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So what kind of entrepreneurship is South Africa really trying to promote?

Backing high tech innovative entrepreneurship is the only way forward for our country, but requires commitment from the private sector and skills development

“Entrepreneurship” is on everyone’s agenda. Primary schools are running entrepreneurship days, while companies run hackathons and challenges to find and support budding entrepreneurs.

Summing up its key priorities, after the recent ANC National Policy Conference, the organisation’s treasurer-general Zweli Mkhize set as a priority, the development of “entrepreneurial skills” among all South Africans as a way of stimulating what it calls “radical economic development”.

While this growing interest in entrepreneurship is very encouraging, we need to be cautious not to create unrealistic expectations. We need to be clear about what we mean by “entrepreneurship”. We must also understand that successful entrepreneurship is a result of a long and difficult journey.

‘Government, companies interested in supporting entrepreneurship in SA must also back higher levels of technical skills’

Simply defined, entrepreneurship means the setting up of a business in the hope of making a profit. It usually involves some risk. Defined in this way, entrepreneurship covers an extremely broad range of activities.

At one end, Joe might buy a bag of oranges and sell individual oranges to commuters at a taxi rank. At the other extreme, a consortium may raise a large amount of capital to develop a new platinum mine. By our simple definition, both Joe and the consortium are entrepreneurs.

Another important aspect in defining entrepreneurship is understanding how it relates to “innovation”. Innovation is all about finding new methods, ideas or products that solve a real social or business problem. One can envisage innovative ways in which Joe may sell oranges at the taxi rank, or how the consortium may build and run the platinum mine.

While innovation is not an essential part of entrepreneurial activity, coupling innovation with entrepreneurship certainly increases the likelihood of success.

One reason for the growing interest in entrepreneurship among policymakers and company executives is the belief that it gives rise to significant economic benefits.

There is considerable evidence to support this perception. An example is a study carried out in 2010 in the US by the Kauffman Foundation which showed that over a 30-year period all job creation came from new entrepreneurial businesses or startups. Large established corporations made a zero net contribution to job creation.

In other words, it was only the activity of successful entrepreneurs that led to a real increase in employment. An important follow-up study by the same researchers showed that innovative “high technology” startups made the greatest contribution to job creation.

When South African policymakers and companies motivate for greater entrepreneurship in our country they obviously have employment and economic growth in mind.

But what type of entrepreneurship do they hope to promote?

I believe that this is never made particularly clear, and leads to a great deal of confusion.

When Zweli Mkhize suggests that we need to develop entrepreneurial skills, is he talking about Joe or the mining consortium? Is he encouraging innovative entrepreneurship or is he hoping to see a significant number of high technology start-ups?

If, as I believe it should be, South Africa’s objective is to promote high technology innovative entrepreneurship, we face a very real problem. Innovative high technology startups require relatively sophisticated skill sets. This against the backdrop of a local economy that has a significant shortage of technical skills.

The problem of access to technical skills has become evident as we develop and grow the Tshimologong Digital Innovation Precinct in Braamfontein, Johannesburg.

We have passionate and creative entrepreneurs coming up with very exciting innovative digital concepts. In many cases, however, the founders do not themselves have the technical ability to implement commercial-grade solutions.

Without this all-important implementation, a viable startup able to take a solution to market will never emerge. For this reason, we are working hard to find ways of creating a pipeline of digital skills that will support the development of innovative high-technology start-ups as part of the Tshimologong Precinct ecosystem.

We have come to realise that government and companies interested in supporting entrepreneurship in South Africa must also devote resources to developing higher levels of technical skills.

  • Great article Prof Barry.
    Unfortunately, ‘entrepreneurship’ is the fix-all flavour of the month and we deceive people into thinking that it will solve all the countries woes like just so much snake oil.
    In my definition, entrepreneurs are business people who have that rare extra entrepreneurial spark. They are the people who make the headlines. When we expect micro-business owners to be entrepreneurs, we set tens of thousands of people up for disillusioning failure.
    There is much to be said for the work done by millions of South African informal traders who put food on the table and (sometimes) barely manage to keep body and soul together. These unrecognised rural and township business people need to be recognised for the contribution that they make to society and to the economy (read KasiNomics). In many cases, these good people benefit significantly from relevant, well-structured business-skills programmes offered at reputable incubators.
    Not every one can be, nor should we all aspire to be entrepreneurs.

    • Anton Pillay

      I think your concept of Entrepreneurship is one of being muilt millionaire but that’s just not true. There are many entrepreneurs ( the famous ones as your describe) who started off selling loose cigarettes and pancakes!

  • philipcopeman

    We have known for 250 years that capitalism leads to monopolies. It is unfortunate for it puts us on a conflict path with some of the most powerful and highest achievers in our society. ANC (Politics) Eskom (Electricity), Big Retail, ICASA, Banks, US Software vendors. These six sectors must be reengineered before entrepreneurs can thrive. Do we have the will and the courage to take them on?

  • Riaz Moola

    Any entrepreneur seeking to learn technical skills to drive forward their startups may benefit from a course from Hyperion, a South African startup itself: http://www.hyperiondev.com/courses

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