Why so few entrepreneurs?

What is REALLY holding SA’s entrepreneurship levels back

“South Africa’s rate of entrepreneurial activity is very low for a developing nation – a mere quarter of that seen in other sub-Saharan African countries.”  According to a recent Global Entrepreneurship Monitor (GEM) report, “Only 2.7% of adult South Africans own or manage an established business.”

Why do we have so few successful entrepreneurs?  In her article Entrepreneurship: The Ultimate White Privilege, sociologist Lethabo Sekele cites a school of thought that argues that “individual traits and psychological factors are far overshadowed by societal structures which are designed to benefit only the elite groups in society.”

Indeed, social structures developed under Apartheid continue to ensure that black South Africans lack the heritage of positive social capital that is bred into whites. Consequently, too many black people lack the persevering confidence necessary to take risks that ultimately lead to business success.

Lethabo points out that this structural legacy is reinforced by “the two-tiered private-public education system [which] means that not everyone will enjoy equal opportunities because of the level of the quality of the education that they have received.”  Indeed, “the majority of the recipients of public education, which is characterized by a lack of resources and a shortage of skilled staff, are mainly black and concentrated in townships and rural areas.”

first published in SME South Africa

Lack of skills and opportunities

This observation is supported by GEM’s findings that the “level and quality of education in South Africa is one of the worst in the world.” “Many school-leavers do not have sufficient literacy, numeracy and livelihood skills to be able to participate actively in the economy.”

As a result, the “perception of opportunities to start a business, and confidence in one’s own abilities to do so, remains alarmingly low” More than 25% of people don’t start a business because they fear failure.

Lethabo reminds us however that “individual attributes are an important factor in determining the fate of individuals.”

Nelson Mandela encouraged Makhaya Ntini writing: “Everyone can rise above their circumstances and achieve success if they are dedicated to and passionate about what they do.”  And they should know.

Lebo Gunguluza also shares that view.  Although his father died when he was young, his mother raised him as best she could. Lebo committed himself to be a millionaire by the age of 25.  Without outside support or funding, he achieved his goal by age 27.

Need for support and inspiration

But achieving business success is not as easy as it may sometimes appear. The Dragons of the popular TV show note that the ingredients for being an entrepreneur have to be in your DNA.  How do you know if it’s in your DNA?  And how does it get into your DNA in the first place?

For most of us, we need appropriate education and good role models. Persevering family members, relevant learning, supportive community, encouraging achievements; all are necessary for us to believe that we can make it too.

Recognising these needs, successful entrepreneurs like Lebo Gunguluza co-founded the South African Black Entrepreneurs Forum. SABEF inspires and supports black people who believe that they can succeed in business just as its founders have.

Yusuf Randera Rees co-founded the Awethu project to give aspiring black entrepreneurs a leg up with relevant learning and financial support. Awethu has incubated hundreds of entrepreneurs.

What we are beginning to see, notes the GEW report, is that almost 60% of black African early-stage entrepreneurs were motivated by opportunity and not by force of necessity. There is hope yet.

How can you help aspiring South African entrepreneurs, either as a role model or as a mentor?



Click here if you want to discuss how mentors can help more emerging entrepreneurs to be successful.

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