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Unlocking Opportunities: Navigating Entrepreneurship in South Africa

“Entrepreneurship” is the buzzword of the decade and maybe a bit longer than that. It has been heralded as the all-encompassing solution to most if not all the economic problems faced by people particularly in South Africa, the rest of the African continent and in some cases the world at large. For entrepreneurship to occur we first need an “Entrepreneur”. This is defined by the Merriam Webster dictionary as “one who organizes, manages, and assumes the risks of a business or enterprise.”

The world is greatly polarized when it comes to the topic of established entrepreneurs being business leaders. On the one hand it has glorified entrepreneurs with an almost cult-like following, especially those who have managed to turn their ideas into the behemoths that dominate the business landscape today. However, there exists a significant disdain for successful entrepreneurs on the opposite end of the spectrum for one reason or another. I believe one reason for this disdain stems from our innate tendency to dream, yet the harsh realities of life often make pursuing these dreams costly. It's disheartening when our aspirations remain unfulfilled. Consequently, due to the perceived risks associated with ambitious dreaming, many in society opt to prioritize pragmatism over idealism. So, what becomes of dreams when the last visionary has departed? I am one of those people who hold entrepreneurship near and dear to my heart. I am greatly fascinated by the process of growth and creation. The turning of ideas and dreams into reality. The bigger the dream, the more daunting the task to make it happen and the greater the reward for the monumental efforts made!

South Africa out of all the African countries would look a very favorable place to become an entrepreneur. When compared to the rest of the continent, the infrastructure and technological development of the nation rival the best not only in Africa but also the world. Given its status as the third largest economy on the continent (STATISTA, 2023) and the presence of substantial corporations competing globally, coupled with the top practices adopted by the nation’s financial institution, one might expect funding not to be a significant issue. The higher levels of unemployment serve as an additional incentive for the population to turn towards entrepreneurship as a means of job creation and economic development. South Africa boasts one of the strongest legal systems globally. In comparison to other African countries, it sets a standard that many aspire to achieve, despite the unique challenges it faces. When looking at the rest of Sub-Saharan Africa, the grass definitely is not greener on the other side. One would be forgiven to make the assumption based on these reasons that South Africa is the perfect place to be an entrepreneur in Africa!

The actual circumstances faced by entrepreneurs in South Africa diverge from the initial impressions one might gather from a superficial analysis of the economy. Whilst South Africa boasts established infrastructure development, accessibility is not uniform across all the economic classes within the nation. Micro, Small and Medium Sized (MSMEs) entities account for about 98% of the businesses operating in the country (UNCTAD, 2023). Most of these entities fall in the informal sector. South Africa has a large informal sector with an estimated 3.3 million micro and informal businesses (Mastercard, 2023). This is in a country where the unemployment rate is 31.9% as of November 2023 (Government, 2023). The MSMEs contribute less than a third of all formal jobs in the nation, leaving the bulk of the burden of job creation to a small number of large employers and the government. The country's nascent entrepreneurship rate is below the global average, impacting job creation and economic growth. In South Africa, many entrepreneurs find themselves trapped in a constant struggle for survival, unable to break free from the cycle of financial insecurity. Entrepreneurial endeavors often prioritize mere survival over thriving. One of the most common questions that gets asked is “How to be an entrepreneur without money?” due to the simple reality that financing is usually provided to those who already have it. What does it mean for a society when the majority of aspiring entrepreneurs are unable to access the funds they need to turn their dreams into reality? Those who most desperately need funding are unable to obtain it from financial institutions because of several reasons, namely the lack of collateral to leverage against the funds obtained, inadequate education and skills to provide the necessary documentation + forecasts required by banks, financiers and investors. Most of the big dreams that people have end up following them to the grave just as a result of how daunting of a task it is to obtain funding. The Global Entrepreneurship Monitor South Africa rated the nation at 3.4/10 for the rate of ease of access to entrepreneurial finance (GEM SA, 2024). Moreover, navigating through regulatory red tape poses significant obstacles, further complicating the already challenging journey of entrepreneurship. In addition, the presence of cartels in lucrative industries, coupled with navigating through these barriers, often compels even the most idealistic entrepreneurs to adopt a pragmatic approach. The options they have are simple: keep soldiering on despite the odds being stacked against you, relocate to a friendlier environment that will value your expertise like many other brilliant minds or give up the dream and do what you can to feed your own.

As we conclude this glance at entrepreneurship in South Africa I’m sure you are pondering the same question I am asking myself: What lies ahead for the South African entrepreneur  despite facing significant challenges? other African nations have seen remarkable entrepreneurial growth. In our next installment, we'll venture into the vibrant world of entrepreneurship, uncovering the foundation of visionary individuals driving innovation and change. It is said for entrepreneurship to succeed, 40% of the success is dependent on the entrepreneur (Friedrich, 2024)!

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