by Cara Louw

African entrepreneurs an example to SA

SA can increase entrepreneurial activity by following the lead of African neighbours

Africa has proven to be an example to southern African entrepreneurs
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The African continent is boasting high levels of entrepreneurial activity, as well as positive entrepreneurial spirit. However, South Africa is lagging behind when compared to its African counterparts and other efficiency-driven economies.

This is according to Nimo Naidoo, project manager of the Sanlam / Business Partners Entrepreneur of the Year® competition, who believes that South Africa should aspire to instil a positive entrepreneurial culture in the region, similar to that of neighbouring African countries.

The latest report reveals that people in sub-Saharan countries hold strong, positive attitudes and perceptions with regard to entrepreneurship. “On average, 70% of the respondents in the sub-Saharan region believe that good entrepreneurial opportunities exist for them over the next six months.

"In addition, the report highlighted a significantly high prevalence of entrepreneurial activity within the region. On average, 28% of respondents were engaged in total early-stage entrepreneurial activity (TEA).” 

Naidoo says South Africa, however, presents contrasting characteristics. “South Africa recorded a 7% TEA level in 2012, which is a 2% decrease from 9% in 2011. While South Africa is better off than it was in 2004 when the TEA level was at 5,4%, the country is a large margin short of other African countries such as Zambia and Ghana, which have TEA levels of 41% and 37% respectively.” 

She concedes that a majority of the sub-Saharan countries differ economically, which could be a reason South Africa seems to be so far behind.

“Most of the sub-Saharan countries that participated in the Global Entrepreneurship Monitor (GEM) survey are factor-driven economies and, according to the research, these economic models tend to have relatively higher levels of entrepreneurial activity than efficiency-driven economies such as South Africa.

"Namibia, however, which is also an efficiency-driven economy, in comparison to South Africa has a TEA level of 18%, which is approximately what we should strive toward.” 

The report reveals that entrepreneurial intentions are highest, on average, in factor-driven economies (48%), decreasing significantly in the efficiency-driven stage (26%) and again in the innovation-driven group (11%). Sub-Saharan Africa reported the highest intentions of any geographic region (53%), which is consistent with its positive perceptions about opportunities and capabilities.

Naidoo says that according to the report, economies in sub-Saharan Africa exhibited the lowest levels of fear of failure, with only 25% of respondents indicating that fear of failure would prevent them from starting a business. “The 2011 South African GEM report revealed that South Africa’s fear of failure rate is also rather low, with only 28% of respondents indicating that they fear failure. These low rates are positive for the region and indicate that South African entrepreneurs are brave when it comes to entrepreneurial ventures.”

Naidoo says that the report also touches on the topic of international migration. “Migrant entrepreneurship has the potential to positively contribute toward both receiving and home economies through knowledge and information transfer. This point is positive for South Africa, as the region will benefit from the broadened opportunities created by migrant entrepreneurship.”

She says it is essential that all major stakeholders, in both the private and public domain, work together in order to develop a positive entrepreneurial culture that supports and encourages local entrepreneurs. “We also need to start making use of our neighboring countries as examples when it comes to entrepreneurship,” concludes Naidoo.

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