Description
This brief file around global entrepeneurship monitor south african report 2006.
Global Entrepeneurship Monitor
South African Report
2006
GEM SPONSORS
2006
GLOBAL ENTREPRENEURSHIP MONITOR
SOUTH AFRICAN EXECUTIVE REPORT 2006
Gideon Maas and Mike Herrington
2
CONTENTS
Page
1. Executive summary 6
2. Chapter 1: Overview of the GEM 2006 report 8
3. Chapter 2: Key informants 2006 16
4. Chapter 3: Adult population questionnaire 2006 21
5. Chapter 4: Women in entrepreneurship 38
6. Chapter 5: Future research in entrepreneurship 59
7. Chapter 6: Integrated recommendations 69
8. References 76
9. Annexure 78
LIST OF TABLES 3
LIST OF FIGURES 5
3
LIST OF TABLES
Page
Table 1: Categories of questions 17
Table 2: Summarised statistics of all categories 17
Table 3: Factors that limit entrepreneurial activity in South Africa 18
Table 4: Factors that contribute to entrepreneurial activity in South
Africa 19
Table 5: Factors that can increase entrepreneurial activity in South
Africa 20
Table 6: Total TEA 2006 index 23
Table 7: Relative ranking from 2001 – 2006 24
Table 8: TEA opportunity index 25
Table 9: TEA necessity index 26
Table 10: Age distribution 27
Table 11: Regional spread of respondents 27
Table 12: Major race groups 28
Table 13: Income levels 28
Table 14: Educational levels 28
Table 15: Stage of activity 29
Table 16: The involvement of the different regions in TEA activities 29
Table 17: Cross-tabulation of TEA indexes with income 30
Table 18: Individual perceptions of entrepreneurship in South Africa 30
Table 19: Cultural support for entrepreneurship in South Africa 31
Table 20: The market expansion mode 31
Table 21: Export intensity 32
Table 22: TEA for new product market cross-tabulated with
educational levels 32
Table 23: Age groups associated with possible product/market
expansion 32
Table 24: Indication of job creation 33
Table 25: Categories of expected number of jobs 33
Table 26: Unemployment rate, March 2001 to March 2006 33
Table 27: Availability of technologies or procedures more than a year
ago 34
Table 28: Technology level of the sector 34
Table 29: Technology compared with age levels 35
Table 30: Sources of funding 35
Table 31: Exit reasons 35
Table 32: Total number of liquidations: 2000 to 2006 35
Table 33: Total number of insolvencies: 200 to 2006 36
Table 34: Total TEA 42
Table 35: Stage of activity 42
Table 36: Educational levels of women involved in TEA 2006 42
Table 37: Income levels of women involved in TEA activities – 2006 43
Table 38: Race groups involved in TEA activities – 2006 43
Table 39: Women involved in TEA activities per region 43
Table 40: Age of women involved in TEA activities 44
Table 41: International TEA comparisons of women 45
Table 42: Ranking for opportunity and necessity
entrepreneurship among women 46
4
Table 43: Individual perception of entrepreneurship 47
Table 44: Cultural support for entrepreneurship 47
Table 45: TEA market expansion mode 48
Table 46: TEA export intensity 48
Table 47: TEA involvement in any jobs now or in 5 years 48
Table 48: TEA number of owners 49
Table 49: How many customers consider products new/unfamiliar? 49
Table 50: How many businesses offer the same product? 49
Table 51: Were the technologies/procedures available more than a
year ago? 49
Table 52: Use of technology per level 50
Table 53: Sources of funding obtained for start-ups 50
Table 54: Reasons for closing business 50
Table 55: Discussion questions 51
Table 56: Recommendations 56
Table 57: Summary of recommendations from previous GEM reports 69
Table 58: Specific recommendations 73
5
LIST OF FIGURES
Page
Figure 1: The GEM conceptual model 13
Figure 2: TEA rates for all countries 22
Figure 3: TEA for women of all participating countries 44
Figure 4: An integrated model for conducting research in South Africa 67
Figure 5: Idealised situation 73
6
EXECUTIVE SUMMARY
South Africa joined the GEM survey study in 2001. Since this date, various
other countries have joined, whereas others have opted not to participate for a
period, and others participated on a once-off basis only. In terms of a survey,
this complicates the measurement of a specific country against others.
However, sufficient data in this report indicated that, although the South
African TEA indexes remained relatively constant over time, South Africa’s
position in the GEM rankings has deteriorated over time despite improved
macro-economic conditions in the country.
The GEM 2006 report therefore focused on trying to isolate the factors that
contribute to this deterioration. Key informants set the scene by indicating
what is currently positive and what is negative in terms of entrepreneurship
promotion. In Chapter 3 these perceptions were tested further. The resultant
data reinforced the earlier conclusions. One of the most important findings is
that potential entrepreneurs lack the mindset and skills to become true
entrepreneurs. Although a positive entrepreneurial culture is starting to form
on a macro level, entrepreneurship on a micro level is not showing any signs
of growth. International markets are not penetrated, employment creation is
not encouraged and innovation is under pressure. The low levels of
educational qualifications may be an important reason why this discrepancy
persists. However, the lead-time in education is far too long to wait for a
general overall improvement before entrepreneurship is encouraged. Dual
strategies need to be developed and implemented, thus encouraging
entrepreneurship.
When women entrepreneurs specifically were analysed it was evident that
skills and mindset are the two most important determinants influencing the
accelerated entrance into the formal labour market. An additional determinant
identified which influences women entrepreneurs negatively is
culture/tradition. Women want to or are expected to look after their families
and therefore opt for businesses that are either flexible enough to allow them
time to care for their families, or are easy enough to operate. Again, the levels
of education proved to be too low to allow for the exploitation of modern
opportunities.
A key issue debated in South Africa for far too long, and shown to be crucial in
the discussions of this GEM 2006 report, is the impact of information.
Although there are pockets of information and the execution of research,
these seem to be very un-organised and un-coordinated. Without reliable
information, no policies can be formulated that can help accelerate the TEA
rates of South Africa. It is, therefore, of utmost importance that information be
researched and implemented in a coordinated and integrated manner. The
research model and focus areas in this GEM report address this and can be of
tremendous help to tertiary institutions involved in this type of activity. A
similar exercise carried out by the Academic Entrepreneurship Society
showed encouraging results but for various reasons this has not been
continued. If done in an integrated and coordinated manner this should benefit
the South African environment within a short period.
7
Various recommendations have been made in the past, some of which have
been addressed and others not. These have been included to avoid re-
inventing the wheel and to refresh minds. Entrepreneurship should, however,
be developed as an integrated system. We used an integrated framework to
illustrate how to go about creating and implementing recommendations in an
orderly way. The development and implementation of micro-recommendations
is not possible without such an integrated macro entrepreneurial framework,
supported by all stakeholders.
Lastly, what this GEM 2006 reports highlights is that Total Early-Stage
Entrepreneurial Activities (i.e. from 0 months up to 3.5 years) are not up to
standard if South Africa wants to sustain economic growth rates that will
create wealth for everybody. With a young population, more pressure will be
exerted on existing businesses to create enough wealth for all. If the TEA
activities are not improved quickly enough, the danger exists that the
dependency level on existing businesses will become too much.
8
CHAPTER 1
OVERVIEW OF THE GEM 2006 REPORT
1.1 ACKNOWLEDGEMENTS
The Global Entrepreneurship Monitor (GEM) for South Africa would not have
been possible without the support of various individuals and organisations.
Firstly, we would like to thank our four sponsors for their financial support,
namely Liberty Life, South African Breweries Limited, Standard Bank of South
Africa and the National Research Foundation.
We express our appreciation to the 38 key informants who so willingly gave of
their time and shared their insights into the state of entrepreneurship in South
Africa.
Thank you to Rothko International for designing the report and INCE for
printing the report.
To AC Nielsen, who did the adult population survey. Thank you for a job well
done!
The GEM project is dependent on the enormous effort of the GEM global
team at the London Business School and Babson College. The South African
team would like to thank them and acknowledge their contribution.
A special thank you goes to the extended South African team who provided
valuable input on various issues. They are Professors Christo Boshoff and
Jurie van Vuuren, Ms Sandra Musengi, Mrs Beulah Maas and Mrs Lynette
Goosen.
Most importantly, the South African entrepreneurs without whom this study
would have no meaning - thank you for your support.
1.2 THE GLOBAL ENTREPRENEURSHIP MONITOR STUDY
Von Broemsen, Wood and Herrington (2005: 10) summarised the reason for
the GEM study as follows:
“The Global Entrepreneurship Monitor (GEM) was started in 1999 as a joint
project by academics at London Business School and Babson College in the
United States.
The raison d’être behind the study was to:
• compare countries in terms of their entrepreneurial activity;
• establish which factors encourage entrepreneurship;
• determine whether the rate of entrepreneurship in a country affects
national economic growth; and
9
• identify policies that encourage entrepreneurial activity”.
Teams from 42 countries around the globe have participated in the GEM 2006
study. It is the largest and most rigorous longitudinal study of
entrepreneurship in the world. South Africa joined GEM in 2001, which means
that South Africa is in its sixth year of participation.
Although the GEM study acknowledges the economic contribution of large
corporations, GEM's specific focus is on two sets of businesses: those that
are in the process of start-up (0-3 months) and those that are more
established but still relatively new (3 months to three and a half years). These
businesses form the new basis from which an economy can expand and
stimulate accelerated socio-economic growth and development. It is critical
that readers keep this focus in mind when reading and interpreting this report.
Von Broemsen et al. (2006:10) make an important point by indicating
that the “GEM is a monitor, which allows for international comparative
analysis. The purpose of the research is not to provide the annual
definitive analysis of the small business sector. Rather, it is to
understand trends - both internationally and within nations - to create
benchmarks and to provide a rich source of longitudinal data for
researchers and government departments”.
Due to a general lack of primary data on small businesses in South Africa, this
year’s GEM report focuses much more on providing specific data which can
be used by other researchers and policy formulators.
