The Global Entrepreneurship Monitor (GEM) ReportGEM is the World’s largest single study of entrepreneurial activity.
Click to read more. of 2008 shows that, in South Africa, up to 7.8% of adults (aged 18-64 years) are involved in early-stage entrepreneurial activity, but that only 2.3% own enterprises that have survived for more than 3 years – which suggests that two-thirds of new enterprises are failing.
Overall business activity (early stage and established) is at 9.9%, but 5.8% of adults in South Africa have sold or closed down businesses over the past year. These figures translate into the sobering fact that only around 4 out of every 100 adults in South Africa are, or are likely to be, successful entrepreneurs.
To make matters worse, approximately 45% of South Africa's entrepreneurs are ‘necessity entrepreneurs’, i.e. they would take the first available job if it came along.
Yet, government looks to small enterprise development as one means of job creation and economic growth. In its Interpretive Guide to the Codes of Good PracticeThe BEE Code of Good Practice encapsulates the fundamental principles and necessary considerations in the form of precise explanations...
Click to read more., South Africa's Department of Trade and IndustryThe dti vision is to build and transform South Africa into a vibrant economy that facilitates growth encourages employment and implements equity...
Click to read more. states that, "job creation cannot be attained without the growth of the small business sector. This will only be made possible if small businesses are assisted to grow, develop and graduate from micro and survivalist entities to become sustainable, job-creating enterprises." (p.82)
The GEM ReportGEM is the World’s largest single study of entrepreneurial activity.
Click to read more. also shows that survivalist businesses create very few jobs. The more sophisticated the business owners, and the higher their education level, the more jobs they create.
Research shows that lack of access to information, as well as the lack of growing up in an entrepreneurial environment, are major contributors to business failure. This is why business incubators have achieved major success worldwide in reversing the failure rate of entrepreneurial businesses. Incubators report success rates in excess of 85%.
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