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The plans and latest findings towards the creation and implementation of the proposed South African Startup Act will be revealed at an event hosted on 16 September 2021.
Event to discuss the current findings of the proposed Startup Act will be discussed on 16 September 2021
The South African Startup Act
The proposed South African Startup Act aims to facilitate and promote the growth and innovation of young South African entrepreneurs. The proposed act has been in the planning phase for the last six months with research being conducted via focus groups and in-depth research methods.
The research part of the planning aims to identify problems that are impacting or hindering the growth of startups in South Africa. The research is being conducted by The Steering Committee, made up of members from Digital Collective Africa, Endeavor South Africa, i4Policy, Loudhailer, the Southern African Venture Capital and Private Equity Association (SAVCA), Silicon Cape, SiMODiSA, and Wesgro.
According to reports, the findings indicate that startups with a turnover of less than an R100-million annually should be exempted from the limitations of current policies and ‘red-tape which limits the growth of startups in the country.
Stephan J Lamprecht, Founder of VS Nova, a Southern African-based management consultancy that has been appointed by the SA Startup Act Steering Committee to provide research and advisory services expands on this point providing elaboration and clear insight into these above-mentioned findings.
“The vast majority of new small and micro business enterprises that exist beyond the first three years of operations do not grow. Rather, it is the remaining balance comprised of a tiny portion of startups that are responsible for creating a disproportionate number of jobs[i]. Such firms, with their high-growth potential, are the intended beneficiaries of the proposed South African Startup Act.”
Not only do the findings aim to assist startups but it also drives the notion that limitations that prevent startups from being established be removed with the inclusion of the current legislation and policies affecting startups such as Capital Gains Tax.
In the overall result, the growth of startups and innovations will in turn drive economic growth and provide more employment opportunities, something which the country is currently in dire need of since the impact of the pandemic.
In addition, the findings propose that there be a simplified approach to the procurement of policies that directly impact the scaling opportunities for startups such as funding. It proposes that the funding of startups be conducted through automatic reinvestment of PAYE and VAT along with easing the existing labour and immigration laws in order to increase access to innovators and talent abroad.
Lamprecht points out that from 2013 to 2019, SMEs contribution to the GDP has increased by nearly 40%[ii],
“While the South African startup ecosystem is clearly growing and increasingly contributing to GDP, recent events in KwaZulu-Natal and Gauteng are a stark reminder that the country is at a critical crossroad in so far as socio and economic policy, with national unemployment and the impact of COVID-19 laying bare the failures of not attaining the objectives outlined in the NDP. By remaining slaves to a resource-driven economy, and negating the opportunities embedded in our burgeoning services sectors, South Africa is missing out on the benefits to its economy from startups. The country can ill afford to wait patiently for the eventual trickling down effects from current levels of entrepreneurial activity, especially if these are reduced to organic growth at best. Other African countries such as Tunisia, Senegal and Ghana are prioritising the participation of startups in their economies by introducing Startup Acts, so why shouldn’t South Africa?”
The event will be hosted virtually and will further discuss the possible interventions and also provide answers to burning questions such as how long will it take to establish and implement the act and more.
Registration for the event can be found here.
Featured image: Christina @ wocintechchat.com via Unsplash