SAB-Commissioned Research Shows SA Poised To Reap Entrepreneurship Rewards

SAB-Commissioned Research Shows SA Poised To Reap Entrepreneurship Rewards

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Every country has both significant opportunities and challenges.  It is becoming increasingly evident that corporates have a big role to play in addressing both.

Companies, particularly large ones like The South African Breweries (SAB) with all its scale and resources, not only do they have a responsibility but a duty to invest in a better world for all.

We know that entrepreneurship can have a huge impact on the growth and development of countries. That is one of the main reasons SAB is backing entrepreneurs 100%. The level of their impact was reaffirmed by recently released research by the Global Entrepreneurship and Development Institute (GEDI).

Not only is the environment for entrepreneurship in South Africa more conducive to small business development than many had previously believed, it also places the country ahead of some of our partners in the Brazil, Russia, India, China and South Africa (BRICS) economies and several others.

Related: SAB Launches Entrepreneurship Campaign To Create 10 000 Jobs In SA

This is pretty significant, given that the South African government’s National Development Plan (NDP) envisages that 90% of jobs will be created in small and expanding firms and that by 2030, the output from these firms would have grown substantially.

The GEDI research indicates it is commonly believed that South Africa does not nurture small businesses. This is mainly because self-employment makes up a comparatively small share of the total, relative to other African countries where it dominates employment.

It is, however, interesting that the report found that high levels of total entrepreneurial activity correlate globally with lower GDP, prosperity and development, and vice versa. Once you scratch beneath the surface, this begins to make better sense.

In less developed economies, it is harder to grow a small business beyond a basic survivalist enterprise. That is often where the story ends: These businesses never grow, therefore, they never employ more than a handful of people each.

By contrast, South Africa has a number of high-growth and high-tech start-ups that have carved out a place among the top companies on the planet and one of the continent’s only two “unicorns”, private, venture-backed companies valued at $1 billion or more, in the form of Promasidor Holdings.

By looking at the entrepreneurship ecosystem rather than at individual entrepreneurs, the GEDI research found South Africa to be the leader on the Continent when it comes to entrepreneurial activity. Furthermore, the potential is enormous. So, once South African start-ups have weathered the initial turbulence that comes from establishing a small business, they have the ability to grow significantly and even potentially compete globally.

In a nutshell, South Africa performs better where it counts: in entrepreneurial aspirations, innovation, high growth, internationalisation and risk capital – the main pillars that lead to economic growth.

The good news is: We have the capability to cultivate world-class, high-growth, highly innovative businesses from scratch and push on to achieve global competitiveness. The unfortunate news is that we have bottlenecks in the system that make it very difficult for entrepreneurs – especially those from disadvantaged backgrounds – to get a start in the first place.

If entrepreneurship is a two-stage rocket, we are good at getting the ones that make it past stage one into orbit but too many fail to launch at all.

That is largely a function of our dual economy:  Poor education and skills, lack of social capital, limited access to risk finance, markets and knowledge networks. This leaves many aspirant entrepreneurs stranded at the idea phase, while a culture that prizes formal employment and shuns risk makes entrepreneurship a seemingly unattractive option.

All this is changing though.

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SA’s Broad-Based Black Economic Development (B-BBEE) legislation is designed to promote inclusion, encouraging big corporates to consider emerging suppliers for integration into their supply chains and stimulating investment in enterprise development, education and skills training, among others.

There is a huge pool of funding available, which, as we learn more about the bottlenecks in our entrepreneurship ecosystem, is being deployed more effectively.

Related: The Journey Of Entrepreneurship: How The Tough Get Going

At SAB, we have one of the longest-running entrepreneurship programmes in the country – SAB KickStart – which focuses on youth-owned businesses.

It complements the SAB Foundation, an independent trust that primarily also promotes entrepreneurship and social innovation. There are also recent additions, SAB Thrive, a black private equity fund set up by SAB to transform the company’s supplier base through acquisition, business development and fostering entrepreneurship, and SAB Accelerator, an incubator with the aim of growing SAB’s supply chain to be inclusive of black-owned, especially black women-owned businesses. And then there are the agriculture projects, where we are investing R610-million over five years to establish thriving barley, hops, maize and malt industries in South Africa to strengthen rural employment and job creation.

These initiatives, and our commitment to create 10 000 authentic, real and sustainable jobs through entrepreneurship within five years, demonstrate our desire to make a difference in society and our faith in the ability of entrepreneurship to drive growth and employment.

In fact, we commissioned the GEDI research because our daily interaction with emerging entrepreneurs led us to question the prevalent assumptions about the deficiencies in the system.

In the 23 years since the launch of SAB Kickstart, we have developed a deeper understanding of what it takes to propel small businesses past the launch phase. As such, we have refined our support systems to boost them to scale.

We have also built a multi-pronged programme to provide support, finance where required, mentorship and skills, access to markets and supply chains across the entire trajectory of a small business – from idea phase to developing the skills to manage a business, to achieving the scale, quality consistency and sustainability that a large corporate like SAB requires of its suppliers.

We have the capacity – and we have ramped up the budget – to significantly expand these programmes and with the introduction of SAB Thrive and Accelerator to complete the circle, but it is also about a change in approach.

Whereas we have concentrated, up to now, on the entrepreneur, in future we will focus on the job-creation potential of candidate businesses.   We have also changed the way we think about procurement to make inclusion a serious consideration when we choose our suppliers.

The GEDI research shows South Africa is an entrepreneurial leader in Sub-Saharan Africa and has made considerable progress in overcoming structural factors to produce some of the most innovative and successful enterprises on the Continent.

South Africa provides the institutional support necessary for high-growth businesses to emerge and thrive, while government policies work to close historical gaps. With the addition of targeted, co-ordinated policies to address remaining bottlenecks, the country is poised to achieve greater growth through entrepreneurship.

We can achieve far more if we work together, if we make small business development an area where corporates share data and lessons learnt, link suppliers into one another’s supply chains and work more closely with government to ease the regulatory burden for small businesses.

If we can bridge the divide between the thousands of entrepreneurs struggling in the early stages of business development and the dynamic environment at the apex of the system, we can create high-growth enterprises in numbers that would change our employment outlook and harness the demographic dividend of a youthful nation.

As a responsible corporate citizen, we are committed to continuously building on the foundations we have laid over past two decades to drive sustainable entrepreneur development. Entrepreneurs are our future!