Report calls for the intervention of state
The Global Entrepreneurship Monitor South Africa (GEM SA) 2019/2020 report, released this week, found that many aspects of the country’s entrepreneurial ecosystem needed a major overhaul in order to serve the country’s needs.
The report was conducted by the University of Stellenbosch Business School (USB), GEM and the Small Enterprise Development Agency. South Africa ranked 49th out of 54 economies on GEM’s National Entrepreneurship Context Index, ahead of only Croatia, Guatemala, Paraguay, Puerto Rico and Iran.
The study also found that most South Africans don’t start a business because of fear of failure. Angus Bowmaker-Falconer, a research fellow at USB who co-authored the report, said the pandemic has intensified the country’s economic challenges.
“We know that earnings have been affected, that further job losses are likely, and that many small, medium and micro enterprises may not survive under these extraordinary high stakes,” Bowmaker-Falconer said.
“Most local companies are small or medium-sized enterprises, and many will battle to stay afloat after one to three months with no or limited trade and income. Early-stage entrepreneurial start-ups [new ventures less than 3.5 years old] are likely to be ravaged.”
The report also called for interventions in terms of government policies and initiatives, market openness, entrepreneurship education and training, and the availability of and access to finance to foster entrepreneurship.
Bowmaker-Falconer said: “Government is an enabler and fully supports and understands the importance of entrepreneurial development for inclusive economic growth and social cohesion.” Zondi Nduli from Nedbank Corporate Investment Banking said that COVID-19 has presented many opportunities like online trading.
“The innovation that has been shown by those in areas like education, entertainment and retail makes a very compelling case for the continued development of these into predominantly online business sectors,” Nduli said.
“And if such focus is accompanied by a parallel commitment to providing the support to SMMEs that has so long been promised, digital could easily become the new mainstream economy in this country.”
Dumisani Moyo, head of mid-market: Southern Africa at SAP, said: “SMEs need to act quickly to make their businesses more resilient. Technology can empower SMEs to make credible decisions.”
