Encouraging entrepreneurship: According to a recent report by the Global Entrepreneurship and Development Institute (GEDI), South Africa is an entrepreneurial leader in sub-Saharan Africa. The GEDI report also states that we have the institutional support necessary for high-growth businesses to emerge and thrive.
Entrepreneurship is a key driver of growth and will help to tackle youth unemployment, which is a staggering 50%.
Yet clearly something isn’t working. Where are all the black entrepreneur success stories?
How can entrepreneurs compete?
The GEDI report highlights the role of monopoly capital in hindering opportunities for entrepreneurs. Not only do large firms dominate South Africa (they comprise 90% of the market) they also prefer to do business with other large firms and long-term suppliers.
Start-ups and SMEs don’t get a chance to compete.
The report also raises the issue of lack of access to finance for entrepreneurs, something we write about regularly. For example, most of the country does not have access to formal banking while other African countries made a serious effort to introduce mobile banking.
The way forward?
The report suggests a number of policies that this blog believes should be seriously considered:
- Education and skills – this should be the top priority for the government
- Deregulation – South Africa should be the easiest country in sub-Saharan Africa to set up a business. It’s not. In fact, South Africa ranks 131st on the ease of starting a business index
- Informal to formal – legitimise a pathway to formal entrepreneurship in the informal sector
You can read GEDI’s report, here.
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