South Africa lagged far behind other emerging economies when it came to entrepreneurial activity, speakers at a FNB - Endeavor entrepreneurship dialogue in Johannesburg said on Wednesday.

Currently, South Africa’s Total Entrepreneurial Activity (TEA), a measure used to calculate the percentage of a country’s working-age population attempting to start a new business, stands at 5,9%.

FNB external acquisitions head Marcel Klaassen said that this was far below an average rate of around 11% in other emerging markets, with Brazil reaching up to 15%.

Following the end of the Cold War in the early nineties and even before, governments of the Bric bloc, consisting of Brazil, Russia, India and China, initiated political and economic reforms geared at improving their education systems and domestic entrepreneurship. This catapulted these countries to become the fastest growing economies in the world today.

In December, South Africa was invited to join this enterprising economic grouping, yet it seems that the country is battling to create an enabling environment for entrepreneurs, and thus its economy, to flourish.

Discussing a white paper compiled by Endevour in partnership with FNB, Endeavour MD Malik Fal said that some of the major hurdles that entrepreneurs in South Africa had to deal with included onerous regulatory systems, a conservative funding environment and a constricted skills pool.

“Even though government has started taking some steps in the right direction to improve the ease of doing and starting a business in South Africa, the process is still very time consuming and often costly,” said Klaassen.

Currently, prospective business people need to complete more than 40 steps to open up a new business in the country, compared with Australia where there are only six steps.

As far as funding goes, Fal said that findings captured in the white paper confirmed that funding institutions in the country were overly conservative, considering the current cash flows of businesses, rather than their potential future cash flows.

“This is not the case in other countries where venture capitalists have a large appetite for risk. It is a known fact that about 70% of new businesses fail, but venture capitalists in countries such as the US already take this into account.”

Further, Fal emphasised that the biggest concern relating to the growth of South Africa’s entrepreneurial sector was its underperforming educational system.

“Grade ten maths and science teachers’ English language comprehension was recently tested in Thembisa, with some only scoring at a grade-five level.

“This shows that there are serious fundamental problems in the country’s education system that need to be addressed,” said Fal.

One of the world’s most famous entrepreneurs, Richard Branson, once said that business opportunities were like buses, there is always another one coming, said Klaassen, adding that South Africa needed a bus schedule.