Doing Business in SA

Doing Business in SA

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On the whole, South African entrepreneurs perform better than their African peers, but tend to be more negative.

This is according to the Monitor Africa Entrepreneurship Benchmarking Survey 2012, which released early results ahead of Global Entrepreneurship Week.

This week marks the start of 2012’s GEW, and while entrepreneurship is important all year round, GEW is the perfect time to critically evaluate the state of entrepreneurship in South Africa, and discuss where opportunities lie.

The Monitor Group has entered into discussions with the IDC, Department of Economic Development and CIPC to discuss the state of entrepreneurship in South Africa and where policy can assist SME growth.

SA in favour of entrepreneurship

South African respondents to the Monitor survey were more positive than their international and African peer group in two spheres: They agreed that financial strategies give entrepreneurs alternatives to traditional debt and equity and that a culture that supports entrepreneurship is evident.

However, they were below the peer group in education, infrastructure and legislation. There was an overriding belief that education does not equip people to manage or work in entrepreneurial ventures, with the general feeling mirroring a respondent claiming that “At this point education is not preparing people to be anything, never mind entrepreneurs.”

 

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Interestingly, while infrastructure in South Africa is actually better than peer states, respondents were negative, particularly about ICT issues, citing broadband as a serious bottleneck in the country.

Legislation was pegged as favouring large businesses that can absorb the costs of compliance. For example, one respondent answered that “The CPA is restrictive. All my products need a chemical analysis which is costly for me but for big business is a drop in the ocean.”

The role of big business

The relationship between big business and SMEs has multiple levels in South Africa. On the one hand, large, established firms are viewed as a significant barrier to market entry by many small business owners.

Respondents who agreed that new and growing firms can enter markets without being unfairly blocked by well-established firms were as low as 17% in South Africa (meaning over 80% believe large firms are a major barrier to entry).

However, these same firms play a critical role as anchor clients for SMEs. According to SBP’s SME growth index, 49% of small manufacturing and business services firms see big corporates as their main clients. This creates an interesting dynamic whereby big business might be viewed as a stumbling block for many SMEs, but is also its biggest client base.

Get involved

There are a host of GEW events happening throughout the week:

Branson Centre of Entrepreneurship

Various events throughout the week. Visit http://www.bransoncentre.org/SouthAfrica/home.html for more information.

The Hub Johannesburg

Various events throughout the week. Visit http://johannesburg.the-hub.net/ for more information.

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