1.3 UCT CENTRE FOR INNOVATION AND ENTREPRENEURSHIP
In 2001 the Graduate School of Business at the University of Cape Town
established the UCT Centre for Innovation and Entrepreneurship, with
financial assistance from Liberty Life, the World Bank Group and the Gatsby
Charitable Foundation. The ambition was bold – to make the Graduate School
of Business Africa’s leading tertiary institution in entrepreneurship teaching
and research, and to become internationally recognised as an authority in this
field in developing economies.
The Centre, building on initiatives started in the late 1990s, was organised
around three distinct and mutually reinforcing sets of activities: teaching and
material development, research and public policy, and business creation and
growth. The core focus of the Centre is on the delivery of quality
entrepreneurship education at academic and all other levels of society. The
Graduate School of Business’s philosophy of entrepreneurship education is
that to be effective, it must be practical. Our students therefore have
meaningful interactions with entrepreneurs, are involved in actual
entrepreneurial projects, work in multi-disciplinary project teams and are
evaluated by entrepreneurs and investors, as well as by academic staff. The
entrepreneurship courses delivered by the Centre are closely integrated with
new venture activity in the local business and investment communities. The
intention is not to compete with incubators or other business promotion
10
projects, but to seek partnership with the most successful of these for mutual
benefit. The Centre’s core activity of ‘quality entrepreneurship education’ has
significantly enhanced its ability to establish such partnerships. The Centre is
involved in high-value-added and high-potential new ventures and in both
township and other community-based enterprises. Since its establishment, the
Centre has assisted over 70 township enterprises by providing practical
business advice and access to finance and training, with the objective of
enabling them to become independent, sustainable businesses with greater
potential for expansion. The Centre, with the co-operation of the Grassroots
Business Initiative of the International Finance Corporation, is also involved
with assisting socially orientated organisations through mentoring and
financial support. The Centre is currently involved in numerous other activities
including:
• research that aims to develop a better understanding of the capacities
and needs of all the different categories of entrepreneurs in South
Africa so that advisory services and finance can be more precisely
targeted;
• advising academics on the commercialisation of their intellectual
property;
• assembling a group of high-profile entrepreneurs in the Western Cape
in order to finance and assist high-growth business ventures;
• offering coaching and mentoring services to entrepreneurs; and
• assisting large companies in nurturing innovative and entrepreneurial
behaviour in their organisations.
The Centre is proud to be a participant in the international GEM project. We
believe that the research spearheaded by GEM is essential to the
development of global entrepreneurial activity and we are committed to that
purpose in South Africa.
1.4 THE GEM TEAM
Mike Herrington is the team leader of GEM South Africa and the principal
author of the GEM 2006 report is Gideon Maas.
Dr Mike Herrington
Mike Herrington is the Director of the UCT Centre for Innovation and
Entrepreneurship at the Graduate School of Business. He is a recognised
entrepreneur, having started four businesses – one in New Zealand and three
in South Africa. He was responsible for starting the CIE and is keenly
interested in entrepreneurship and all levels of business creation. His leading
activities are in the areas of entrepreneurship, business planning, venture
capital and the internationalisation of businesses.
Dr Gideon Maas
Gideon Maas is Director of Global Entrepreneurial Business Consultants
(GEBC), his own company focusing on entrepreneurship and family
businesses, and contracted to conduct research for this GEM study. He was
11
the holder of the first International Chair in Entrepreneurship in South Africa
and is also an Adjunct Professor of the University of Limerick in Ireland.
The above team was also assisted by four specialists who provided support
with various chapters. They are:
• Prof. Christo Boshoff
Christo Boshoff holds a Ph D from the University of Pretoria in South Africa.
His research interests are service quality as a competitive strategy, the role of
risk perceptions in service marketing and the management of service
recovery. He has published papers on these and related topics in several
international journals. He teaches Marketing and Marketing Research at the
Department of Business Management, University of Stellenbosch. He has
also taught on the MBA courses of Rhodes University (South Africa), the
University of Otago (New Zealand) and Nyenrode Business School in the
Netherlands. He is co-author of three marketing textbooks used at South
African universities.
• Prof. Jurie van Vuuren
Dr van Vuuren is a Professor at the University of Pretoria, South Africa and
co-ordinator of the Danie Cronje SAB Chair of Entrepreneurship in the
Department of Business Management. He initiated and developed the first
Bachelors Degree with specialisation in Entrepreneurship in South Africa and
was instrumental in developing the first lectured Masters and PhD degrees
offered by the Department. In 1992 he started up a company in
Entrepreneurship, Education, Training and Consultation that has since trained
over 2 000 delegates. He is the author of a number of articles in various South
African journals and in more than 20 international conference proceedings
from all over the globe.
• Sandra Musengi
Sandra joined Rhodes University after her graduation and was with them from
2002 to May 2006 as a lecturer in the Principles of Management, Financial
Management and Entrepreneurship. In June 2006 she joined Cida City
Campus in Johannesburg as their Head of Education Operations. She has
received a number of academic and research funding awards, including the
International Chair in Entrepreneurship (ICE) Scholarship award to further her
studies in the field of Entrepreneurship at a Masters level. She is also a
founding member of the Institute for Family Business of Africa (IFBA).
• Beulah Maas
Beulah has been a director of Global Entrepreneurial Business Consultants
(GEBC) since its inception in 1999. She holds an M.Comm (Industrial
Psychology) degree from the University of Stellenbosch and is a registered
Industrial Psychologist. She focuses mainly on the ‘softer’ issues of
entrepreneurship and family businesses, which includes the analysing and
interpretation of profiles, the development of entrepreneurial training plans for
individuals and human resource aspects which are applicable to normal
businesses. She is also a founding member of the Institute for Family
12
Business of Africa (IFBA) and the Academic Entrepreneurship Society of
Southern Africa (AcES).
1.5 FOCUS OF 2006 REPORT
South Africa joined the GEM study group during 2001. Up until this point, data
on entrepreneurship was relatively ad hoc and very general in nature. The
South African GEM studies proved to be a valuable instrument in unlocking
data, which lead to an increased debate on this important topic.
The GEM 2006 report now takes this debate and research to a new level,
focusing on finding more detailed links, in order to develop a macro model
which will allow the research into and development of entrepreneurship to be
done in a more integrated manner. Recommendations, not necessarily linked
to policy, will be made to encourage a focused approach for the future and in
turn lead to accelerated support for entrepreneurship in South Africa.
In order to achieve the above, the outline of the GEM 2006 report is as
follows:
• Chapter 2: Data from key informants;
• Chapter 3: Adult population questionnaire;
• Chapter 4: Women in entrepreneurship;
• Chapter 5: Future research in entrepreneurship;
• Chapter 6: Integrated recommendations.
1.6 RESEARCH METHODOLOGY
The GEM 2006 study relies on various sets of data, namely:
• Data from key informants
Data was obtained from 38 key informants by doing in-depth, face-to-face
interviews; through the completion of a detailed structured questionnaire; and
from involvement in fine-tuning the data obtained from interviews. The list of
key informants is contained in the appendix.
• An adult population survey (APS)
This data set is a survey of the adult population, namely people between the
ages of 18 and 64. In South Africa, the questionnaire was translated into six
languages and 3 251 people were interviewed. Details of this set of data will
be discussed in Chapter 3.
• Other secondary data
Other data was obtained from a variety of reliable secondary resources such
as the World Bank reports, information from Statistics South Africa and
research conducted by various academics.
All the resources used were chosen to fit with the GEM conceptual model.
The primary aim of the GEM conceptual model is to explore the contribution of
entrepreneurial activity to national economic growth. The GEM conceptual
framework (see Figure 1) was discussed in detail by Von Broemsen et al.
13
(2006:12-13) in the GEM 2005 report. It was decided to include this
discussion again in this report because of various misunderstandings of this
study in the past.
Figure 1: The GEM conceptual model
Source: Adapted from the GEM 2004 Executive Report
The following discussion of the GEM model is obtained from Von Broemsen et
al. (2006:12-13):
“General business conditions affect the ability of large corporations to
compete effectively and to start new or ancillary businesses. When conditions
are such that businesses are able to compete effectively and new or ancillary
businesses are started, this in turn creates jobs. These conditions are
determined by the openness of the economy in terms of trade, the level of
government intervention in the market, the efficiency of financial markets, the
sophistication of physical infrastructure, the availability of management skills,
the flexibility of labour markets and the extent to which the laws of the country
are applied impartially and consistently. The interplay of these conditions is
very specific to each country and creates a unique environment in which to do
business.
The decision by individuals whether or not to respond to an opportunity and
start a business is influenced by an additional set of factors, referred to as
entrepreneurial framework conditions. These conditions refer to the
following nine factors: access to finance; government policies; government
programmes; education and training; transfer of research and development;
the commercial, legal and financial infrastructure; the openness of the
domestic market; access to physical infrastructure; and the extent to which
cultural and social norms support the choice of starting a business as a career
option.
14
The primary measure of entrepreneurship that GEM uses is the Total Early-
Stage Entrepreneurial Activity (TEA) index. The TEA index measures the
percentage of individuals between the ages of 18 and 64 that are involved in
starting a new business. Individuals may start the business on their own
account. They may also start the business in collaboration with or on behalf of
an existing business. They do need to own the business, either partly or
wholly, and to manage it, either on their own or with others. The creation of a
new business is a process, which GEM sees as a two-phase process. The
first phase is the start-up phase, a three-month period during which (one or
more) individuals identify the products or services that the business will trade
in, access resources (such as finance) and put in place the necessary
infrastructure, which would include staff. When the business is in this phase of
development, it is referred to as a start-up firm.
The next phase, a period of 3–42 months, is when this new business begins
to trade and compete with other firms in the market place. When the business
is in this phase of development, it is referred to as a new firm. The definition
of a new firm is a business that has paid salaries or wages for longer than
three months. Once a business has established itself and is more than 42
months old, it is referred to as an established firm.
