Cape Town Leads SA Entrepreneurship

Cape Town Leads SA Entrepreneurship

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Cape Town remains the undisputed entrepreneurial leader among South African cities, although experts are uncertain about exactly why the Mother City nurtures higher concentrations of entrepreneurs compared to the rest of South Africa.

Business development experts canvassed for the launch of the website of this year’s Telkom Cape Town Entrepreneurship Week confirmed Cape Town’s status as South Africa’s leading entrepreneurship centre.

Research favours Cape Town

Research by the Global Entrepreneurship Monitor (GEM) puts Cape Town’s entrepreneurship levels at 65% above that of the whole of South Africa. In contrast, Johannesburg, South Africa’s main economic hub, records only about 24% above the national average.

An even more dramatic figure hints at one of the reasons for Cape Town’s lead. The city’s concentration of opportunity entrepreneurs (those who start businesses because they want to rather than because they have no other choice) is a whopping 190 percent above the average for South Africa.

Maybe they just like Cape Town

Mike Herrington, professor at the University of Cape Town’s Graduate School of Business who heads up the GEM research, explained that people who choose to start a business are often in a position to choose where they want to live.

Cape Town is the “city of choice” especially among young people, and therefore tends to attract entrepreneurial, educated types. The fact that the greater Cape Town has four universities further helps to attract entrepreneurial potential to the city.

Is it education?

Better basic-education results could have a positive influence on entrepreneurship levels in Cape Town, because the link between education and entrepreneurship is “incontrovertible”, said Herrington. But he warned the causes of Cape Town’s lead in entrepreneurship levels are still open to speculation and based largely on anecdotal evidence.

Is it the business culture?

Other experts point out that the business culture in Cape Town is conducive to entrepreneurship. Local and international trade is as old as Cape Town itself, says Mansoor Mohammed, head of Responsible Impact, an organisation that promotes innovation and social entrepreneurship.  Like San Francisco and Barcelona, Cape Town’s history as a trading port makes for a deep entrepreneurial culture.

Or is it the money?

Jaco van der Bank, University of the Western Cape entrepreneurship  lecturer and founder of Crowdinvest, said Cape Town’s “old money” makes for a well-developed networks of angel investors with anything from R10m to R100m each to invest, that are hugely important for giving new ventures the break they need.

No great feat

All the experts agreed, however, that being the entrepreneurial capital of South Africa may not be saying all that much. South Africa has overall low levels of entrepreneurship compared to its economic peers. The latest GEM results show that one in eleven South Africans run their own businesses, compares to one in seven Brazilians.

When it comes to youth entrepreneurship, which is the theme of this year’s Cape Town Entrepreneurship Week, South Africa lags behind even more. GEM research shows that South Africa has roughly half of the youth entrepreneurship levels of its economic equivalents. For example, only one in 15 of 18- to-24-year-old South Africans run their own business, compared to one in eight among South Africa’s economic peers.

The Telkom Cape Town Entrepreneurship Week will kick off on 9 and 10 November with a youth entrepreneurship conference and expo at the Bellville campus of the Cape Town University of Technology. Community-based organisations and business clubs throughout Cape Town will hold their own events to make up a city-wide festival of entrepreneurship.

Entrepreneur
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