Tag: Doing Business

Solving SA’s unemployment crisis through entrepreneurship

Posted on by Webmaster

While the unemployment rate for the fourth quarter of 2016 as released by Statistics South Africa on Tuesday decreased from 27.1% (Quarter 3 of 2016) to 26.5%, urgent action and support structures are still required in order for local entrepreneurs to do what they do best – create jobs.

This is according to Kobus Engelbrecht, spokesperson for the 2017 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who says that one of the surest ways to further bolster employment figures in South Africa is to place more emphasis on the promotion and development of entrepreneurship.

Engelbrecht points to the latest Global Entrepreneurship Monitor 2016-2017 which states that small and medium enterprises (SMEs) in South Africa contribute 36% to GDP. “However, we could improve this figure if we make business conditions more conducive to growth.” Engelbrecht references the 2017 World Bank’s Ease of Doing Business report ranked South Africa 74 out of 190 economies – down from 72 in 2016.

If SMEs are to increase their contribution to the local economy, and in turn, the number of jobs they create, we need to ensure that we have an enabling environment and entrepreneurial ecosystem that allows entrepreneurs to thrive, says Engelbrecht. “The number of people a small business can employ is ultimately determined by many factors including the sector it is in, its turnover and length of time it has been in operation. The more stable the business, the more staff it can employ fulltime.

“South Africa’s established business ownership rate – the percentage of owners/managers of businesses that have been in operation for more than 42 months – is ranked 61/65 in the GEM 2016, while its Total Early-Stage Entrepreneurial Activity (TEA) – businesses that have been in operation for less than 42 months – is ranked at 52/65. This highlights how more emphasis should be put on ensuring that entrepreneurs – in all business cycles – have the necessary support to grow their business from a start-up to an established, thriving enterprise.”

The South African Institute of Chartered Accountants (SAICA) SME Report 2016 reported that of the SMME respondents with a turnover between R100k and R5 million per annum, 47% employ between two and five people, 33% employ between six and 49 people, and only 4% employ over 50 people. The balance of 16%, don’t employ any people, except for the business owner. “More needs to be done to bolster these employment figures.”

Engelbrecht adds that it was encouraging that the recent State of the Nation Address listed the development of SMMEs as a key focus area in the Government’s Nine-Point Plan. “With more focus being placed on the development of opportunities for entrepreneurs, it will enable Government to work towards the National Development Plan’s target of ensuring that 90% of new jobs will be generated by SMMEs by 2030,” says Engelbrecht.

“South Africa is home to many motivated and aspiring entrepreneurs, with 72.6% of the adult population believing that entrepreneurship is a good career choice*. Through platforms such as the Entrepreneur of the Year® competition, we have seen the impact made by previous finalists, creating jobs and uplifting their respective communities. The challenge now is to provide the necessary programmes and support needed to upskill and develop future entrepreneurs,” concludes Engelbrecht.

*GEM 2015/16 data.

Who’s the best?

Posted on by Webmaster

South Africa vs. Sub-Saharan Africa entrepreneurs

There has been much talk around the rise of the African continent and many comparisons have been made between entrepreneurship and business levels in South Africa and other African regions.

According to Christo Botes, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, while some countries report higher entrepreneurship levels, this doesn’t necessarily mean that the small and medium enterprises operating within them are more financeable or sustainable than those in other regions. “It is unfair to compare entrepreneurs of different countries, as each region contains its own strengths and weakness, all of which can impact a business, either positively or negatively.”

Botes says that as an economy develops, so does its entrepreneurial opportunities, but that these opportunities differ depending on a country’s economic structure. “The recent economic boom in Africa has seen many sectors develop and expand and it therefore isn’t surprising that more individuals are exploring entrepreneurship as a possible career choice to capitalise on the continent’s expansion and growth.”

He points to the latest Global Entrepreneurship Monitor (GEM) 2013 Global report, which revealed that Sub-Saharan Africa has the highest Total Early-stage Entrepreneurial Activity (TEA) rates globally. Leading these figures are Zambia and Nigeria with 39.9% of the adult population involved in early-stage population activity, while South Africa, only has a TEA rate of 10.6%.

Botes adds however that although countries, such as Nigeria, have become a hub for investment opportunities, South Africa remains Africa’s gateway to sustainable business and investment opportunities, due to the country’s infrastructure and economic structure.

“Countries around the globe are divided into factor-driven, efficiency-driven and innovative-driven economies, depending on their economic structure and development levels. Countries such as Ghana, Zambia and Nigeria, operate in a factor-driven economy, which thrives on advantages such as low cost labour and untouched natural resources. However, this type of economy is also susceptible to global economic cycles, commodity prices and exchange rate fluctuations.

“In an efficiency-driven economy, such as South Africa, an economy has become more competitive, enabling it to produce and deliver more advanced products, this aids the establishment of more sustainable businesses.”

Botes adds that job creation is also a key differentiator when comparing the countries entrepreneurial business ventures.

