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Entrepreneurs battle funding drought, power cuts
Small business owners in South Africa have demonstrated a remarkable entrepreneurial spirit and determination, with many successfully building multiple businesses on their own. However, the two major obstacles hindering their growth in 2023 are the lack of access to funding and the ongoing impact of power cuts.
According to the new 2023 State of Entrepreneurship in South Africa Survey conducted by the Entrepreneurs’ Organisation (EO) South Africa chapter, a significant number of South African entrepreneurs are self-starters who have seized opportunities and turned their passions into successful businesses. The survey, which polled EO-SA members, sheds light on the challenges faced by entrepreneurs in the country and the support they require to thrive.
“When asked why they became entrepreneurs, the majority of respondents (26.6%) stated that they seized an opportunity, followed by those who claimed to have a natural entrepreneurial spirit (26.1%) and those who turned their passions into businesses (22.9%),” said Richard Rayne, chairman of EO Cape Town chapter, whose board initiated the survey.
“Our business owners face the prevalent South African challenges with courage, and despite it all continue to create jobs and contribute significantly to the economy, without much external support.”
The survey findings reveal that while most entrepreneurs (53.2%) have successfully established one business, they have actually embarked on multiple ventures, with 39.9% starting between three and five businesses. Furthermore, a significant portion of entrepreneurs (89%) have started their own businesses, demonstrating their drive and determination.
However, entrepreneurs in South Africa face numerous challenges that impede their growth. The lack of funding support emerged as a major obstacle, with only 10.1% of respondents reporting ever receiving government support.
“Most entrepreneurs feel that their business growth is stifled by a lack of support, funding, and systemic stability and security – and this tells us that they need both policy support and capital to make an even greater positive impact on society,” emphasised Rayne.
The survey also highlighted the significant impact of load shedding, with 58.7% of businesses experiencing financial losses due to power outages. Additionally, crime affected 24% of entrepreneurial businesses annually, while 11.9% experienced it on a monthly or daily basis.
In response to these findings, EO South Africa is calling on policymakers to take concrete actions to support local entrepreneurs.
“We appeal to our partners in local, regional, and national government to listen to our entrepreneurs and provide the necessary support for the benefit of the country,” urged Rayne.
The organisation recommends developing policies that support small businesses and scalable start-ups, increasing access to broadband and technological infrastructure, and investing in education and training programs to equip entrepreneurs with the necessary skills.
EO also emphasises the role of employers in supporting the economy by encouraging business growth, facilitating flexible work arrangements, and diversifying the economy beyond major urban hubs.
The survey findings underscore the resilience and determination of South African entrepreneurs. Their ability to seize opportunities and navigate challenges demonstrates their potential to make a significant positive impact on the country’s economy.
By addressing the key issues of funding, load shedding, and red tape, policymakers and stakeholders can create an environment conducive to entrepreneurship and drive sustainable economic growth.
