I remember attending a talk given by Clem Sunter, the exceptional scenario planner, futurologist and author, during which he spoke about various scenarios facing South Africa.
One specific statement he made stuck with me. He said (and, I paraphrase here): “For South Africa to revive and strengthen its economy, a million entrepreneurs are needed to create the five million jobs that the politicians are talking about.”
Following the global pandemic, this statement is true, now more than ever.
Governments’ responses to COVID-19 hit economies around the world hard as whole industries (and countries) shut down and companies shed job losses. These job losses, however, sparked a new global trend, the growth of the micropreneur.
More out of necessity than choice, side hustles and embryonic ideas have transformed into fully-fledged businesses as many have turned to entrepreneurship as their next career move.
In South Africa, and elsewhere around the globe, for those lucky enough to keep their jobs, many saw pay reductions or reduced working hours. To supplement their income, side hustles were born.
And while many South African SMMEs were forced to close their doors (the SMME quarterly update issued by SEDA in August 2021 showed a decline in the number of SMMEs year-on-year from 2.61 million to 2.33 million), those who managed to survive showed their tenacity in that they provided an additional 688 000 jobs over the period and maintained their total share of total turnover at around 37.5%.
To empower these new and existing entrepreneurs we need to develop a fresh new perspective to building this critical sector.
In 2019, South Africa ranked 49th out of 54 economies on the Global Entrepreneurship Monitor’s (GEM) National Entrepreneurship Context Index, ahead of only Croatia, Guatemala, Paraguay, Puerto Rico and Iran.
Sadly, according to its report, South Africa’s entrepreneurial ecosystem was one of the most challenging in the sample of participating economies in 2019, and has exhibited little sign of improvement over the past few years.
GEM cited a number of issues hampering entrepreneurship ranging from access to markets and funding to restrictive policies to access to mentorship. Many entrepreneurs will espouse that only an entrepreneur can truly understand the needs and challenges of an entrepreneur.
To this point, Clem Sunter suggested at a recent University of Cape Town (UCT) Summer School lecture, that “President Cyril Ramaphosa establish an entrepreneurship council that consists of successful entrepreneurs who regularly advise him on how best to lift the economy from the brink of ruins.” I wholeheartedly agree.
Another critical aspect is access. We need to rethink how entrepreneurs access certain key necessities. These include access to funding and infrastructure but extends to more non-traditional elements such as access to time, to the city and to mentorship.
Each aspect requires an innovative approach to problem solving and requires built in collaboration between those people successful in each sphere of the related industries. I believe that we could relook the way...
1. Entrepreneurial funding is evaluated.
It should not be according to a business plan and estimated figures as so many are, but on discipline, tenacity, work ethic and accountability. So many institutions evaluate entrepreneurs on a track record of success prior to them even being given a chance to build one. Others evaluate them on success or failure but not on how they reacted to previous failures and how they managed the resultant fallout.
2. Cities operate. Many aspiring entrepreneurs start their businesses working after hours. The challenge is that many cities within South Africa don’t operate after hours. Having been an entrepreneur in both South Africa and internationally, I can personally stand testament to the value of a ’24-hour city’ and the ability to build a business therein.
3. We provide mentorship. Mentorship is probably one of the most valuable assets an entrepreneur has access to providing the opportunity to learn from another’s life lessons and avoid making mistakes within your own. I believe that every funding agreement with an entrepreneur should have a mentor allocated to it. This would accelerate the path to success, reduce the risk and in many cases avoid the lack of experience leading to failure. Many would argue that entrepreneurs and successful business people just don’t have the time. I believe that this could be addressed by building an innovative approach to mentorship within our country which looks to not only incentivise existing professionals to mentor another but also taps into retired professionals who have the spare time and experience built over life time of success and failures.
4. Access to technology. In a world where the digital revolution has moved 5-10 years in the past 18 months, we should be prioritising the democratisation of the internet in South Africa. I have seen first-hand how a determined young entrepreneur taught himself coding and digital marketing utilising youtube videos he watched during his lunch break while working in a call centre. I have also watched that same young man, go on to launch and run a successful marketing agency which now employs 18 people. By providing access to information to a generation hungry for opportunity we can change the way they learn and grow.
The reality is that being an entrepreneur is hard and so the decision to become one is not taken lightly. Thankfully, according to the GEM SA study, there has been a substantial increase, from 43.2% to 60.4%, in the number of individuals who perceive that there are good entrepreneurial opportunities in South Africa and believe that they have the skills and capabilities to start a business. This number is relatively high compared to many other economies.