SA on entrepreneurial decline, says latest Global Entrepreneurship Monitor report

The latest Global Entrepreneurship Monitor (GEM) report for South Africa says entrepreneurs in the country have declined during 2015 to 2016.

According to the report, entrepreneurial intentions in SA have almost halved when compared to 2010 and are 3.6 times lower than the African average.

Since 2014, there has been an 18% increase in creating startups out of necessity. This is due to SA’s poor economic growth and high unemployment rates, according to the GEM report.

Entrepreneurs in 2015 are four-times more likely to anticipate making no contribution to job creation.

Due to unprofitability or problems in accessing finance to sustain the business, 62% of businesses closed in 2015.

The majority of entrepreneurs are aged between 24 and 44, and account for 50% to 60% of all early-stage activity.

There has been a decrease in female entrepreneurs. During 2014, women were 2.6 times more likely to startup a business out of opportunity; in 2015, this figure has decreased to 1.6 times.

Early-stage black African entrepreneurs decreased from 85% in 2014 to 68% in 2015.

With regards to specific sectors, 67% of total early-stage entrepreneurial activity (TEA) is in the customer service sector, with half of all entrepreneurs in the wholesale or retail sectors. A further 90% of TEAs are in the business services sector.

The report names a number of conditions that have hampered entrepreneurial growth, such as government programmes, research, and cultural and social norms.

Government policy (61%), access to finance (44%), and education and training (42%) were names as three critical constraints to entrepreneurs. The report highlights that government has stated the SME sector is crucial in economic growth, but two-thirds of experts have cited government policies as a critical constraint.

There are some positives from the report though. Half of SA entrepreneurs believing their products or services are new to some or all customers. This is higher than the African average, which comes in just over a third.

SA entrepreneurs also display high levels of strong international orientation with a quarter reporting 25% or more of their revenue from international sales, which is more than double the average for Africa as a region.