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Hanging on By our fingertips

South Africa’s entrepreneurs are holding on to gains made in 2010 but are still performing below their potential.

Mike Herrington




It is a truth, pretty much universally accepted now, that entrepreneurship has a significant role to play in creating new jobs and growing economies. The news that South African entrepreneurship is still performing below its potential – despite gains made in 2010 – is therefore concerning.

According to the latest South African Global Entrepreneurship Monitor (GEM) research released by the UCT Centre for Innovation and Entrepreneurship at the Graduate School of Business in mid-June, Total Early-stage Entrepreneurial (TEA) activity in South Africa was at 9,1% in 2011, statistically not different from the level of 8,9% in 2010, but the country has slipped back below the median of entrepreneurship rates of all 54 countries participating in the survey.

GEM is the largest research project of its kind in the world and South Africa has participated in the study for the past 11 years. This provides us with unrivalled longitudinal data set upon which to draw conclusions and base policy recommendations.

No new growth

The cumulative data from GEM shows that entrepreneurship in South Africa, after holding steady at low levels for many years, jumped 62% from 5,9% in 2009 to 8,9% in 2010. This was largely ascribed to the 2010 World Cup.

But while we should celebrate the fact that we have not slipped back to pre-2010 levels, something that many observers predicted would happen, we cannot afford to ignore the fact that the numbers also show us that more work needs to be done to support this crucial segment of our economy.

Historically,South Africahas always been below the GEM median. In 2010, the country managed to get above it (by two points) for the first time. The fact that we have slipped below again, despite the fact that our TEA rates are holding steady, is a red flag that alerts us to the fact that we are not performing as well as we should be on the global stage. As global economic conditions have improved, other countries are taking better advantage of this than we are.

There is huge potential for entrepreneurship in this country. Arguably enough potential even to help the government meet its ambitious targets of 5 million jobs in the next five years. If you compare South Africa with similar economies like Brazil and China, we should be performing at about 14 or 15%. In other words for every 100 adults between the ages of 18 and 64, 14 or 15 should be engaged in running their own business. Why this is not happening needs to be interrogated.

SA’s perception of entrepreneurship

The report shows that people’s perceptions towards entrepreneurship in South Africa are changing. Five years ago, only 36% of those surveyed thought that they had the ability to start and run a business and 27% saw opportunities to do so. In 2011, by contrast, 42,8% more people believed that they have what it takes to be an entrepreneur and 40,7% say they can see opportunities out there. And yet this is still not translating into gains on the ground, suggesting that the problems are more systemic.

Over the years, the GEM research has pointed to several factors that inhibit entrepreneurship in South Africa. The major challenges remain top-down corruption, high levels of crime, low standards of education – particularly at primary school level – and poor health among South Africa’s labour force. Significantly,South Africa performed badly on all these metrics in the latest Global Competitiveness Index.

2012 and the BRIC countries

This year the research also looked specifically at BRIC countries – weighing up how South Africa performs relative to this group. The picture that emerged was not pretty, with South Africa only barely pipping Russia at the post on many key metrics.Brazil and China lead the pack with high levels of TEA (14,9% and 24% respectively).

InBrazil, the TEA rate has increased by 28% since 2006 – an improvement attributed to well-managed government programmes to stimulate and support small businesses, as well as numerous legislative reforms that focus on making it easier to start businesses. Surveys amongst citizens also showed a significant increase in perceptions in the population about their ability to start and run businesses.

Media support for entrepreneurship is also a significant factor. In Brazil the media supports entrepreneurial initiative with free advertising and coverage and by publicizing issues affecting entrepreneurs.

National experts participating in the study ratedSouth Africa’s physical infrastructure highest in terms of stimulating entrepreneurial activity, while government entrepreneurship programmes scored lowest. There was strong criticism levelled at the fact that government agencies with significant funding were often still not addressing the needs of entrepreneurs adequately.

Addressing these issues

There are plenty of things that we can do to address these issues. From investing in education and training – especially for the youth who represent the largest segment of the unemployed – R&D transfer, and infrastructure to promoting access to finance and further reducing of red tape. Established business should also be encouraged and incentivized to support small business.

Understanding what is holding us back and finding ways to fix this is important not only to create opportunities for more businesses to emerge, but also to ensure top level support for those business that have managed to hang on since 2010 so that they mature into established firms that will generate more jobs.

Historically South Africa has had a high attrition rate meaning that new business mostly fail before they reach maturity. This is disastrous for the economy as mature businesses generate the most jobs.