The TEA index, the primary measure used to compare the rate of
entrepreneurship both amongst countries as well as annual variations within a
specific country, measures how many new businesses are started in a given
year. The key question in the survey that is used to establish the TEA rate is,
‘Are you, alone or with others, expecting to start a new business, including
any type of self-employment, within the next three years?’
The TEA rate therefore includes start-up businesses and new firms, but
does not include established firms. In other words, it measures early-
stage entrepreneurial activity only.
The TEA rate captures individual entrepreneurship, but does not capture
another equally important source – the launch of a new business venture by
the owner-manager of an established firm. This prompted the need to re-
define TEA as ‘Total Early-stage Activity’, rather than Total Entrepreneurial
Activity. Therefore, whenever TEA appears in this report, it refers to ‘Total
Early-stage Entrepreneurial Activity’.
‘New firms’ describes a continuum of businesses, with a street trader in an
informal settlement on the one end of the continuum and a business such as a
small, structured finance firm on the other. They differ fundamentally, not least
in terms of the turnover and the quality of employment generated.
The tool that GEM has identified to distinguish between businesses that
generate quality employment for the owner and potentially for others, and
businesses that are little more than a survival strategy, is to ask interviewees
about their motivation for starting a business. If the individual is starting the
business because he/she has no other way of earning a living, then this
15
business is referred to as one motivated by necessity. If, on the other hand,
the individual is starting a business in response to an opportunity (whether an
opportunity in the market place, or an opportunity to lead a different lifestyle or
to earn more money), this business is referred to as one motivated by
opportunity. The report therefore refers to both necessity entrepreneurship
and opportunity entrepreneurship”.
1.7 RELIABILITY OF GEM
Various questions were raised in the past regarding the reliability of the GEM
study. The reliability of the GEM studies (the extent to which the measurement
outcome can be replicated by others) has been tested extensively. Reynolds
et al. (2005: 222) concluded that “while there is no direct test of the reliability
of the GEM survey based measure of entrepreneurial activity, a variety of
indirect measures suggests that this procedure, despite the small sample
sizes, is reflecting the same phenomena as a wide range of other efforts to
track new firm creation, using a range of national administrative data bases”.
Reynolds et al. (2005: 224) also concluded that, after refining the interview
schedules, “the reliability of all 17 multi-item scales was 0.63 or higher; 15
were 0.70 or higher, and 7 were 0.80 or higher; this is consistent with current
standards for index reliability in social sciences”.
It can be deduced from the above that readers need have no concern about
the reliability of the study as it is in line with accepted statistical and academic
norms.
1.8 HOW TO READ THE GEM REPORT
The GEM Report is not an entrepreneurship monitor that will provide an exact
picture of the state of entrepreneurship in a country. It is a comparative study
among countries where differences are highlighted. The GEM also has the
advantage that it stimulates debate on what the data is showing and how best
to react to the findings. As indicated in paragraph 1.7 the methods used in this
survey are sound and the data obtained can be trusted.
Therefore, when reading through this report let the data talk to you; talk to the
data; reflect and try to find solutions for the South African situation.
1.9 SUMMARY
When evaluating a country in isolation it is easy to create a highly skewed
image of that country. However, by measuring that country against other
countries over time, a more accurate image is created. It is the intention of the
GEM report to provide a factual image of what is currently happening in South
Africa. Some data shows positive trends but equally there are trends that are
quite negative and should be attended to. In a true entrepreneurial spirit, one
needs to study the data and then decide what to do to improve the future.
Although to simply dwell on the past will not stimulate entrepreneurship, one
can identify lessons that can be useful when formulating plans for the future.
16
CHAPTER 2
DATA FROM KEY INFORMANTS
2.1 INTRODUCTION
Key informants supplied data through in-depth interviews, the completion of a
structured questionnaire and a round of voting for the most important
suggestions. This data provides the GEM 2006 report with an overview of
entrepreneurial activity in South Africa.
Although the data referred to in this chapter is based on perceptions it
provides valuable information which aids in the understanding of
entrepreneurial activity, and determining policies which should be
focused on to help improve entrepreneurship in South Africa.
The GEM consortium defines a country expert as “a professional or an
entrepreneur who is directly involved in delivering or assessing a major aspect
of an entrepreneurial framework condition in his/her country. They are
individuals with knowledge of entrepreneurship which results from various
experiences and perspectives”.
The key informants’ questionnaire is based on framework conditions that can
promote entrepreneurship in a country. The nine framework conditions are
financial support; government policies; government programmes; education
and training; research and development; access to commercial and
professional infrastructure; market openness; access to physical
infrastructure; and cultural and social norms.
According to guidelines from the GEM Projects Committee, South Africa had
to submit data from 36 experts of which 18 had to be experts consulted in
previous years. A database of previous experts was used (more than 184
from 2001) to identify a list of previously consulted experts. Of the 65 experts
contacted, only nine were willing to participate. One of the problems
experienced was that contact details were no longer relevant which meant
that the data was not up to date. Others simply did not wish to participate for
various reasons.
In order to comply with the requirement of 36 experts, we decided to involve a
larger number of new experts. Of the new experts, 29 were willing to
participate. In total there were 38 key experts (29 new and 9 from previous
years). Of these, 16 were Black, 22 White, 25 male, and 13 female (see list of
participants in Annexure A).
2.2 SUMMARY OF QUESTIONNAIRE DATA
The questionnaire presents questions and statements about various factors of
entrepreneurship. Questions were divided into 15 categories (see Table 1)
with 82 questions in total. Each response was measured on a standardised
Likert scale.
17
Table 1: Categories of questions
Category
Finance
Government policy
Government programmes
Education
Technology transfer
Business services
Market openness
Physical infrastructure
Social and cultural norms
Entrepreneurial opportunities
Entrepreneurial capacity
Respect for entrepreneurs
Intellectual property protection
Women entrepreneurs
High growth
The data obtained from the 38 respondents by means of a structured
questionnaire was analysed per category. The mean and standard deviations
of each category of questions were calculated and are summarised in Table 2.
From the data it is clear that only four of the fifteen categories (physical
infrastructure, entrepreneurial opportunities, respect for entrepreneurs and
women entrepreneurs) are perceived to be average or better than average.
On a Likert scale of five, the mean is three.
As the focus in this GEM report is on women entrepreneurs it was decided to
check whether the women key informants were in agreement that they are
supported and encouraged adequately. The average for this category in
Table 2 is 3.07, but that includes both the male and female perceptions of the
key informants. When the perceptions of female key informants only were
calculated, the average was 2.83, which clearly indicated that women
respondents are of the opinion that this category is also sub-standard and that
not enough support and encouragement is available for the development of
women entrepreneurs specifically. Women entrepreneurs will be analysed
and discussed in detail in Chapter 4.
Table 2: Summarised statistics of all categories
Category Mean Standard
deviation
Finance 2.70 0.88
Government policy 2.43 0.61
Government programmes 2.22 0.67
Education 2.44 0.69
Technology transfer 2.03 0.54
Business services 2.86 0.77
Market openness 2.52 0.63
Physical infrastructure 3.07 0.91
Social and cultural norms 2.67 0.87
Entrepreneurial opportunities 3.48 0.77
Entrepreneurial capacity 2.13 0.74
Respect for entrepreneurs 3.51 0.73
Intellectual property protection 2.82 1.07
Women entrepreneurs 3.07 0.95
High growth 2.93 0.79
18
The categories that are perceived to be the most underdeveloped areas (see
the highlighted categories in Table 2) are government programmes (e.g.
general support programmes from government for entrepreneurs), technology
transfer (e.g. research data transferred into business practices) and
entrepreneurial capacity (e.g. the skills a potential or existing entrepreneur
has in order to exploit opportunities).
The responses (see Table 2) portray a negative situation regarding
entrepreneurship in South Africa in general. The only two positive points are
that the infrastructure promotes entrepreneurship and that there are more
than enough opportunities to exploit. This supports the findings in Chapter 3
where South Africa fares below average on a number of critical factors, even
when compared with developing countries – the category within which South
Africa falls.
2.3 SUMMARY OF INTERVIEWS
One-on-one interviews also took place. These interviews allowed for the further
gathering of opinions from the respondents about aspects of entrepreneurial
activities they considered important. The interview aimed to gather and analyse
opinions about:
• the major factors that limit entrepreneurial activity, including the number
of independent and/or corporate start-ups in South Africa;
• the major factors that contribute to entrepreneurial activity, including the
number of independent and/or corporate start-ups in South Africa; and
• what is necessary to increase the entrepreneurial activity, including the
number of independent and/or corporate start-ups in South Africa.
Information generated during this phase was in some instances too general,
vague or diverse to produce meaningful conclusions. We decided to have
further rounds of interviews where we added issues or clarified others and
where respondents had to indicate what, to them, were the most important
issues. The results of this phase are summarised in Tables 3, 4 and 5.
Table 3: Factors that limit entrepreneurial activity in South Africa
The education system does not encourage entrepreneurship as a career – it is seen as
something you do when you cannot find a job or do not have a profession.
There is a lack of resources available to start one’s own business - banks want too much
security.
Regulations create huge administrative burdens and high costs when starting a business.
South Africa is not highly entrepreneurial due to factors such as sanctions of the past and the
education system that does not encourage entrepreneurship.
The environment in which children grow up influences them to believe that it is better to find a
job and be safe.
Starting a business is a risky process that often involves cycles of failure. South Africa has a
harsh attitude towards failure, which inhibits many potential entrepreneurs.
Infrastructure and the necessary skills required for the development of entrepreneurship are
lacking.
A paradigm of entrepreneurship does not exist. The expectation is that big business,
19
government and others should create jobs, rather than that one can create one’s own
employment.
Competencies such as management and entrepreneurial skills are lacking amongst
entrepreneurs.
The perceived reasons hindering entrepreneurship (see Table 3) can be
grouped together in the following three major areas:
• Culture
Culture refers to both a business culture (i.e. a feel for the world of business
and new ideas) and a personal culture (i.e. upbringing - to seek formal work
rather than create one’s own).
• Skills
Skills refer to knowledge and experience needed to become an entrepreneur.
