Entrepreneurship in South Africa: more than one approach needed?

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Johannesburg, South Africa

With Global Entrepreneurship Week being celebrated around the world this November, South Africa is once again faced with the reality that despite significant government and corporate investment in entrepreneurship, we are failing to catalyse the type of business creation that our country so desperately needs – notably labour-intensive manufacturing and material beneficiation.

The type of entrepreneur required to start, grow and maintain this level of large-scale industrialisation is arguably years in the making however, and it will take a significant amount of time for these businesses to emerge and make the requisite socio-economic impact. Given this situation, Shaun Govender, CEO of the Jozi SME Hub, argues that SMMEs (small, micro and medium enterprises) still have a critical role to play in boosting the economy and supporting sustainable job creation.

As South Africa’s growth rate remains stubbornly slow, companies across the country continue to trade cautiously – having a knock-on impact on SMMEs operating in diverse sectors. “We’re once again seeing tougher economic conditions translate into many businesses failing to commit spending or budgets fully,” says Shaun Govender, CEO of the Jozi SME Hub. “This has a direct impact on the suppliers – many of them SMMEs – that were depending on this spend to ensure the sustainability of their own enterprises.”

While many of these SMMEs are survivalist in nature (having being started out of necessity often as a result of the business owner either losing their formal job or being unable to access a job in the formal economy), their collective impact on overall job creation cannot be underestimated or disregarded. “Even though micro and small enterprises often only create one or two jobs, these effectively ease collective dependency on our social grants system and boost the local economy. As such, former job seekers potentially become job creators – usually within their home communities where they have higher levels of support from family and friends, and where jobs are most needed,” notes Govender.

Despite much being said about the true entrepreneurial nature of these companies, he argues that with the right levels of support and the provision of appropriate business advice, start-up owners can begin to act more entrepreneurially – and see their SME as a valuable asset as opposed to a stop-gap until they find a formal job. This makes it important for business support services to cater for their specific needs, which often includes the provision of appropriate training. “This is something we continue to see at our various Jozi SME Hubs across greater Johannesburg where many first-time business owners are looking for basic advice and assistance regarding how to get started or, in the case of established SMEs, become more sustainable. In most instances, the provision of basic group training on marketing, sales and accounting among others, can have an almost immediate effect on the ability of these SMEs to service their clients – directly impacting their profitability.”

As such, it is critical for enterprise development programmes to continue catering for survivalist entrepreneurs as opposed to focusing their efforts purely on enabling high impact entrepreneurs. “While there is long term merit in the latter approach, the short to medium term impact of enabling survivalist enterprises cannot be discounted,” explains Govender. “For us to realise South Africa’s goals of job creation and socio-economic upliftment, government and the private sector must therefore continue to support entrepreneurs across the spectrum channelling resources appropriately to ensure a targeted approach is taken for each sector – maximising return on collective efforts and investment.”