SA has the potential to be the Silicon Valley of Africa; however, it lacks the full understanding, government support and proactive development of intellectual property rights in order to foster entrepreneurship.

 

This is according to Endeavor MD Malik Fal who, at yesterday`s briefing in Rosebank, called for active collaboration and investment between government and the private sector to spur a culture of entrepreneurship in SA.

Endeavor, in partnership with SAP and FNB, unveiled the third edition of its white paper, entitled “Entrepreneurial Dialogues: The State of Entrepreneurship in SA 2012”.

According to the white paper, SA`s performance on the Total Entrepreneurship Activity (TEA) Index, the percentage of the active population who are entrepreneurs, improved from 5.9% to 8.9% between 2009 and 2010.

However, Fal pointed out that SA is still lagging compared to other emerging economies. Since the mid-1990s, SA`s TEA has fluctuated between 4% and 6%, whereas Brazil has a TEA more than three times as large as SA`s. The average TEA for low- to middle-income countries lies between 10% and 12% for the past three years, according to the research paper.

The white paper indicated that one of the biggest challenges is that local universities and high schools are not exposing students to practical entrepreneurial skills, nor showing them how to protect intellectual property. This results in graduates not being prepared to approach funders or commercialise their products.

Fal said: “In SA, the venture capital community is small and conservative. There`s also a skills shortage of managers and a challenge to attract and retain skills.”

He added that BBBEE legislation has negatively impacted the growth of entrepreneurship, as young black skilled workers are snapped up by large corporates offering sizeable financial packages instead of innovating a business idea and creating their own start-ups.

“Enterprise development is proving to be an unpredictable and unreliable resource, and the unintended consequence of BBBEE is deterring young black skilled workers away from entrepreneurship.”

Fal said that, despite these challenges, there is huge potential for entrepreneurship in SA and Africa, as six of the fastest growing economies in the world are based in Africa. He explained that, while the funding is available to start-ups, the solution lies in partnerships, education, helping entrepreneurs define a business model, and achieving government support.

According to consulting firm Monitor, around 23.9% of the South African labour force is unemployed and faces a low growth rate in terms of job creation. The firm stated that the local economy is not geared towards creating entrepreneurship because of a lack of a competitive small business base.

Sanjeev Orie, FNB head of acquisitions for business banking, says the bank partnered with Endeavor in order to help support local entrepreneurs to take advantage of business opportunities by offering financial solutions.

Sunil Geness, corporate affairs executive for SAP Africa, said SAP is driving entrepreneurship development programmes in SA, one of the biggest being High Potentials.

“From our perspective, we have enabled entrepreneurs to be coached and mentored by top management and provided insight to research and development in SMEs. The goal is for SAP to create platforms that drive economic opportunity for entrepreneurs, and by working with Endeavor, it accelerates this objective,” added Geness.

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