We cannot let up the efforts to support and grow these entrepreneurs, transforming South Africa’s entrepreneurial environment, and creating opportunities for lasting economic growth is vital for us all.

Mike Herrington is the team leader on the South African GEM project. The GEM research is funded by South Africa Breweries, The Swiss South Africa Cooperative Initiative and the Small Enterprise Development Agency.

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1 Comment

1 Comment

  1. Rose McClement

    Jun 25, 2012 at 08:59

    Thanks for a very interesting report Mike. For me the crucial factors were only mentioned towards the end – namely the support that Big Business should be giving the Baby Brothers. We are no threat to them and if the small business is going to contribute towards a healthy economy, then there is benefit to be had by all. Yes Government needs to support potential entrepreneurs. But let us not depend on them alone.

    I just want to take this opportunity to speak as a “on the ground, small business entrepreneur”.

    I have to wonder: are the negative influences mentioned in your article ( such as crime etc) the only factors impacting on the slow growth of entrepreneurship in SA. Yes, there are many of us who see the potential to open and run our own business and we know the potential we have within us. But, entrepreneurship I have discovered can be likened to building a house. Line upon line starting with the foundation. My question is : how many of us know how to ‘ build’ a business thinking like an entrepreneur, instead of like a Technician or Manager. When I started out, I didn’t!

    When I woke up to the fact that I have to transform my mindset and behaviour as a business owner from being a Technician to being just that – an Entrepreneur- I realized what I was in for.

    I have looked around me, seen many new businesses fold and not felt very encouraged by this. Again I wonder, could this also be a contributing factor that puts other potentials off becoming entrepreneurs?

    But, there is nothing more that I want than to grow myself as an entrepreneur and to grow my business. I hope that many more potential business owners will join me on the entrepreneur’s journey. But I have to say this in closing – I do wish that the successful entrepreneurs who made it big would come alongside us, without charging us an arm and a leg to gain the knowledge and understanding we need to grow. Somehow it would speed the process up a little more. If they are out there, can someone please point me to them.

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Business Landscape

Never Mind The New Dawn – The Sun’s Shining For Brave SA Entrepreneurs

How do you manage risks and where do you find opportunities where the ‘sensible’ money fears to tread?

Marc Wachsberger




We’re planning to open two new apartment hotels each year, which is a pretty aggressive growth strategy in an environment where land expropriation without compensation is the hot topic of the moment, and investors are looking beyond our borders for growth opportunities.

However, I believe that smart entrepreneurs find opportunity in every financial climate, no matter how dire it may seem on the surface. For example, current investor caution means that those who are willing to take calculated risks face less competition – now and in the long term.

In our sector, international hotel groups are slowing or even halting any investment in improving existing properties or developing new ones. For us, that means our competition is thinning, and that there are more opportunities for us to build on prime sites for which we would have had stiff, if not insurmountable, competition in the past.

Related: 10 SA Entrepreneurs Who Built Their Businesses From Nothing

How do you manage risks and where do you find opportunities where the ‘sensible’ money fears to tread?

  • If an issue seems to be an obstacle, do your research to understand all the implications. In the property business, we’re finding out how to structure our new builds and acquisitions so that they’re unlikely targets for any potential expropriation, including focusing on transformation, job creation, and promoting tourism – all elements of the National Development Plan.
  • Find ways to make your investment opportunities appealing. For example, Section 12J of the Income Tax Act offers scope to create investment options that reduce tax liability and offer alternative sources of return.
  • One of South Africa’s biggest challenges is a shortage of skills. We’re changing that by investing in our people, giving them access to training and career growth opportunities, and teaching them how to be entrepreneurs. We believe that these skills will either help our business grow, or they’ll give the individuals the courage they need to launch their own businesses – yet another great outcome for the country.
  • While South Africa is developed in many ways, it still has many characteristics of an emerging market. This means that there are still many opportunities for brave entrepreneurs here, equipped with the ‘can-do’ attitude for which we are famous, that wouldn’t likely be available in more developed markets.
  • Even though countries like Nigeria and Kenya are gateways to their regions, South Africa remains a gateway to SADEC countries and markets beyond. Adapting your products or services to appeal to those travelling through South Africa is a way of growing your client base too. For example, we have found that our apartment hotels in the Sandton district are particularly popular with visitors from the continent who come to the city to shop – but who don’t like local food. They choose our hotels because they can prepare their own favourites in our apartments’ fully equipped kitchens – clear example of how adapting to meet the needs of a potentially ‘lost’ opportunity can carve a niche for your business.
  • Work harder than your competitors to convince bankers and shareholders that you’ve done everything possible – and then some – to manage risk. If you can tell a compelling story supported by solid facts, investors are likely to make decisions more quickly, giving you the edge over your competitors.