This can be from primary and secondary schooling to tertiary education and
beyond, and is perceived not to be furthering entrepreneurship development
as much as it should.
• Support
This refers to government and private sector support for the creation and
development of new and existing enterprises.
• Access to finance
The respondents indicated that although there seems to be sufficient funds
available it remains difficult to access these funds, especially for start-ups.
Factors perceived to be contributing towards entrepreneurship in South Africa
are outlined in Table 4 and are divided into the following two broad categories:
• Push factors
Push factors are the more negative factors such as unemployment and
retrenchment which force people to become entrepreneurial in order to
survive.
• Pull factors
Pull factors refers to the more positive factors (e.g. government support which
is becoming more focused, and role models) which are helping people to
consider the option of entrepreneurship as a career choice.
In an ideal entrepreneurial environment, the pull factors should outweigh the
rest. Only then can one say that a true entrepreneurial culture exists in a
country.
Table 4: Factors that contribute to entrepreneurial activity in South Africa
Entrepreneurship is becoming a key focus of the government.
Economic conditions are stable and favourable for the development of entrepreneurship.
Government tries to encourage the development of entrepreneurship through regulations
such as lower taxation rates.
The implementation of a central integrated organisation such as the Small Enterprise
Development Agency (Seda) is a step in the right direction.
Policies are starting to fall into place although the execution still lacks focus.
Schools are starting to encourage entrepreneurship education.
An entrepreneurial awareness is starting to be developed among younger generations.
20
Unemployment pushes people to become more entrepreneurial.
More role models in entrepreneurship – also women and people from various cultural groups
– are observable in South Africa.
People who are retrenched are forced to become entrepreneurs because jobs are scarce.
Respondents were also required to indicate what activities they thought should
be implemented or focused on in future in order to accelerate the development
of entrepreneurship in South Africa (see Table 5).
Table 5: Factors that can increase entrepreneurial activity in South Africa
Provide clear definitions for key concepts such as political and economic development,
poverty alleviation and economic development.
Entrepreneurship should be developed from an early age through the education system. The
right skills for modern entrepreneurship should be developed.
Access to cheaper and different funding models must be developed i.e. quasi-funding, grants.
A one-stop shop and integrated approach for the development of entrepreneurship is
necessary e.g. the development of Seda and the Business Place.
Corruption and nepotism must be ruled out by the politically powerful.
Integrated support services such as training, research and consulting must be developed and
implemented.
Access to venture capital must be improved.
Service delivery on various government levels must improve drastically.
Policy conflicts should be highlighted and solved between government departments.
Different support measurements should exist for the development of different entrepreneurial
groups e.g. necessity and opportunity entrepreneurial groups.
From Table 5 it is clear that the emphasis falls on a focused, integrated and
modern approach of supporting entrepreneurship. The approach should be
focused in the sense that it must be clear which groups need to be targeted
for support and how the specific groups should be supported. The “one-
system fits all” approach is not promoting an entrepreneurial environment. A
portfolio of support measurements should be developed and implemented.
Secondly, integration between all the role players is necessary. A focused,
coherent and integrated macro model should exist to promote
entrepreneurship in South Africa. This will be dealt with in Chapters 5 and 6.
Lastly, entrepreneurs should be developed to fit into the paradigm of modern
entrepreneurship. A change of outdated skills and mindsets into modern ways
of thinking and competing is necessary. More modern ideas and opportunities
are required.
2.4 CONCLUSION
From the range of responses received during this phase it was clear that there
was consensus on the fact that the promotion and support of entrepreneurship
is, in general, below standard in South Africa. The respondents also agree
that although there are movements in the right direction, speed, focus and
integration of activities are still lacking. These perceptions will be dealt with in
more detail in the following chapters before recommendations are made in
Chapter 6.
21
CHAPTER 3
ADULT POPULATION QUESTIONNAIRE
3.1 INTRODUCTION
The GEM’s principle measure of entrepreneurial activity is the Total Early-
stage Entrepreneurial Activity (TEA). The TEA rate estimates the percentage
of people aged between 18-64 years who are actively involved in starting or
managing a business which they wholly or partly own and which is less than
three-and-a-half years old. It is a measure of the national rate of new
business formation. Data in this chapter is primarily from the Adult Population
Survey 2006 compiled by AC Nielsen. However, additional data is included
from various sources when needed.
3.2 METHODOLOGY
In South Africa AC Nielsen interviewed 3 251 people during the first half of
2006. The OMNIBUS Survey, a multi-ethnic syndicated survey, was used
which covers different areas of enquiry for a number of different clients.
Personal “at-home” interviews were conducted in the home language, or
preferred language of the respondent. The interviews were conducted using a
structured questionnaire on a CAPI (Computer Assisted Personal Interview)
machine as well as interviewing aids. The questionnaire was translated into
Afrikaans, Zulu, Xhosa, Tswana, South Sotho and North Sotho. The
OMNIBUS survey covered Black, Coloured, Indian and White adults.
Coverage for Blacks and Whites included metros, cities, towns and villages
throughout South Africa. In the case of Blacks, live-in domestic workers and
mine workers were excluded. Coloured coverage included the major metro
areas of Cape Town, Durban, East London, Port Elizabeth and Gauteng.
Indian coverage included the major metro areas of Durban, Pietermaritzburg
and Gauteng. The total coverage represents 94% of the urban adult
population of South Africa and 56% of the total adult population. An area-
stratified, probability sample of 3 300 households was drawn from AC
Nielsen’s Customized Research computerised dwelling unit census. The
sample was divided into 50% males and 50% females. In each household a
male or female was chosen to be interviewed, using a random selection grid.
Three calls were made before substituting it with an adjacent household and a
person of the same sex.
The advantages of a probability sample, in contrast with a quota sample, are:
• Respondent selection bias has been eliminated.
• Results can be evaluated within known limits of error.
• Results can be weighted up to the total population being studied.
• Findings from different surveys are statistically comparable.
• Standard statistical procedures can be applied.
Fieldwork was done by trained, experienced interviewers. Investigators
worked under the direction of regional supervisors and field managers. A
20% validation check was done personally or telephonically on the work of
each interviewer.
22
Raw data was provided to the international GEM project team at London
Business School who checked all data and performed statistical calculations
on a uniform basis on all participating countries’ data. They provided two sets
of data to individual countries, namely an international comparison and the
individual country’s data. These data used the same weightings (18-64 years)
which facilitated the conducting of comparative evaluations. The South
African team performed further analysis on this data using the computer
programme SPSS versions 13 and 14.
From the above discussion and from analysing the raw demographic data, it is
clear that the respondents accurately represented the composition of the
South African environment.
3.3 DISCUSSION OF DATA
Two broad sets of data were used for this particular section. Countries that
participated in the GEM 2006 survey were compared in the first set of data
and in the second set of data South Africa was analysed in depth.
3.3.1 GLOBAL PERSPECTIVE
• Total early-stage entrepreneurial activity
In Figure 2, the TEA rates for all countries are highlighted.
0
5
10
15
20
25
30
35
40
45
B
e
l
g
i
u
m
J
a
p
a
n
S
w
e
d
e
n
I
t
a
l
y
U
n
i
t
e
d
A
r
a
b
E
m
i
r
a
t
e
s
G
e
r
m
a
n
y
F
r
a
n
c
e
S
l
o
v
e
n
i
a
S
i
n
g
a
p
o
r
e
R
u
s
s
i
a
F
i
n
l
a
n
d
M
e
x
i
c
o
S
o
u
t
h
A
f
r
i
c
a
D
e
n
m
a
r
k
N
e
t
h
e
r
l
a
n
d
s
U
K
T
u
r
k
e
y
H
u
n
g
a
r
y
L
a
t
v
i
a
C
a
n
a
d
a
S
p
a
i
n
I
r
e
l
a
n
d
C
z
e
c
h
R
e
p
u
b
l
i
c
G
r
e
e
c
e
C
r
o
a
t
i
a
U
n
i
t
e
d
S
t
a
t
e
s
N
o
r
w
a
y
C
h
i
l
e
A
r
g
e
n
t
i
n
a
I
n
d
i
a
M
a
l
a
y
s
i
a
I
c
e
l
a
n
d
B
r
a
z
i
l
A
u
s
t
r
a
l
i
a
U
r
u
g
u
a
y
T
h
a
i
l
a
n
d
C
h
i
n
a
I
n
d
o
n
e
s
i
a
J
a
m
a
i
c
a
P
h
i
l
i
p
p
i
n
e
s
C
o
l
o
m
b
i
a
P
e
r
u
Figure 2: TEA rates for all countries
In order to determine where South Africa is positioned in comparison with
other countries, the average TEA for all countries was calculated. The
average for all countries is 9.43%. When this is compared with the TEA rate
for South Africa (5.29%) it is clear that South Africa is positioned below the
average of all other countries (see Table 6). However, this list includes
countries on different levels of development. According to the World
23
Development Indicator Database of the World Bank 2006, South Africa falls
within the “upper-middle income countries” category, where the per capita
income is between $3 466 and $10 725. Other countries that fall within this
category are highlighted in Table 6. The average TEA for all these countries is
7.79%. Compared with South Africa’s TEA rate it is again clear that even in
this category South Africa performs below average. In the past, South Africa
was compared with certain countries labelled as “developing countries”.
These countries are indicated by means of an asterisk in Table 6. The
average of these countries’ TEA rates is 14.80%. The large discrepancy
between this figure and South Africa’s TEA rate of 5,29% is certainly cause for
concern.
