year® competition
In recognition of the irrepressible dynamism of South African entrepreneurs in the face of adversity, the Entrepreneur of the Year® competition is introducing a new category this year, namely Resilient Entrepreneur® of the Year® together with the usual Emerging Entrepreneur of the Year®, Small Business Entrepreneur of the Year®, Medium Business Entrepreneur of the Year® and Job Creator Entrepreneur of the Year®.
Are SA’s entrepreneurs living up to their full potential?
But a reflection on the state of entrepreneurship in South Africa would be incomplete without considering if they are living up to their full potential, says David. By all measures, it appears that they are not. Compared to previous years, the entrepreneurial intent of the South African population has fallen to a low of 6%. In other words, only 6 out of 100 South Africans are thinking about starting a new venture in the immediate future. This includes existing business owners thinking about branching out.
According to figures from the Global Entrepreneurship Monitor (GEM), a longitudinal multi-national study on levels of entrepreneurship, this is down from 11% before 2020, and a spike of 17% during the pandemic. The low figure might be the result of a lag effect of the pandemic and might also be an indication of how hard the environment has become for businesses, says David.
It is not only a comparison to previous years that show South African entrepreneurship in the doldrums. Compared to other countries in the GEM study South Africa has fallen behind, scoring 45 out of the 49 participating countries when it comes to entrepreneurial intent.
But David points to another study that shows that, even if South African entrepreneurship has not reached its full potential, at least there is an almost universal acknowledgement in South Africa of the importance of entrepreneurship.
Changes required to support SMEs
Business Partners Ltd has commissioned a meta-study (an analysis and synthesis of a range of completed research projects) on the small- and medium enterprise (SME) sector in South Africa. Early indications from the findings is the widespread agreement on the importance of entrepreneurship in South Africa, but also the perception that SMEs are underperforming.
David says undertaking the meta-study has also highlighted the importance of segmenting the SME sector into at least five different strata, ranging from informal micro-businesses on the one end of the spectrum to high-growth venture-capital backed businesses on the other.
Each segment has its own support needs and shortcomings, with education and training perhaps needed most for entrepreneurs running micro-enterprises, while high-growth venture-capital backed businesses possibly have easier access to support through boards, business infrastructure, less red tape, and international trade linkages.
If South Africa can develop a more finely calibrated understanding of the support needed for entrepreneurs in each SME segment and the belief in the importance of entrepreneurship, can continue, it is only a matter of time before the South African community of entrepreneurs will live up to their promise of creating and spreading prosperity to levels of equivalent developing countries, says David.
About the Author: David Morobe