Related: 10 Successful SA Women Entrepreneurs’ Top Advice On Balancing Work And Family

Ours is truly a homegrown business, with long term plans to continue our growth throughout South Africa. Current risks have certainly made us sharpen our proverbial pencils but using these risks to identify opportunities and research them into reality has seen us stand out from our competitors.

Any business that takes the time to interrogate challenges properly will find opportunities where others flee in uninformed fear. Do your homework and you’ll agree with me: South Africa really is one of the best places in the world to build a new business.

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Business Landscape

Saving Time When You Need It Most

With the right tools in place, thanks to TomTom Telematics, the company’s Emergency medical technicians can reach the scene faster — and as a result, they can concentrate on what they do best, saving lives.

TomTom Telematics




Vital Stats

No two industries are alike. Each sector faces its own unique challenges, and businesses within those sectors have specific KPIs they need to deliver on. For businesses in the emergency medical services sector, time is of the essence. Seconds can mean the difference between life and death.

For a company like Redicure EMS, how quickly an ambulance can reach the scene of a medical emergency is at the very heart of its value proposition.

“Every day we have another chance to save a life,” says Rosert Manamela, an emergency care practitioner at Redicure. “But to do that, we need to be able to get to the scene on time.”

Racing the clock

Redicure has a strict policy that all ambulance drivers stick to the rules of the road at all times. “We have lights and sirens, but we still need to be safe. You can’t assume everyone else sharing the road with you has heard or seen you.”

Related: How TomTom Telematics Can Keep Your Business Moving Forward

The company’s entire fleet utilises TomTom Telematics devices for this reason. “We’re able to receive up-to-date information on traffic within the area as well as alternative routes. When you’re racing against the clock you don’t have time to consider your different options — you need an immediate plan of action that will get you where you need to be.”

Thanks to this platform, which links each vehicle on the road with Redicure’s control centre, the EMS provider’s promise to all of its clients is that an ambulance will be on the scene within 15 minutes. Because vehicles are tracked, the trained emergency care practitioners — who are both monitoring the vehicles and in contact with the client who requires emergency services — can keep everyone informed from the control centre.

Pushing the boundaries of innovation

After two years operating in the medical emergencies sector, and based on their relationship with TomTom Telematics, the team at Redicure began to evaluate what else they could do to support the safety and wellbeing of South Africans facing a medical emergency.

“WEBFLEET is open API, which means it can integrate with any other applications you have,” explains Rosert. “We understood the value TomTom Telematics had brought to our business by enabling us to get to emergencies as quickly as possible, and so we started thinking about what else we could do with this technology.”

The answer was instant access to Redicure in the case of an emergency. “Once you solve the problem of how quickly an ambulance can reach you, the next challenge is how quickly you can get hold of an ambulance. We approached this problem with an understanding that in an emergency people don’t always have all the information they need on hand — who should they call, can they get through, and how quickly can the control centre gather all the information they need to be able to dispatch an ambulance? All of this wastes precious time.”

Related: How TomTom Telematics Is Blurring The Lines Between Your Fleet And The Office

In response to this clear need, Redicure has piloted the Redicure app with Tshwane University of Technology across its six campuses. Each student has been encouraged to download the app. In the case of an emergency, one push of a button immediately sends a signal to Redicure’s control centre, complete with who needs medical assistance, all of their contact details, and most importantly, their location.

Through TomTom Telematics’ WEBFLEET solution, an alert is then sent out from the control room to the closest ambulance in the area, and the client is contacted with up-to-date expected arrival times.

“We’re changing the face of medical emergency response times, thanks to technology that enables us to get to the scene of a medical emergency more quickly and efficiently,” says Rosert.

“We’re also fine-tuning what we do on a daily basis, thanks to the information available through WEBFLEET. With TomTom, we’re not only working with collaborators who understand our business, but support the development and growth of our services and products, allowing us to push the limits of what’s possible in our industry.”

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Business Landscape

4 Vital Differences Between King III And King IV™ On Corporate Governance

April 2018 marks a year since the effective date of the IoDSA’s (Institute of Directors in Southern Africa) latest report, the King IV Report on Corporate Governance ™ (King IV™), on effective and ethical corporate governance.