Table 6: Total TEA 2006 index
Ranking
Country
TEA 2006
1 Peru * 40.15
2 Colombia * 22.48
3 Philippines * 20.44
4 Jamaica 20.32
5 Indonesia 19.28
6 China 16.19
7 Thailand * 15.20
8 Uruguay * 12.56
9 Australia 11.96
10 Brazil * 11.65
11 Iceland 11.26
12 Malaysia 11.09
13 India * 10.42
14 Argentina* 10.18
15 Chile * 9.19
16 Norway 9.14
17 United States 8.82
18 Croatia 8.58
19 Greece 7.90
20 Czech Republic 7.85
21 Ireland 7.35
22 Spain 7.27
23 Canada 7.12
24 Latvia 6.57
25 Hungary 6.04
26 Turkey 5.96
27 UK 5.77
28 Netherlands 5.42
29 Denmark 5.32
30 South Africa 5.29
31 Mexico * 5.26
32 Finland 4.99
33 Russia 4.86
34 Singapore 4.85
35 Slovenia 4.63
36 France 4.39
37 Germany 4.21
38 United Arab Emirates 3.74
24
39 Italy 3.47
40 Sweden 3.45
41 Japan 2.90
42 Belgium 2.73
Average all countries 9.43
Average for countries in upper-middle income group 7.79
Highlights and Italics = countries within the upper-middle income group
Source:http://web.worldbank.org. Accessed 2006/11/14.
The above table represents only one year. How, has South Africa done over
the years especially since it became part of the study in 2001? It is difficult to
accurately rank South Africa’s performance because not all countries
participated every year. Certain countries only participated on an ad hoc
basis. One cannot therefore determine South Africa’s overall performance by
comparing it to the countries that participated each year because this will
provide a selective image. The median (the middle of a distribution) was
therefore calculated. The calculations in Table 7 show that South Africa’s
performance in terms of relative position has consistently been below the
median, which means that South Africa’s position has not improved since
2001.
Table 7: Relative ranking from 2001-2006
2001 2002 2003 2004 2005 2006
South
Africa’s
TEA
ranking
14
th
out of
28
countries
20
th
out of
37
countries
22nd out of
31
countries
20
th
out of
34
countries
25
th
out of
34
countries
30
th
out of
42
countries
South
Africa’s
TEA rate
9.4 6.3 4.3 5.4 5.15 5.29
Median 14 19 16 17 17 21
Number of
positions
below the
median
0 1 6 3 8 9
Source: GEM 2001-2005
• Motivation of entrepreneurs
The GEM study makes a distinction between opportunity and necessity
entrepreneurial motivation. Opportunity entrepreneurs are people who take
advantage of a business opportunity while necessity entrepreneurs are people
who have no better options for work.
This category determines whether respondents were pro-active participants in
starting and managing a business or whether they had no other option than to
create a new business because they had no other source of income. Both
necessity and opportunity can be seen as prime motivational factors.
However, in a country with an entrepreneurial culture one would expect the
focus to be orientated towards effective utilisation of opportunity, rather than
an option forced on desperate people.
25
South Africa’s TEA opportunity index of 3.47% for 2006 is far below the
average of 6.82% for all participating countries. Compared with countries in
the upper-middle income category only, South Africa’s index is still lower than
the average of 5.46%. South Africa is in the 33
rd
position out of the 40
participating countries as far as opportunity orientation is concerned (see
Table 8).
Table 8: TEA opportunity index
Ranking
2006
Country
TEA 2006
1 Peru * 29.57
2 Indonesia 16.67
3 Colombia * 13.68
4 Jamaica 12.91
5 Philippines * 11.11
6 Australia 10.64
7 Thailand * 10.23
8 Malaysia 10.12
9 Iceland 9.81
10 China 9.59
11 Norway 8.36
12 Uruguay * 7.87
13 Argentina* 7.49
14 United States 7.44
15 India * 6.71
16 Chile * 6.57
17 Ireland 6.20
18 Spain 6.12
19 Canada 6.00
20 Brazil * 5.99
21 Czech Republic 5.45
22 Latvia 5.05
23 Greece 5.01
24 Denmark 4.94
25 Netherlands 4.94
26 United Kingdom 4.70
27 Hungary 4.64
28 Croatia 4.41
29 Singapore 4.10
30 Slovenia 4.05
31 Finland 3.74
32 Turkey 3.60
33 South Africa 3.47
34 Mexico * 3.41
35 Russia 3.39
36 Sweden 3.01
37 United Arab Emirates 2.95
38 France 2.70
39 Italy 2.61
40 Germany 2.46
41 Japan 2.45
42 Belgium 2.36
26
Average all countries 6.82
Average for countries in the
upper-middle income group
5.46
Highlights and Italics = countries within the upper-middle income group
Source:http://web.worldbank.org. Accessed 2006/11/14.
When South Africa’s TEA opportunity index is compared with that of
developing countries (see countries indicated by means of * in Table 8), South
Africa’s TEA opportunity rate of 3.47% is below the average of 9.65%.
South Africa’s TEA necessity index is 1.51% for 2006, which is below the
average of 2.35% for all participating countries. Compared with countries in
the upper-middle income group only, South Africa’s index is also lower than
the average of 2.07%. South Africa is ranked 19
th
of the 40 countries (see
Table 9). When South Africa’s TEA necessity index is compared with that of
developing countries (see countries indicated by means of * in Table 9), South
Africa’s TEA necessity rate of 1.51% is below the average of 4.93%.
Table 9: TEA necessity index
Ranking
2006
Country
TEA 2006
1 Peru * 10.57
2 Philippines * 9.32
3 Colombia * 8.74
4 Jamaica 6.60
5 China 6.27
6 Brazil * 5.55
7 Thailand * 4.75
8 Uruguay * 4.57
9 Croatia 3.81
10 India * 2.86
11 Argentina* 2.63
12 Indonesia 2.62
13 Chile * 2.59
14 Czech Republic 2.40
15 Turkey 1.77
16 France 1.70
17 Greece 1.63
18 Germany 1.52
19 South Africa 1.51
20 Russia 1.44
21 Hungary 1.33
22 Australia 1.28
23 United States 1.19
24 Mexico * 1.17
25 Spain 1.11
26 Latvia 1.04
27 Canada 1.02
28 Iceland 0.95
29 United Kingdom 0.89
30 Italy 0.78
27
31 Ireland 0.76
32 Finland 0.71
33 Singapore 0.65
34 Malaysia 0.53
35 Slovenia 0.47
36 Japan 0.45
37 Netherlands 0.33
38 United Arab Emirates 0.32
39 Norway 0.32
40 Sweden 0.25
41 Denmark 0.19
42 Belgium 0.19
Average all countries 2.35
Average upper-middle income
countries
2.07
Highlights and Italics = countries within the upper-middle income group
Source:http://web.worldbank.org. Accessed 2006/11/14.
3.4 SOUTH AFRICA 2006 OVERVIEW
• Total TEA
South Africa’s Total TEA index for 2006 was 5.29%. The profile of people who
are categorised as entrepreneurs within the TEA definition shows that 2.8%
are male and 2.5% female. The majority of respondents are in the age group
25-34 years (see Table 10). If one takes into account that South Africa has a
relatively young population where 42.63% is below 20 years of age and a
further 18.83% between the ages of 20 and 29 (mid-year population
estimates, South Africa 2006), then the data in Table 10 represents a positive
situation where a larger number of younger entrepreneurs are entering the
market.
Table 10: Age distribution
Age categories Frequency Percent
18-24 years 31 21.7%
25-34 years
45 31.5%
35-44 years 34 23.8%
45-54 years 18 12.6%
55-64 years 15 10.5%
Total
143 100.0
The TEA respondents are mostly from Gauteng, followed by KwaZulu-Natal
and Western Cape (see Table 11).
Table 11: Regional spread of respondents
Region Frequency Percent
Gauteng 57 40.1%
KwaZulu-Natal 30 21.1%
Western Cape
19 13.4%
Mpumalanga/Limpopo
15 10.6%
28
Eastern Cape 10 7.0%
Free State
7 4.9%
Northwest/Northern Cape
4 2.8%
Total 142 100.0
In absolute terms the entrepreneurs are mostly from the Black population,
followed by the White population (see Table 12). However, when taking into
account the size of the different race groups, the group that is most
represented is the Indian group, followed by the White group, the Black group
and then the Coloured group.
Table 12: Major race groups
Race Frequency Percent South African
population
(1)
Percentage
of race
groups
involved in
TEA activities
Black 91 63.6% 37.7m 0.00024
Coloured 7 4.9% 4.2m 0.00017
Indian 13 9.1% 1.2m 0.00108
White 32 22.4% 4.4m 0.00073
Total
143 100
47.6m
(1)http://www.southafrica.info/ess_info/sa_glance/demographics/population.htm
The income distribution of TEA respondents is mainly within the R8 000 and
higher category (see Table 13). However, the group in the R800-R3 999
income category is also quite high. One could argue that in order to make
meaningful contributions towards the economic growth of a country that the
income levels should be higher. This data could also indicate that lower levels
of ideas are exploited which only provide a lower level of income.
Table 13: Income levels
Income Frequency Percent
R8000 plus 49 34.5%
R4000-R7999 34 23.9%
R800-R3999 46 32.4%
R1-R799
13 9.2%
Total
142 100.0
The majority of TEA respondents (75%) have a qualification equal to or lower
than Grade 12 level (see Table 14). In a global competitive environment
characterised by high levels of innovation and technological involvement one
would expect educational levels to be higher than Grade 12.
Table 14: Educational levels
Level Frequency Percent
No school 1 0.7%
Some primary school 2 1.4%
Primary school completed 3 2.1%
Some high school 37 26.1%
29
High school completed 64 45.1%
Some university 7 4.9%
University completed 12 8.5%
Other post-Grade 12
qualification
16 11.3%
Total 142 100
• Stage of activity
The respondents were further classified into the two stages of the TEA
definition i.e. the start-up phase (0-3 months) and baby businesses or new
firms (3 months -3.5 years) (see Table 15). From the table it is clear that the
majority of activities (67%) are in the start-up phase with far fewer activities
(33%) in the baby business stage. What is interesting to note, is that although
the activities of nascent entrepreneurs decrease over a three year period, the
number of baby businesses shows a positive trend which means that more
entrepreneurs are graduating to the next level.
