DURBAN, SOUTH AFRICA - Only 15% of South African start-ups are successful, despite having the second-highest ranking on the continent, according to the 2018 Global Entrepreneurship Index.
The reasons, along with the state of entrepreneurship in South Africa, were discussed at a recent Entrepreneurship Ecosystem Forum held by the Allan Gray Orbis Foundation.
On the panel were Kizito Okechukwu, from Global Entrepreneurship Network Africa, Venture Capital 4 Africa’s Thomas van Halen, and Dr Nontobeko Mabizela, Allan Gray Orbis Foundation, head of Impact Assurance.
The forum creates a platform for strategic engagement between role players involved in entrepreneurial development. The engagements aim to facilitate the sharing of experiences, successes, and lessons learned, in pursuit of accelerating entrepreneurial development in South Africa.
During the discussion on the state of entrepreneurship in the country, it was stated that job creation remains a key challenge, along with a lack of skills development and insufficient support for entrepreneurs.
A report on the state of entrepreneurship in South Africa, by the Gordon Institute of Business Science, found although entrepreneurial activity is increasing, South Africa still lags behind other countries.
Mabizela said it appeared efforts and successes in entrepreneurship exceed that of our peers in many instances. “However, our entrepreneurs seem doomed to fail. Yes, we record an impressive number of start-ups, but few of these translate into sustainable jobs.”
Discussions highlighted how there are 340 organisations providing entrepreneurial support in the country, but the participation rate is still 40% lower than in comparable countries. Added to this is the challenge of building businesses that create jobs as the South African unemployment rate poses a great challenge, at 38.3%, and youth unemployment at 27.5%.
Support for young businesses is vital to success, as most start-ups will only start breaking even after around 19 months, according to research form Venture Capital 4 Africa.
Last year, research into the key mindsets of an entrepreneur, commissioned by the foundation, showed entrepreneurs have set dimensions that characterise them, including entrepreneurial desire, focus, confidence, diligence, innovation, leadership, motives, resilience and self-control.
At the forum, Van Halen shared research carried out by the organisation which indicated that start-ups who received support had a 50% higher chance of creating jobs, and these created an average of 5.8 jobs. They were also likely to create 60% more revenue and three times more likely to secure investments.
Another key challenge facing entrepreneurship in South Africa is a lack of entrepreneurial skills both at formal and informal levels. To address this skills shortage, the foundation runs three programmes, said Mabizela.
This post originally appeared on IOL: Independent Media:
Entrepreneurs 'Doomed to Fail'