Ilana Steyn




What is the King Report?

If you’re not familiar with the King Reports: it’s a series of reports that translate international standards and big-time happenings on corporate governance into set of local principles. Each new Report replaces the former.

The aim of the King Report is to set up actionable principles for South African company leadership to act as modern, good corporate citizens.

It also ensures those in leadership positions act in the best interest of the company and all parties influenced by the company. The first Report, King I, published in 1994, and was the first officiated document of its kind in South Africa.

Why is it useful to my business?

The Report also promotes transparency within your company’s leadership to ensure transgressions aren’t hidden that will eventually damage the company.

Related: South African Millennials Key To Enforcing King IV

The Report also ensure blunders can be evaluated, found and corrected ASAP. Today, its mandatory for all JSE listed companies to implement the Report into their company policy. If you’re a smaller business or a non-profit, you can comply with the Report voluntarily; by applying the principles you’re essentially ensuring the long-term sustainability and survival of the business.

It also helps that create a healthy corporate culture and when your business’s foundation is healthy, growth is unthreatened. If you haven’t applied any of the former Reports in your business, you’re in luck; King IV™ is the simplest, and seemingly the most practical, Report in the family of four reports.

Why was King IV™ needed?

Companies, especially smaller businesses, often struggled to apply the King III due to its long-winded structure.

Also, King IV™ was needed because King III, published in 2009, was out-dated in terms of present-day concerns like technological advances, the increased need for online transparency, long-term resource sustainability and information security.

Here’s the rundown of the most significant differences between King IV™ and King III.

1. King IV’s™ structure is much simpler to apply

While King III did a good job of summarising the extensive scope of effective and ethical governance into 75 principles, the Report still lacked clear guidance on real-world application.

Ensuring the effective incorporation of all 75 vague, ethical principles was too exhaustive for most companies to implement, monitor and account for. That’s why King IV™ took a different structural approach.

King IV™ boiled good corporate governance down to 17 simplified principles, each supplemented with various recommended practices to make it easier for smaller companies to implement the principles within their day-to-day running.

2. King IV™ spotlights practical implementation

King III lists multiple ethical principles and then commands companies to explain how their management and actions honour those principles.

Unfortunately this meant companies approached it like a mindless compliance checklist.

King IV™ also states principles, but more importantly, requires organisations to actively report on the implementation of the recommended practices thereof.

Mervyn King, the chair of the King Committee, dubs this the shift from a “apply OR explain” mentality to a “apply AND explain” mentality. The Report also allows organisations to report on alterative-implemented practices – provided they support and advance the principle.

To make the application simpler to grasp, King IV™ clearly differentiates between the long-term Outcomes, the ethical Principles and the recommended Practices.

Essentially the new structure and its requirements mean companies have to engage in thoughtful implementation and reporting of those practices.

Related: 5 Thoughts To Give You The Courage To Make Change

3. King IV™ is inclusive to more than just large companies

After King III, there was a significant demand for the inclusivity of smaller businesses, and governmental or non-profit organisations in the King Report.

Consequently, King IV™ dedicates an entire supplement chapter to guiding municipalities; non-profit organisations; retirement funds; small and medium enterprises and state-owned entities in the implementation of the Report.

Also, where King III used terms like “companies” and “boards”, King IV™ very purposefully uses more inclusive terms like “governing bodies” and “organisations” throughout the report.

It’s clear that King IV™ aims to move the principles on good corporate governance into real-world action – for all organisations.

4. Difference 3: King IV™ pushes for more accountability, transparency and reporting

What King IV™ does quite differently from King III, is recommending the application of its principles within set timelines, reports and committees within it’s recommended practices.

King IV™ strongly propagates transparency, the delegation of responsibility and the implementation of accountability by putting pen to paper in term of officiated aims, bodies responsible for those aims and the provisions of consistent reports.

Take leadership as an example, where King III would just stipulate what being a good leader means, King IV™ advises you to set goals, delegate responsibility and evaluate progress through reports and accountability.

An example would be to set up a committee, consisting of lower management levels, with clearly identifiable responsibilities and then to measure their progress via reports.

It comes down to the ignorance no longer being a valid excuse. Directors should be aware of all issues within your company.

Directors should take responsibility for everything that happens within their organisation – you can’t plead innocence on the grounds of not knowing. There should rather be reports in place to identify and uncover any discrepancies early on.

Essentially, where King III lacks in the aim of ensuring the actualisation of good corporate citizenship, King IV™ steps up the game.

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