NEW ORLEANS, Louisiana — In 2019, roughly 78% of South Africans surveyed by Global Entrepreneurship Monitor (GEM) viewed entrepreneurship as a good career path. However, 49.8% of South African adults did not pursue entrepreneurship out of fear of their businesses failing. With a high unemployment rate of 29.1%, working for oneself seems like a desirable path in South Africa. Entrepreneurship in South Africa has the potential to empower impoverished South Africans to rise out of poverty and contribute to the economy.
Educational Barriers to Entrepreneurship in South Africa
The greater the number of years that an aspiring entrepreneur remains in school, the greater the chances that he or she will start a business and be able to sustain it despite the issues evident in South Africa’s educational system. Unfortunately, from 2017 to 2019, educational levels among early-stage South African entrepreneurs plummeted. In 2017, 95.7% of early-stage South African entrepreneurs received education above the primary level. However, in 2019, this figure dropped to 38.63%. Additionally, roughly 50% of South African students do not graduate from high school.
One of the main reasons for dropout across all education levels is that families cannot afford to pay for schooling. At the university level, another reason for dropout is that the quality of primary and secondary education in South Africa does not equip students with the academic skills for success in higher education. Given these high dropout rates, potential entrepreneurs face knowledge and skill barriers that prevent them from breaking into and succeeding in the world of entrepreneurship.
Furthermore, while South Africa has a significant education budget for a developing country, it ranked 119 out of 141 countries in quality of education and 128 out of 137 countries in quality of education for science and mathematics in 2019. Also, primary, secondary and tertiary education do not equip students with entrepreneurial skills and knowledge. The education systems do not provide sufficient math and business knowledge and curriculums do not foster creativity; therefore, South Africans struggle to start and grow their own businesses.
The Entrepreneurial Funding Problem in South Africa
GEM’s National Expert Survey, which measures the conditions that may be beneficial and harmful to the implementation of new businesses, ranks funding for entrepreneurship as the third-largest hindrance on entrepreneurship in South Africa. While there is an abundance of funders in South Africa, financial backing is not reaching the entrepreneurs who have the greatest need for it.
Aspiring entrepreneurs with less education and fewer resources face challenges conducting in-depth research into the market that they are trying to enter with their product or service and face barriers creating and presenting a quality business plan. As a result, impoverished South African entrepreneurs are not well-prepared to create strong foundations for their businesses and pitch their products or services to potential funders. Therefore, many are not successfully capitalizing on the potential funding opportunities that they do receive.
Growing Entrepreneurship in South Africa
Unicorn Group is an investment company that supports potential and current entrepreneurs in Africa to achieve their business aspirations. The group operates in some of the largest African cities, like Johannesburg in South Africa, Lagos in Nigeria and Accra in Ghana. Unicorn Group recognizes the major challenges that entrepreneurs face in Africa and helps them navigate these challenges.
The company runs programs that teach aspiring entrepreneurs how to grow their businesses and provide mentorship from successful entrepreneurs and business leaders “from Silicon Valley, Europe and Africa.” The programs also help place aspiring entrepreneurs in front of potential investors.
Investing Further in South African Entrepreneurs
In September 2021, Unicorn Group launched a Unicorn Incubation Campus in Johannesburg after launching incubation campuses in Lagos and Accra earlier in the year. The incubation campus demonstrates a commitment to South African entrepreneurs and deepens the impact that Unicorn Group has on entrepreneurship in South Africa.
The campus provides around-the-clock “access to essential resources such as high-speed internet, management coaching, pitch training, government agencies, venture capitalists and a range of other essential tools” so that entrepreneurs can conduct successful business pitches to potential investors. The Unicorn Group recognizes the challenges that entrepreneurs face in South Africa and creates programs that help entrepreneurs tackle these barriers.
While South Africa’s education and entrepreneurial funding systems pose significant hurdles to entrepreneurs, Unicorn Group and other organizations in the country recognize these challenges and help entrepreneurs overcome them. The interest in entrepreneurship in South Africa is high. Continued investments in South African entrepreneurs can provide them with the tools they need to become confident enough to chase after and materialize their entrepreneurial ambitions in order to rise out of poverty