SA youth would rather work for government than themselves
The latest Global Entrepreneurship Monitor (GEM) research shows that entrepreneurship in South Africa is on an upward trend, but young people are not entrepreneurially minded enough to sustain this.
New research from the University of Cape Town shows that South Africa's youth do not see entrepreneurship as a viable career choice - despite the potential it holds to generate jobs and wealth.
According to the latest Global Entrepreneurship Monitor (GEM), two thirds (67%) of the youth surveyed agreed with the statement: 'where I live, working for the government is the best way to earn a good living.' And 61% thought that those who start their own business have to work too hard for too little money and only start a business because they are not able to find a job.
Dr Mike Herrington, Executive Director of the Global Entrepreneurship Monitor international operations and co-author of the GEM South African report, says this is significant because entrepreneurial activity is understood to be a necessary condition of healthy societies, specifically as it contributes to economic growth and job creation, which is a key concern in SA.
'SA's economy has grown at an average rate of 3.3% per year over the past two decades, but this has not been fast enough to alleviate the high rates of unemployment - particularly youth unemployment,' he says.
The latest Global Entrepreneurship Monitor (GEM) research published in April shows that the country's entrepreneurial activity is on a gradual upward trend.
Although it still compares poorly with similar economies - the latest research shows SA's Total Early-stage Entrepreneurial Activity (TEA) rate is at 10.6% compared to Brazil's 17.3 %. Entrepreneurship levels, as measured by the number of individuals who are engaged in starting or who have just started a new business, are now at their highest since 2002.
Also encouraging is that for only the 2nd time in the 12 years that SA has taken part in the study, its TEA rate is above the median of all other participating countries.
But the report cautions that the low levels of youth entrepreneurship and poor prevailing attitudes to entrepreneurship among the youth could derail this positive development.
'The GEM research has shown that there are a few fundamentals that we need to get right if SA is to continue its upward entrepreneurial trend,' says Jacqui Kew, co-author of the report.
'The first of these is changing the perceptions and attitudes, particularly of young South Africans towards entrepreneurship.'
'What we think and believe drives how we act so it should not come as a surprise that the GEM research clearly shows that the more positive the perceptions about and attitudes towards entrepreneurship is in a society, the higher the rates of entrepreneurship. Thus a country like Ecuador, which has a TEA rate of 36%, also reports that 74% of the population believes they have the capabilities to start a business. By comparison, just 43% of South Africans believe they have what it takes to be an entrepreneur,' Kew says.
GEM recommends that much more be done to create positive perceptions about entrepreneurship - and the media has a key role to play here.
'We need to celebrate our entrepreneurial role models and create more realistic perceptions about what starting a small business can offer young people,' Kew says.
The GEM research provides very clear guidelines as to what needs to be done to support entrepreneurs and boost job creation. Housed in the Development Unit for New Enterprise (DUNE) at UCT, it is the largest and most authoritative longitudinal study of entrepreneurship in the world - 70 countries took part in the 2013 research cycle. SA has participated since 2002 giving policy makers unbeatable insight into what's really going on in the entrepreneurial space along with the ability to compare what is happening in this country with other similar efficiency-driven economies such as Brazil, Chile and China.
Another key challenge is education. 'The link between education and entrepreneurship is very clear in GEM; the better the level of education, the more likely a person will be to start a business and crucially, the more likely they are to start a business that exploits a gap in the market, survives its first three years and creates employment,' says Herrington, who also lectures entrepreneurship at the UCT Graduate School of Business.
Hand in hand with this are health, crime and corruption. The good health of a nation's population is imperative because an unhealthy population cannot start and run businesses successfully. Likewise corruption and crime remain big potential saboteurs of any business and new entrepreneurs are particularly vulnerable as they are less able to absorb the additional costs and uncertainty caused by high levels of crime and corruption.
'These elements are the pot-holes in SA's road to economic success. And unless we take the time to fill them in, very little will change and even the best policies to support entrepreneurs will founder,' cautions Herrington.