Table 15: Stage of activity
Stage 2004 2005 2006
Nascent entrepreneur (0-3 months) 71.3 69.3 67.1
Baby business owner-manager (3
months -3.5 years)
28.7 30.7 32.9
Total 100.0 100.0 100.0
• Opportunity and necessity TEA
In order to classify respondents as either opportunity or necessity
entrepreneurs, they were asked whether they got involved in an
entrepreneurial activity because they took advantage of an opportunity or
whether they got involved because they had no other choice of work. 3.5%
replied that they got involved in opportunity early-stage entrepreneurial activity
and 1.5% got involved in necessity early-stage entrepreneurial activity. 0.3%
of the respondents could not be classified as either opportunity or necessity
entrepreneurs.
In terms of a regional perspective Gauteng is still first in terms of opportunity
entrepreneurs and KwaZulu-Natal first in terms of necessity entrepreneurs
(see Table 16).
Table 16: The involvement of the different regions in TEA activities
Region Total TEA TEA: opportunity TEA: necessity
Gauteng 40.1% 44.1% 26.8%
KwaZulu-Natal 21.1% 15.1% 36.6%
Western Cape 13.4% 16.1% 9.8%
Mpumalanga/Limpopo 10.6% 7.5% 14.6%
Eastern Cape 7.0% 5.4% 12.2%
Free State 4.9% 7.5% 0.0%
Northwest/North Cape 2.8% 4.3% 0.0%
Total 100 100 100
In terms of the TEA necessity index the majority of the respondents could be
catagorised into the lower income brackets (see Table 17). This is to be
30
expected because necessity entrepreneurs are involved in “start-ups” only
because they have no other choice.
The TEA opportunity index, however, does not reflect a trend where the
majority of respondents are in the higher income brackets. As mentioned
earlier, this is problematic if entrepreneurs are to make a meaningful
contribution to economic growth in a country.
One is forced to ask whether a person with a lower income can really exploit
opportunities that can have a positive influence on the economy. This might
well be a reason why South Africa’s total TEA index is in all respects lower
than that of its counterparts in the world. The positive trend in terms of
nascent to baby businesses can, on the other hand, be seen as a starting
phase whereby respondents are migrating from lower levels of
entrepreneurship to higher levels, thus assisting in the stimulation of the
economy.
Table 17: Cross-tabulation of TEA indexes with income
TEA categories R8000 plus R4000-R7999 R800-R3999 R1-R799 Total
TEA index 34.5% 23.9% 32.4% 9.2% 100%
TEA opportunity
index
43.0% 22.6% 28.0% 6.5% 100%
TEA necessity
index
15.0% 30.0% 37.5% 17.5% 100%
• Attitude and culture
Each respondent had to answer questions relating to individual perceptions or
perceptions related to the culture in South Africa as a whole. Individual
questions related to the following: whether the respondent knows someone
personally who has started a business; whether there will be good
opportunities to start a business in the next few months; whether the person
has the skills and experience to start a new business; and whether fear of
failure will prevent the respondent from trying. These questions were
translated into an index and measured on a scale which provides an indication
of individual perceptions on entrepreneurship. A negative perception of 48%
and a comprehensive positive perception of only 12.2% was indicated
regarding entrepreneurship (see Table 18). This means that the majority of
respondents do not regard themselves as entrepreneurial. This supports the
views of the key experts as discussed in Chapter 2.
Table 18: Individual perceptions of entrepreneurship in South Africa
Number of positive reasons
provided
Frequency Valid Percent
Not entrepreneurial 503 48.0
One out of three possible positive
reasons
221 21.1
Two out of three possible positive
reasons
196 18.7
Three out of three possible positive
reasons
128 12.2
Total
1048 100.0
31
Whether an entrepreneurial culture exists was tested by asking questions
such as whether people would prefer everybody to have a similar standard of
living; whether starting up your own business is a desirable career choice;
whether people starting their own businesses have a high standard of living;
and whether positive stories are published in the media regarding successful
businesses. These questions were translated into an index and measured on
a scale which provides an indication of whether an entrepreneurial culture
exists in South Africa. In Table 19,29% indicated that such a culture does not
exist whilst 42.1% indicated that such a culture does exist.
One can conclude that although the environment is becoming more positive
as far as entrepreneurship is concerned, not all individuals are ready for it yet.
Although systems are being implemented to assist in making
entrepreneurship possible, development and the mindsets of potential
entrepreneurs are clearly not on the same level. Both the World Bank and the
International Finance Corporation 2006 reports support this finding where
South Africa is rated 28
th
of the top 30 countries in the world in terms of ease
of doing business.
Table 19: Cultural support for entrepreneurship in South Africa
Number of positive reasons
provided
Frequency Valid Percent
No entrepreneurial culture in South
Africa
315 28.8
One out of three possible positive
reasons
101 9.2
Two out of three possible positive
reasons
219 20.0
Three out of three possible positive
reasons
461 42.1
Total 1096 100.0
• Market orientation
The market orientation is derived from questions focusing on the percentage
of customers in South Africa or elsewhere, distance from supplier, and
dependency on a single large customer (see Table 20). In a more classical
entrepreneurial approach one would expect to see a growth orientation within
entrepreneurs. However, in Table 20, 50% of the respondents indicated that
they have no desire to grow, and only 2.3% indicated the highest order of
market orientation.
Table 20: The market expansion mode
Level of market expansion Frequency Valid Percent
No market expansion 71 50.1
Some market expansion (no new
technologies)
49 34.3
Some market expansion (new
technologies)
19 13.3
Profound market expansion 3 2.3
Total
142 100.0
32
Exports can help to exploit and grow markets. However, the majority of people
interviewed are not focusing on international markets (see Table 21).
Table 21: Export intensity
Percentage of export involvement Frequency Valid Percent
75%-100% involvement 10 7.7
25%-75% involvement
21 17.1
1%-25% involvement 27 21.6
No involvement 67 53.6
Total 125 100.0
The above phenomenon, i.e. why respondents are not geared towards market
expansion or exporting, was further explored by cross-tabulating a mindset for
product/market development with educational levels (see Table 22). From this
table it is clear that only 13.8% have university training, 13.8% have other
post-Grade 12 qualifications and the majority are without post-school
qualifications. One would expect qualification levels associated with exports to
be higher because of the complexity and technological nature of this
competitive environment.
Table 22: TEA for new product market cross-tabulated with educational
levels
Educational level Positive indication
No schooling 0.0%
Some primary schooling 0.0%
Primary school completed 6.9%
Some high schooling 24.1%
High school completed 34.5%
Some university 13.8%
University completed 6.9%
Other post matric qualifications 13.8%
Total 100.0%
Further exploration indicated that the age groups associated with
product/market expansion peaks were within the 35-44 years bracket (see
Table 23).
Table 23: Age groups associated with possible product/market
expansion
Age group Positive indication
18-24 years 20.7%
25-34 years 20.7%
35-44 years 27.6%
45-54 years 13.8%
55-64 years 17.2%
Total 100.0%
The above phenomenon might have various interpretations. One such link
exists with Table 18 where it is indicated that entrepreneurs do not have the
know-how and experience to exploit opportunities coming their way. A number
of questions arise. Are people appropriately trained and exposed to
33
entrepreneurship? Do we have enough suitably qualified graduates that can
exploit opportunities in a modern global competitive environment? Can this
phenomenon also be ascribed to the fact that the majority of entrepreneurs
are in the lower income bracket, not enabling them to operate on a more
sophisticated level?
• Growth in employment
Growth in employment is needed to stimulate socio-economic development in
South Africa. The mindset, however, of the majority of the respondents is not
geared towards growing employment in the near future (see Table 24).
Table 24: Indication of job creation
Mindset to grow
employment
2004 2005 2006
Yes 4.6% 4.3% 4.8%
No 95.4% 95.7% 95.2%
Total 100.0 100.0 100.0
Source: GEM 2004-2005 data
Those that will grow business in terms of employment will expect to do so
mainly in the 1-5 jobs category (see Table 25).
Table 25: Categories of expected number of jobs
2004 2005 2006
1-5 jobs 65.5% 81.7% 78.6%
6-19 jobs 24.5% 15.4% 15.5%
20+ jobs 10.0% 2.9% 5.9%
Total 100.0 100.0 100.0
Source: GEM 2004-2005 data
The above has serious implications for South Africa where 25.6% of the
labour force is currently unemployed (see Table 26). Furthermore, with a
population of 47.4 million (Labour Force Survey, March 2006) which is
growing at a rate of 2.7%, the absorption rate of the labour force is low on
41.7% - i.e. only 4 out of 10 newcomers to the labour force can be
accommodated (Labour Force Survey, March 2006).
Table 26: Unemployment rate, March 2001 to March 2006
2001 2002 2003 2004 2005 2006
26.4 29.7 31.2 27.9 26.5 25.6
Labour Force Survey, March 2006
A further important statistic is that the average size of companies has dropped
from 35 people in the eighties to 13 people currently (Fin Week, 5 October
2006). This must be seen against the trend that during 1999 there were an
estimated 812 000 active companies in South Africa whilst the current
estimate is 1 717 756 active entities (12 June 2006) of which close
corporations form the majority (74.29%).
(www.cipro.co.za/about_us/registration_stats.asp).
34
Therefore, more businesses need to be created in order to accommodate
more people in the labour force. However, the South African TEA rates and
stage of business analyses indicate that not enough businesses are being
created to offset the number of new entrants into the labour market.
• Innovation
The innovation index is derived from three questions, namely whether
potential customers consider this product or service new and unfamiliar;
whether there are other businesses offering the same products or services to
potential customers; and whether the technologies and procedures required
for this product and service were available more than a year ago. Nascent
entrepreneurs are generally more optimistic about innovation than existing
businesses.
The majority of respondents (60.2%) indicated that they actually use no new
technologies – they use technology more than 5 years old (see Table 27).
Table 27: Availability of technologies or procedures more than a year
ago?
Level of involvement Frequency Valid Percent
Very latest technology (newer than one year) 22 15.5
New technology (one to 5 years) 35 24.3
No new technology (more than 5 years) 86 60.2
Total 142 100.0
The sectors that are using new technologies are mostly in the low or non-
technological category (95.5%) with the medium and high technological
sectors making up the rest (See Table 28).