“In the recently released 2013 South African GEM report, it indicates that while Sub Saharan Africa displayed higher rates of TEA, only an average of 5.5% of early-stage entrepreneurs between 2001 and 2013 will create over 20 jobs. On the other hand, South Africa, which reported a lower number of TEA, indicated 14.6% of early-stage entrepreneurs will create over 20 jobs during the same period.”

Botes says that, ultimately, factors such as investment in infrastructure, access to investment capital and investor security, play a vital role in the success of a business. “While the rest of Africa is home to many growing and successful entrepreneurs, more developed and established business owners are prevalent in South Africa, due to the country’s developed infrastructure, investor security, as well as the established and successful international and local trade relationships.

He adds that the regulations within a country can also impact a business. “The World Bank’s Doing Business 2014 report, which investigates the regulations that enhance business activity and those that constrain it, revealed that it takes an average of 19 days to register a new firm in South Africa, which is roughly a week longer than it takes in higher-income countries, but 10 days less than countries in Sub-Saharan Africa. With the introduction of the Small Business Development Ministry in South Africa, with its promise to cut the red tape for SMEs, the amount of days should improve further which will bodes well for entrepreneurs in the country.

Botes says that it will however be interesting to witness the shift in factors motivating entrepreneurs in South Africa as other Sub-Saharan Africa regions continue to boom. “This can also be an important motivating factor for South African entrepreneurs to continually ensure their competitive advantage, in order to be sustainable for years to come,” concludes Botes.

Who’s the best? South Africa vs. Sub Saharan Africa entrepreneurs

Posted on by Webmaster

There has been much talk around the rise of the African continent and many comparisons have been made between entrepreneurship and business levels in South Africa and other African regions.

According to Christo Botes, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, while some countries report higher entrepreneurship levels, this doesn’t necessarily mean that the small and medium enterprises operating within them are more financeable or sustainable than those in other regions. “It is unfair to compare entrepreneurs of different countries, as each region contains its own strengths and weakness, all of which can impact a business, either positively or negatively.”

Botes says that as an economy develops, so does its entrepreneurial opportunities, but that these opportunities differ depending on a country’s economic structure. “The recent economic boom in Africa has seen many sectors develop and expand and it therefore isn’t surprising that more individuals are exploring entrepreneurship as a possible career choice to capitalise on the continent’s expansion and growth.”

He points to the latest Global Entrepreneurship Monitor (GEM) 2013 Global report, which revealed that Sub-Saharan Africa has the highest Total Early-stage Entrepreneurial Activity (TEA) rates globally. Leading these figures are Zambia and Nigeria with 39.9% of the adult population involved in early-stage population activity, while South Africa, only has a TEA rate of 10.6%.

Botes adds however that although countries, such as Nigeria, have become a hub for investment opportunities, South Africa remains Africa’s gateway to sustainable business and investment opportunities, due to the country’s infrastructure and economic structure.

“Countries around the globe are divided into factor-driven, efficiency-driven and innovative-driven economies, depending on their economic structure and development levels. Countries such as Ghana, Zambia and Nigeria, operate in a factor-driven economy, which thrives on advantages such as low cost labour and untouched natural resources. However, this type of economy is also susceptible to global economic cycles, commodity prices and exchange rate fluctuations.

“In an efficiency-driven economy, such as South Africa, an economy has become more competitive, enabling it to produce and deliver more advanced products, this aids the establishment of more sustainable businesses.”

Botes adds that job creation is also a key differentiator when comparing the countries entrepreneurial business ventures.

“In the recently released 2013 South African GEM report, it indicates that while Sub Saharan Africa displayed higher rates of TEA, only an average of 5.5% of early-stage entrepreneurs between 2001 and 2013 will create over 20 jobs. On the other hand, South Africa, which reported a lower number of TEA, indicated 14.6% of early-stage entrepreneurs will create over 20 jobs during the same period.”

Botes says that, ultimately, factors such as investment in infrastructure, access to investment capital and investor security, play a vital role in the success of a business. “While the rest of Africa is home to many growing and successful entrepreneurs, more developed and established business owners are prevalent in South Africa, due to the country’s developed infrastructure, investor security, as well as the established and successful international and local trade relationships.

He adds that the regulations within a country can also impact a business. “The World Bank’s Doing Business 2014 report, which investigates the regulations that enhance business activity and those that constrain it, revealed that it takes an average of 19 days to register a new firm in South Africa, which is roughly a week longer than it takes in higher-income countries, but 10 days less than countries in Sub-Saharan Africa. With the introduction of the Small Business Development Ministry in South Africa, with its promise to cut the red tape for SMEs, the amount of days should improve further which will bodes well for entrepreneurs in the country.

Botes says that it will however be interesting to witness the shift in factors motivating entrepreneurs in South Africa as other Sub-Saharan Africa regions continue to boom. “This can also be an important motivating factor for South African entrepreneurs to continually ensure their competitive advantage, in order to be sustainable for years to come,” concludes Botes.