Insight into South African Entrepreneur 

A recent study by Atud and Associates Consulting sheds light on who are South Africa’s entrepreneurs. Understanding who South Africa’s entrepreneurs are can shed light into how the economic growth and job creation priority of government can be approached. Such insight also has a bearing on policies that can enhance the growth of entrepreneurs or understand the factors that promote entrepreneurship in the economy. According to the Department of Trade and Industry (DTI) 2012, out of the 13.2 million people formally employed in south Africa, only 30.3% of those are employed in firms that employ 50 or more employees, 14.4% work in companies that employ between 20 and 49 employees and more than 40% of south Africa’s formally employed persons work in companies that employ less than 10 people.  A majority (more than 60%) of South Africa’s small businesses are less than 5.5years of age according to a Fin Mark Trust Survey, 2011. While about 40% of South Africa’s small businesses are start-ups, 26% are in the growth stage and 37% are established. This has implications for policies that can promote the growth of start-ups and sustainability of small businesses.

Importantly, 58% of South Africa’s entrepreneurs are women and 42% are male. This has implications for the sustainability of small businesses from a gender based analysis. While women constitute the majority of entrepreneurs in South Africa, they face more challenges in the business world than men. Though many women have disproportionate access to entrepreneurial training and  access to finance and credit, they still dominate the entrepreneurial space in South Africa and thus polices that can reduce barriers to women’s success in the business world can promote more entrepreneurship and job creation in south Africa.

From a race perspective and contrary to most popular opinions, Africans owns 83% of all small businesses in South Africa, white own 8%, Indians 4% and Coloured 5%. While the fight for transformation in the work place has for a long time focused on companies that employ more than 50 employees or have a huge turn over (R10million or more) data on small business ownership shows that small businesses which are already owned in their majority by blacks have a greater potential to transform and grow the south Africa’s economy than big business.  If small businesses can double the size of their current employees, they will be employing more than 14million people which is more than the total size of the current South Africa’s formally employed.

Finally a majority of South Africa’s small business owners are less than the age of 40. Though South Africa has the majority of its population in the  age group of less than 40, it also has the majority of unemployed in this group- this has implications of missing the benefits of the current youthful population in advancing growth and development. Policies to promote entrepreneurship within this age group will go a long way to promote growth and job creation in South Africa. A survey by FinMark Trust revealed that 43.1% of small business owners have some high school training and only 8% of small business owners have post-secondary education. This has significant policy implications when analyzing the characteristics of successful small businesses in South Africa, businesses owned by individuals with some formal high school and post high school education have a high success rate than those owned by those with little or no education. Policies aimed at developing the skills of current entrepreneurs and also skill development for potential entrepreneurs can go a long way to promoting sustainable small businesses, and increased productivity and job creation in South Africa.

The growth and success of small businesses in South Africa is not a matter of destiny but will be as a result of the right policy choices made by government and the reaction to such policies by entrepreneurs who will take advantage of those policies and create businesses and jobs. Given that women and blacks constitute the majority of small business owners, policies that can promote the success of these groups will have an even greater effect on the promotion of small business success in South Africa.

Vivian Atud is a Director at Atud and Associates.  This Article maybe republished with acknowledgement of the author.

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