SA needs to dig deep to revive its flair for entrepreneurship

Team SA, led by finance minister Enoch Godongwana, was in Davos, Switzerland,’last This year s visit week took for place the annual World Economic Forum, which seeks to improve the world by engaging business, political, academic and other leaders to shape global, regional and industry agendas. against a backdrop of SA’s relentless poor GDP growth, recording figures of -5.96% in 2020, 4.7% in 2021, 1.91% in 2022 and 0.93% in 2023. The country also has a staggering unemployment rate of 31.9%, with an enormous 7.8-million people out of work, arguably the worst in the world.

To add salt to the wound, the medium-term budget policy statement forecast that the economy will grow at an average rate of just 1.4% from 2024 to 2026, barely high enough to move the needle on unemployment. The World Bank’s Global Economic Prospects report forecasts average Sub-Saharan Africa economic growth of 3.8% in 2024, with SA at just 1.3% in 2024 and 1.5% in 2025.

Entrepreneurship has long been identified as an instrument to drive inclusive economic growth and job creation, with the National Development Plan highlighting the need to increase exports, invest in infrastructure and reduce the regulatory burden on small businesses. The UN sustainable development goals also seek to encourage the growth of small, mediumsized and micro-enterprises (SMMEs) to promote sustainable growth, full and productive employment and decent work for all.

It is common cause that entrepreneurs boost economic growth by introducing innovative ideas, technologies, products and services. They promote competition, resulting in new and improved products and services. Entrepreneurs also provide new job opportunities in the short and long term, and are more likely to employ economically marginalised individuals such as the youth and women.

Despite committing to an ambitious target of 90% of job opportunities coming from small businesses by 2030, SA continues to fail dismally in living up to its entrepreneurship potential. The government has chosen to lean more towards talking the talk than walking that talk. The National Small Business Act has done little to cultivate a conducive business environment and culture of entrepreneurship.

The Global Entrepreneurship Monitor (GEM) report on SA, “Fostering entrepreneurial ecosystem vitality”, states that while there are positive signals in increased earlystage entrepreneurial activity among women and young people, SA’s environment for entrepreneurship is rated lower than the global averages. SA ranks 45 out of 50 countries in the GEM national context index, a measure of the favourability of the environment for entrepreneurship and new business creation.

The report also identified mixed signals about the confidence of entrepreneurs, fear of failure and the adoption of digital technology, a sentiment echoed by the 2022/23 GEM report “Adapting to a ‘New Normal’”. Based on interviews with more than 175,000 individuals and experts from 51 economies, the report tracks the percentage of adults who are starting or running a new business, referred to as total early-stage entrepreneurial activity.

One of the problems we have in SA is that we tend to frown on failure. Of course, failure is real and should not be taken lightly, but while it can be discouraging it also provides lessons and experiences that could lead to ultimate success.

With the right tools and support failure can be mitigated, and even avoided. Some of the most successful entrepreneurs today have gone through stages of failure. Silicon Valley’s culture of “embracing failure” aligns with research and learning from setbacks.

To its credit, SA is no stranger to entrepreneurship flair. It boasts a list of towering business pioneers across racial and gender divides. There are certainly lessons to be drawn from their courage and pioneering spirit.

That said, we need to urgently deal with both the “hard” and the “soft” issues that hobble entrepreneurship. On the hard side is a lessthan-optimal regulatory and policy environment, poor energy and logistics infrastructure, and badly co-ordinated government support programmes. We also need to improve access to finance and markets, and focus on entrepreneurship education in schools.

On the soft side are the need to emphasise the payment of service providers on time, to appoint people with business experience to key decision-making roles, and promote local brands and locally made products. If we do not get these right our entrepreneurship development agenda will sadly continue to misfire.

On the international front, some fundamental lessons can be drawn from Davos by leaders. After all, Switzerland is rated number eight in the world in terms of entrepreneurial activity.