Publications
Partners
Cape Town - South Africa’s total early-stage entrepreneurial activity (TEA) rate is still well below the average of comparable economies around the world.
This is a matter of concern when considering the country’s economic and social health and requires closer investigation into the entrepreneurship ecosystem that impact on entrepreneurial activity in South Africa, according to Dr Cobus Oosthuizen, dean of the Milpark Business School.
Against this backdrop, an exploratory study was undertaken to evaluate the state of South Africa’s entrepreneurship ecosystem on a macro level.
The entrepreneurship ecosystem consists of a set of six individual elements, namely enabling policies and leadership, availability of and access to appropriate finance, an encouraging culture, a variety of institutional and infrastructural supports, quality human capital and venture-friendly markets for products.
In isolation, each is contributing to entrepreneurship, but insufficiently to sustain it, according to Oosthuizen.
As an integrated holistic system, however, these elements drive venture creation and growth.
When symbiosis occurs and they interact, the ecosystem spawns entrepreneurial activity.
The aim of the study was, therefore, to determine what each of the six imperatives look like and whether there is healthy interaction between them.
Of the six domains of the South African entrepreneurship ecosystem respondents rated support the highest.
This indicates an average variety of institutional and infrastructural supports.
Policy was rated the lowest, indicating a lack of enabling policies and leadership.
"The study showed that the South African entrepreneurship ecosystem appears not to be ideally favourable to optimally stimulate entrepreneurial activity," said Oosthuizen.
"This study confirmed the importance of availability of and access to appropriate finance, institutional and infrastructural support, an encouraging culture and venture-friendly markets for products."
He said the six domains of an entrepreneurship ecosystem are present and active in the South African context.
"However, the contradicting low levels of entrepreneurial activity in comparison with other developing countries, highlights the possibility of neglect in some domains as well as insufficient integration between the elements," he said.
There is, therefore, a need to enhance the integration of the domains.
"In isolation, each is conducive to entrepreneurship, but insufficiently to sustain it," he said.
Although the study is still work in progress, a few interim recommendations can already be made.
"A starting point could be open and frank dialogue between government and the private sector in relation to reducing structural barriers and formulating entrepreneur-friendly policies and programmes," said Oosthuizen.
"The private sector has the proclivity and orientation to develop self-sustaining, profit driven markets, and can contribute significantly in finding creative ways of stimulating the ecosystem."
He said to initiate this dialogue, business schools can play an important role in originating discussion forums in their respective geographic locations.
Another interim recommendation is to give priority to ventures with high potential.
"In South Africa, most government programmes spread scarce resources among large numbers of bottom-of-the pyramid ventures," said Oosthuizen.
"However noble the intent, it is not wise to do so to the exclusion of high-potential ventures."
This is a matter of concern when considering the country’s economic and social health and requires closer investigation into the entrepreneurship ecosystem that impact on entrepreneurial activity in South Africa, according to Dr Cobus Oosthuizen, dean of the Milpark Business School.
Against this backdrop, an exploratory study was undertaken to evaluate the state of South Africa’s entrepreneurship ecosystem on a macro level.
The entrepreneurship ecosystem consists of a set of six individual elements, namely enabling policies and leadership, availability of and access to appropriate finance, an encouraging culture, a variety of institutional and infrastructural supports, quality human capital and venture-friendly markets for products.
In isolation, each is contributing to entrepreneurship, but insufficiently to sustain it, according to Oosthuizen.
As an integrated holistic system, however, these elements drive venture creation and growth.
When symbiosis occurs and they interact, the ecosystem spawns entrepreneurial activity.
The aim of the study was, therefore, to determine what each of the six imperatives look like and whether there is healthy interaction between them.
Of the six domains of the South African entrepreneurship ecosystem respondents rated support the highest.
This indicates an average variety of institutional and infrastructural supports.
Policy was rated the lowest, indicating a lack of enabling policies and leadership.
"The study showed that the South African entrepreneurship ecosystem appears not to be ideally favourable to optimally stimulate entrepreneurial activity," said Oosthuizen.
"This study confirmed the importance of availability of and access to appropriate finance, institutional and infrastructural support, an encouraging culture and venture-friendly markets for products."
He said the six domains of an entrepreneurship ecosystem are present and active in the South African context.
"However, the contradicting low levels of entrepreneurial activity in comparison with other developing countries, highlights the possibility of neglect in some domains as well as insufficient integration between the elements," he said.
There is, therefore, a need to enhance the integration of the domains.
"In isolation, each is conducive to entrepreneurship, but insufficiently to sustain it," he said.
Although the study is still work in progress, a few interim recommendations can already be made.
"A starting point could be open and frank dialogue between government and the private sector in relation to reducing structural barriers and formulating entrepreneur-friendly policies and programmes," said Oosthuizen.
"The private sector has the proclivity and orientation to develop self-sustaining, profit driven markets, and can contribute significantly in finding creative ways of stimulating the ecosystem."
He said to initiate this dialogue, business schools can play an important role in originating discussion forums in their respective geographic locations.
Another interim recommendation is to give priority to ventures with high potential.
"In South Africa, most government programmes spread scarce resources among large numbers of bottom-of-the pyramid ventures," said Oosthuizen.
"However noble the intent, it is not wise to do so to the exclusion of high-potential ventures."
