South Africa is ranked 55 out of 137 countries globally in a study by the Global Entrepreneurship and Development Institute (GEDI).
This article was originally published on Fin24. Read the full article here. Written by Lameez Omarjee.
The study was commissioned by South African Breweries (SAB) and the Allan Gray Orbis Foundation which released the report, “Entrepreneurial Ecosystem of South Africa: A Strategy for Global Leadership Report”.
South Africa is included in the top 25% of countries globally. Its strengths include competition – as 53% of new businesses are competitively positioned, the global average for this is 43%. And 52% of new businesses offer new products, this is above the global average of 40%. About 57% of new businesses use new technology, whereas the global average is at 47%.
South Africa’s depth of capital market scores 75, where the global average is at 41. “Deep capital markets provide the highest tier of financing, while improving access to finance at lower levels could improve the country’s conditions considerably,” said the report.
The report shows South Africa provides better conditions for entrepreneurship than 20 countries that have higher per capita GDP. These include Russia, Mexico, Brazil and Thailand. In sub-Saharan Africa, South Africa is second to Botswana as a front-runner in entrepreneurship in the region. South Africa is still ahead of Namibia, Gabon and Ghana.
According to the report, the country is on par with other middle-income countries around the world when it comes to entrepreneurship. It also provides the institutional support needed for high-growth businesses to start-up and thrive, said the report.
Entrepreneurs in South Africa have overcome structural factors such as the slow GDP growth, and competition from larger firms dominating the business market. South African entrepreneurs excel at “spotting” opportunities, product and process innovation, high growth potential, risk acceptance and internationalisation.
However, its weakest area is start-up skills, followed by low-risk capital, weak technology absorption and human capital.
“The country is poised to achieve further growth in years to come through entrepreneurship,” said the report.
This is the opposite of trends observed about the misconceptions about South Africa’s lack of entrepreneurship and perceived poor performance against other countries, said SAB Foundation Director, Bridgit Evans.
The report suggests that South Africa needs to help more entrepreneurs get skills and education needed, access to banking must be expanded, especially mobile banking. Further, improving technology absorption through the focus on digital technology is needed. Improving the conditions for entrepreneurship by ten percent could add $176 bn (R2.3trn) to the economy, the report said.