Low rates of new business ownership and low survival rates for new enterprises show that South Africa is not yet a place where entrepreneurs can thrive. The Global Entreneurship Monitor (GEM) Global Report for 2013, however, shows that South African entrepreneurs are still upbeat about opportunities to start a business in the country, and the DA shares their optimism – because we have a plan to harness South Africa’s entrepreneurial spirit.
 
The GEM South Africa 2013 Report will be launched this evening in Cape Town. Positive trends from the Global Report include the fact that 43% of South African respondents believe that they have the skills and knowledge to start a business (up from 40% in 2012 and 35% in 2009) and our entrepreneurs are becoming increasingly innovative, with 68% of entrepreneurial businesses indicating that their product or service is new (versus 57% in 2009 and 66% in 2012).

Whilst these indicators are improving, they still remain too low to ensure that small businesses can fulfil their potential as job-creators. They also compare poorly to entrepreneurship indicators in Sub-Sahara Africa and for other countries where entrepreneurship is really contributing to economic growth.

The following indicators are of particular concern:

• The percentage of new entrepreneurial businesses that expect to employ at least five people five years from now has decreased from 32% in 2012 to 28% in 2013;
• The informal investment rate (percentage of respondents who have provided funds for a new business, started by someone else, in the past three years) is still very low at 2%;
• Entrepreneurial intention rate (those planning to start a business within three years) remains very low at 13% (33% below the average for Sub-Sahara Africa at 46.8% and just more than a third of the average for Latin America at 32.5%);
• At 38%, the perceived opportunity rate is the lowest in Sub-Sahara Africa (average for the region is 68.9%, Brazil is at 50.9% and Chile at 68.4%);
• At 3%, the established business ownership rate is less than a fifth of the regional average (which is 15.4%);

The bottom line is that too few South Africans are planning to start up an entrepreneurial business and too few of those businesses that are started survive.

The DA believes that small businesses are struggling because they are being smothered by excessive regulation and because they do not receive the support they need from government.

To make South Africa a nation of entrepreneurs, the DA will:

• Establish Opportunity Centres where small businesses can access support and conduct all their business with government;
• Roll out small business incubators, like the Bandwith Barn in Woodstock in Cape Town, where small businesses can share resources and have a supportive environment in which to find their feet;
• Give small business owners an Opportunity Card that they can use to access free or discounted training, business support services and business advisory services. The card will give qualifying entrepreneurs credits to spend on an e-commerce portal listing accredited service providers;
• Work to reduce the red tape that makes it so hard to establish a business in South Africa. It is particularly important that we reduce the regulatory burden for small business with regard to business registration, labour legislation and empowerment regulations;
• Make it easier for small businesses to win government contracts by breaking up big tenders into smaller contracts;
• Establish a National Venture Capital Fund to provide initial funding for start-ups and early-stage businesses;
• Recognise the role of the informal sector in job creation and assist informal businesses by:
• Providing safe trading spaces for informal traders.
• Talking to informal traders about their challenges and Developing a Code of Good Practice for how the government should work with them.

The GEM Report shows that government is not doing enough to support entrepreneurs. A national DA government will put small business at the centre of its economic growth plan.