Table 28: Technology level of the sector
Level of technology Frequency Valid Percent
No/low technologies 136 95.5
Medium-tech 2 1.2
High-tech 5 3.3
Total 142 100.0
When the level of technology was measured against age levels the most
important categories were the 25-34 years and 35-44 years categories (see
Table 29). In terms of new technology between 1 and 5 years old the most
important category is 18-24 years followed by the 25-34 years old cohort.
35
Table 29: Technology compared with age levels
Latest technology
(0-1 years)
New technology
(1-5 years)
No new technology
18-24 years 13.6% 38.2% 17.6%
25-34 years 36.4% 26.5% 32.9%
35-44 years 36.4% 8.8% 27.1%
45-54 years 4.5% 8.8% 16.3%
55-64 years 9.1% 17.6% 7.1%
Total 100 100 100
• Funding
This section focuses on the source of funding during the start-up phase. The
most important sources tend to be banks/financial institutions and the
government (see Table 30).
Table 30: Sources of funding
Source Count Percentage
Close family members 9 13.8
Other relatives 5 7.7
Work colleagues 6 9.2
Strangers 1 1.5
Friends or neighbours 3 4.6
Banks or financial institutions 18 27.7
Government programmes 16 24.6
Other sources 7 10.8
Total 65 100.0
• Closing of business
This section focuses on possible reasons for closing down a business. In
Table 31, the most important reasons were financial and personal. A positive
trend is that there is a decline in the number of liquidations and insolvencies
(see Tables 32 and 33). This could be a possible explanation as to why more
entrepreneurs are graduating to higher levels of entrepreneurial activity (see
Table 15).
Table 31: Exit reasons
Reason Frequency Valid Percent
Too much competition 6 11.8
Lack of customers 6 11.3
Financial reasons
17 32.1
Found another job
2 4.3
Retirement 1 2.7
Personal reasons 12 23.1
Other reasons 8 14.7
Total
52 100.0
Table 32: Total number of liquidations: 2000 to 2006
Month 2000 2001 2002 2003 2004 2005 2006
Total 3804 4156 3911 4086 3510 3225 2228
Companies 1626 1671 1858 2110 1532 1604 1100
Close
Corporations
2179 2485 2053 1976 1978 1621 1128
Statistics of liquidations and insolvencies, September 2006
36
Table 33: Total number of insolvencies: 2000 to 2006
Month 2000 2001 2002 2003 2004 2005 2006
Total 4693 3935 3043 2639 1947 1567 879
Statistics of liquidations and insolvencies, September 2006
3.5 SUMMARY
From the research, it is clear that a country needs to embark on creating more
businesses that can stimulate economic growth and development. In this
chapter, it is clear that South Africa performs below average on most of the
criteria when compared with other countries. The number of people that are
involved in TEA activities is also a clear indication that South Africa is not
succeeding in creating enough businesses in this category. If the composition
of South Africa’s population is taken into consideration (i.e. where the majority
are under the age of 30 years) then one would expect a better performance in
the creation of businesses that can help with economic growth and the
subsequent growth in employment. The TEA rates indicate that, to a certain
degree, this is not the current situation and that the pressure on existing
businesses is increasing to provide the needed impetus for socio-economic
growth and development.
The above information is supported by the following main findings in this
chapter:
• South Africa performs below average as compared with other countries
(Table 6).
• South Africa has actually declined in performance since 2001 (Table 7).
• The mindset in South Africa is not in line with entrepreneurship (Tables
8 and 9).
• A negative individual entrepreneurial mindset exists (Tables 8, 9 and
18).
• To a certain degree a reason for the lack of entrepreneurial activities is
that the majority have an educational qualification of Grade 12 or less
(Table 14).
• The growth orientation of respondents is also not in line with an
entrepreneurial mindset (Tables 20, 21, 22, 24 and 25).
• Deduced from above tables and highlighted by Tables 13, 14, 17, 20
and 21, entrepreneurs are mostly involved in lower order
entrepreneurial ideas (commonly referred to as “me too” projects).
• There is a perception that the entrepreneurial culture in South Africa is
improving (Table 19).
• Fewer businesses are liquidated and more people seem to be
graduating from the start-up phase to the next phase of operation
(Tables 32, 33 and 15).
One could argue that to promote entrepreneurship a total balanced systems
approach should exist. From the above interpretation, however, it is clear that
because of individual entrepreneurial capacity problems the current system is
not balanced. This influences the way policies should be formulated e.g.
focusing on the unlocking of markets will not have the desired impact because
37
entrepreneurs do not know how to identify and exploit opportunities in such a
market. Different mechanisms should be found and formulated to provide a
balanced system that will address the unique problems of the South African
environment.
Focusing on improving individual entrepreneurial capabilities on all levels
should therefore be a priority for all stakeholders involved in the promotion of
entrepreneurship in South Africa.
38
CHAPTER 4
WOMEN IN ENTREPRENEURSHIP
1. INTRODUCTION
Worldwide female entrepreneurs outnumber male entrepreneurs. This has led
to the renewed focus on gender entrepreneurship and the development of
appropriate entrepreneurship interventions for gender-specific groups
internationally. In Chile, a developing country, the estimation is that there are
513 000 women entrepreneurs, which is 33% of all entrepreneurs and has
increased from 20% three years ago. The estimate is that by 2010 female
entrepreneurs will equal male entrepreneurs and create more than 50% of the
jobs in new enterprises (GEM Newsletter, September 2006). Similarly,
Canada has experienced a 200% growth in the number of women
entrepreneurs over the last 20 years (ITC, 2004). In the African context, taking
Cameroon as an example, women entrepreneurs manage 57% of small and
micro businesses whilst in Uganda, women entrepreneurs form the majority of
the country’s business people in the areas of farming and small to medium-
sized companies (ITC, 2004).
The question is whether South Africa can experience the same growth as far
as women entrepreneurship is concerned. Growing women entrepreneurs to
the detriment of male entrepreneurs will, however, not provide an impetus for
accelerated socio-economic growth of a country. It will be necessary to
enlarge the economic cake before both male and female entrepreneurs can
prosper.
This chapter has as its focus how to promote women entrepreneurship in
South Africa without simply switching ratios around between male and female
entrepreneurs. Therefore, the emphasis in this chapter is to look at women
entrepreneurs as a whole and to compare them not with male entrepreneurs
but with women entrepreneurs in other countries.
The first part of this chapter focuses on a theoretical background description
of women entrepreneurship. Thereafter, we will look at information taken from
the Adult Population Survey. Thirdly, an analysis is made of important trends
from this primary research which were discussed in two focus groups of
women entrepreneurs in order to determine how best to develop women
entrepreneurs in South Africa. The emphasis is not so much on what went
wrong in the past but rather on what to do in future. This chapter ends off with
various recommendations.
2. THE ROLE OF WOMEN IN THE SOUTH AFRICAN ECONOMY
In South Africa, women make up 52% of the adult population. Of this, only
41% are regarded as being part of the active working population and only
14.7% find themselves in executive managerial positions (KPMG, 2006).
Furthermore, a study commissioned by the South African Department of
Trade and Industry (DTI) (2005:2) highlights that “women in South Africa
39
make up half of the business force and their contribution has not been
adequately nurtured.” The study further indicated that the majority of South
African women entrepreneurs operate within the crafts, hawking, personal
services and retail sectors.
Research on women entrepreneurship in the South African context remains
limited with few empirical studies in existence. This has an influence on the
formulation and implementation of policies and support programmes. The
government does accept the importance of women in entrepreneurship, as
reflected in a speech of the President, Mr. Thabo Mbeki during 2005 when he
indicated that businesses should appoint more women to middle and top
management positions (Nel, 2005).
Over the last few years, the government has undertaken a range of initiatives
e.g. SAWEN (South African Women Entrepreneurs Network), SAWIMA
(South African Women in Mining), TWIB (Technology for Women in Business)
all with the aim of advancing women’s economic empowerment (The DTI,
2005).
According to Duncan (www.moneyweb), the DTI is also considering
developing a set of incentives for women entrepreneurs, such as business
incubation, training and the creation of a networking organisation for women
entrepreneurs and business people. The DTI also has an initiative called
Technology for Women in Business that focuses on women entrepreneurs at
all levels of business to fast-track their skills development and enable them to
embrace appropriate technologies. Various science councils and
organisations are partners in the initiative, offering training and mentorship
programmes (www.southafrica.info).
It is realised that without factual, reliable information on the status as well as
the profile of the women entrepreneurs it will be difficult to make a fair
assessment of the representation and participation of women in business. It is
questionable whether any organisation can play a meaningful role in the
absence of reliable information. This does not mean that organisations should
not to get involved in the promotion of women entrepreneurship. Rather,
organisations should all contribute to the generation of reliable information in
order to accelerate such support.
According to the DTI Special Report (2005), support should focus on:
• education from dependency and entitlement to self-sufficiency and
economic growth;
• development/facilitation of information and communication technologies
that bridge the gap between new enterprises and established
businesses;
• establishment of networking links, international partnerships,
community participation and access to national and global markets;
• development of partnerships between stakeholders (government,
private sector, NGOs, trading partners);
40
• provision of business skills training, facilitation of business incubation,
mentoring and support services;
• establishment of appropriate changes to trade, investment and tax
policies that promote sustainability and do not stifle the economic
dreams of women entrepreneurs; and
• review/changing of regulatory frameworks that stifle women
entrepreneurs and hinder economic growth.
3. FACTORS INFLUENCING FEMALE ENTREPRENEURS
The critical areas in developing women entrepreneurs (discussed in
paragraph 2) can only be tailor-made when all the factors influencing women
entrepreneurs are considered. Starting and operating any entrepreneurial
business involves considerable risks and effort, particularly due to the high
failure rate. Nieman, Hough and Nieuwenhuizen (2003) are of the opinion
that the risk is perhaps even greater for woman entrepreneurs, not only
because they have to deal with the problems associated with operating in a
traditionally male-dominated area but also due to their lack of education and
training in this specific field. Although men and women find it difficult to start
up an enterprise limited access to financial resources, lack of support for
women entrepreneurs specifically, negative prevailing socio-cultural attitudes,
gender discrimination or bias and personal difficulties seem to be specific
barriers that women entrepreneurs are grappling with.
