UNCTAD will help the country lay the foundations for a resilient, innovative and agile entrepreneurial ecosystem.
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Two-thirds of South African small businesses fail within the first five years.
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The National Entrepreneurship Strategy creates an enabling environment for entrepreneurs and businesses to thrive.
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South Africa’s entrepreneurship development efforts are promising, particularly in the tech startup ecosystem.
According to UNCTAD’s South African Entrepreneurship Strategy Review, South Africa is home to over two million MSMEs, accounting for over 98% of formal businesses.
Despite their large presence, these small and medium-sized enterprises create less than a third of all full-time jobs, with job creation concentrated in a few large companies and government agencies.
The survival rate of businesses is also low, with two-thirds failing within the first five years and about 20% failing in the first two years.
High youth unemployment, combined with around 70% of entrepreneurs operating in the informal sector, means South Africa’s entrepreneurial potential remains well below international trends.
The benefits of entrepreneurship
To boost entrepreneurship, the country’s Department of Small and Medium Enterprise Development (DSBD) is developing a national entrepreneurship strategy to create an enabling environment for entrepreneurs, SMEs and start-ups to thrive.
To lay the foundations, UNCTAD has been supporting the DSBD in preparing a revised entrepreneurship strategy, based on research and multi-stakeholder consultations, the country’s 2030 National Development Plan and the 2022 National Integrated Small Enterprise Development Master Plan.
“We aim to contribute to building a sustainable, resilient and inclusive economy where entrepreneurs can be catalysts for change,” said Mohalefa Mohoto, DSBD’s Chief Director for Enterprise Development. “UNCTAD’s support in presenting policy options and a proposed action plan has been beneficial to this process.”
The review outlines priority actions, including creating a supportive regulatory system with less bureaucracy, streamlined rules that are easily accessible online, and simplified economic and fiscal regimes and support programs.
It also calls for incentives to increase access to funding from traditional and non-traditional sources, advisory services, mentorship and partnership programs.
We encourage entrepreneurship through education and skills development initiatives such as training workshops by Empretec., UNCTAD’s flagship capacity-building programme.
Long-term vision
“National entrepreneurship strategies need to provide a long-term vision that enables entrepreneurs to plan and stakeholders to invest in a beneficial entrepreneurial ecosystem,” said Arlette Verpreau, who leads UNCTAD’s entrepreneurship work.
“Having a steering committee for monitoring and evaluation purposes and having data that can guide informed decisions about the implementation of the strategy are both equally valuable,” Verpreau said.
She was speaking at a session on South Africa’s National Entrepreneurship Strategy at the World Entrepreneurship + Africa Gathering on 14 March 2024. Drawing on international best practices, she highlighted the role of increased investment in innovation-led education and research and development.
Promising Initiatives
Despite challenges, South Africa’s entrepreneurial development efforts, particularly in its tech startup ecosystem, have shown promise, earning it the top spot in the 2021/2022 Africa’s Future Tech Ecosystems rankings.
The National Entrepreneurship Strategy will strengthen the country’s efforts towards a new competitive and sustainable entrepreneurial environment.
UNCTAD supported South Africa as part of a UN Development Account project titled “Global effort to revive the MSME sector post COVID-19”.