Women also seem to have low credibility when it comes to dealing with
suppliers, banking institutions and clients. Although 72% of micro-enterprises
are owned by women, the success of their businesses was impacted by
internal and external barriers ranging from basic life skills such as self-
confidence, assertiveness, self-motivation, achievement orientation, reliability
and communication skills as well as the absence of mentorship opportunities,
marketing and basic holistic management training (Nieman, et al. (2003).
Furthermore, Nieman, et al. (2003) and Sokabo (2002) also highlighted the
following barriers specific to women entrepreneurs:
• Limited networking for women within specific industries;
• Women entrepreneurs lack start-up funds;
• Banks/financial institutions readily criticise women’s business plans
without giving direction and guidance;
• Exposure to the media is very expensive;
• No database of women entrepreneurs by sector is available;
• There is replication and duplication of too many craft centres or groups
in an area; and
• Courses offered by training institutions focus on training the traditional
manager and not the entrepreneur.
A special report by the DTI, Women in Business (2003), states that some of
the challenges facing women entrepreneurs include:
41
• The regulatory environment, where some legislation limits women’s
contractual rights which in turn limits women’s participation in the
economy
• A lack of education opportunities and education systems which has the
potential to limit women’s participation in entrepreneurial activities as
women are often the ones to experience limited access to education
• Cultural factors, societal views and societal perceptions that did not
encourage women entrepreneurship
• A lack of management training and job opportunities as in some cases
women did not have the same access to appropriate training in
organisations they worked in
• Family responsibilities could limit women engaging in entrepreneurial
activities because these responsibilities were a financial priority
Various research projects have been conducted on women entrepreneurship,
such as those done by Sokabo (2002), DTI (2005), O’Neill and Viljoen (2001)
and Verwey (2003). Although these research projects were mostly ad hoc in
nature with relatively small and sometimes unrepresentative samples, they
have provided some ideas in terms of how best to promote entrepreneurship
among women. Some of the recommendations include the development of
women-specific training programmes, active promotion of the importance of
women entrepreneurs, and bridging the information and digital divide.
The information stemming from various research projects as discussed in the
above paragraphs may be seen as fairly general and vague in nature. Some
concerns are equally true to both male and female entrepreneurs such as
skills, lack of networking opportunities for smaller entrepreneurs, the forming
of appropriate partnerships, and obtaining finance. The question which this
research should be addressing, however, is “What is different?” Is the fact that
data is vague, non-existent or too general in nature not the underlying reason
why support for women entrepreneurs seems underdeveloped or to be
missing the point?
In the next paragraph, data is scrutinised to try to find specific and meaningful
pointers regarding the development of women entrepreneurs.
4. RESEARCH
4.1 INTRODUCTION
The basis for the analysis is the GEM 2006 data but in some instances, data
from previous years is also included in an attempt to find specific and
meaningful clues. Based on the data, two focus groups were identified which
further supported the generation of specific data and recommendations (see
paragraph 6.3 for details on the focus groups).
4.2 DATA FROM GEM SURVEY 2006
The first step was to identify the demographical data from the GEM 2006
survey. Thereafter, a more specific data identification and discussion took
42
place. The specific focus area of all the data was, women. Whenever this is
not the case, the reader will be informed accordingly.
• Total TEA
The TEA for women follows the general trend of the total TEA (see Table 35).
The last three years show a more stable trend for women.
Table 34: Total TEA
Category 2002 2003 2004 2005 2006
Total TEA 6.3 4.3 5.4 5.15 5.29
TEA female 2.9 2.0 2.5 2.4 2.5
When the TEA data is further analysed in terms of stage of activity, it is noted
that more women were involved in starting a business (the 0-3 month stage)
and fewer were involved in the young business (3 months-3.5 years) phase
during 2006 (see Table 36). One would expect to see a higher percentage in
the latter category if more women were graduating to higher levels of
entrepreneurship. This is not evident from the data.
Table 35: Stage of activity
Stage 2002 2003 2004 2005 2006
Nascent (0-3
months)
73.3% 67.4% 68.2% 67.7% 74.6%
Baby business
owner-
manager (3
months-3.5
years)
26.7% 32.6% 31.8% 32.3% 25.4%
Total 100% 100% 100% 100% 100%
The question arises whether there is specific data that can explain why
women are not that involved in early-stage entrepreneurial activities and why
they are not graduating to higher levels of entrepreneurship. The profile of
women involved in TEA activities was analysed to find some clues.
In terms of educational levels, 71.2% of women involved in TEA activities in
2006 have a Grade 12 or lower educational qualification (see Table 36). This
could influence the exploitation of “higher order” entrepreneurial opportunities
because generally, due their complexity, these opportunities demand higher
levels of education.
Table 36: Educational levels of women involved in TEA - 2006
Level of education Involved in TEA
No school 1.5%
Some primary school 1.5%
Primary school completed 1.5%
Some high school 27.3%
High school completed 39.4%
Some university 3.0%
University completed 7.6%
Other post-Grade 12 qualification 18.2%
Total 100.0
43
The majority of women entrepreneurs earn less than R3 999 per month (see
Table 37). One can deduce from this that the type of businesses women
entrepreneurs are involved in do not allow for higher income levels. However,
one must be cautious here because the type of business referred to in this
category is generally in the start-up phase, and might have the potential to
grow over time. Table 35 indicates that women entrepreneurs are not often
graduating to these higher levels of activities over time, which will necessarily
hinder their financial prospects.
Table 37: Income levels of women involved in TEA activities - 2006
Income level Involved in TEA
R8000 plus 28.4%
R4000-R7999 23.9%
R800-R3999 41.8%
R1-R799 6.0%
Total 100
The race groups involved indicates that the majority of women involved in the
TEA activities are Black women, followed by White women (see Table 38).
This is supported by an article in Fin Week (5 October 2006: 11) which also
indicated that Black females are most involved in entrepreneurial activities,
followed by White females, Indian females and Coloured females.
Table 38: Race groups involved in TEA activities - 2006
Group Involved in TEA
Black 71.6%
Coloured 6.0%
Indian 7.5%
White 14.9%
Total 100
Gauteng is making the biggest contribution in terms of women entrepreneurs,
followed by KwaZulu-Natal and the Western Cape (see Table 39). This is no
surprise because these three provinces are regarded as the growth points in
South Africa.
Table 39: Women involved in TEA activities per region
Region Involved in TEA
Gauteng 43.9%
KwaZulu-Natal 21.2%
Western Cape 12.1%
Mpumalanga/Limpopo 12.1%
Free State 7.6%
Eastern Cape 1.5%
Northwest/Northern Cape 1.5%
Total 100
More than 57% of women involved in TEA entrepreneurial activities are less
than 34 years of age (see Table 40). This is in contrast with the 45.3% for the
same age category during 2005 and is clearly a positive sign that more
women entrepreneurs are getting involved in such activities. The focus should
now be to ensure that women who enter the labour market as entrepreneurs
44
can sustain their involvement over time and graduate to higher levels of
entrepreneurial activities.
Table 40: Age of women involved in TEA activities
Age level Involved in TEA 2006 Involved in TEA 2005
18-24 years 27.9% 15.6%
25-34 years 30.9% 29.7%
35-44 years 17.6% 28.1%
45-54 years 14.7% 12.5%
55-64 years 8.8% 14.1%
Total 100 100
When comparing the women involved in TEA activities with the general profile
of responses we observe the same trends, namely the lack of education, their
involvement in activities that do not create high levels of income and women
who are not graduating to higher entrepreneurial levels.
• International comparisons for 2006
The above data should not be look at in isolation. South Africa’s ranking for
the total TEA (male and female included) is 30
th
yet South Africa’s female
entrepreneur’s ranking is 23rd place
(see Figure 3).
0
5
10
15
20
25
30
35
40
45
U
n
i
t
e
d
A
r
a
b
E
m
i
r
a
t
e
s
B
e
l
g
i
u
m
S
l
o
v
e
n
i
a
S
w
e
d
e
n
F
r
a
n
c
e
R
u
s
s
i
a
G
e
r
m
a
n
y
J
a
p
a
n
I
t
a
l
y
D
e
n
m
a
r
k
N
e
t
h
e
r
l
a
n
d
s
U
n
i
t
e
d
K
i
n
g
d
o
m
S
i
n
g
a
p
o
r
e
L
a
t
v
i
a
F
i
n
l
a
n
d
H
u
n
g
a
r
y
I
r
e
l
a
n
d
M
e
x
i
c
o
G
r
e
e
c
e
S
o
u
t
h
A
f
r
i
c
a
C
r
o
a
t
i
a
C
z
e
c
h
R
e
p
u
b
l
i
c
S
p
a
i
n
I
c
e
l
a
n
d
U
n
i
t
e
d
S
t
a
t
e
s
N
o
r
w
a
y
C
a
n
a
d
a
C
h
i
l
e
T
u
r
k
e
y
U
r
u
g
u
a
y
I
n
d
i
a
B
r
a
z
i
l
A
u
s
t
r
a
l
i
a
M
a
l
a
y
s
i
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
T
h
a
i
l
a
n
d
C
o
l
o
m
b
i
a
J
a
m
a
i
c
a
I
n
d
o
n
e
s
i
a
P
h
i
l
i
p
p
i
n
e
s
P
e
r
u
Figure 3: TEA for women of all participating countries
When the average for women entrepreneurs involved in TEA activities for all
countries is calculated, South Africa’s 4.83% is below the average of 7.72%.
When South Africa’s TEA is compared with the average of countries within the
upper-middle income group, then South Africa’s average for women is also
lower than the average of these countries, i.e. 6.55% (see Table 41).
45
Table 41: International TEA comparisons of women
Ranking Country Female TEA 2006
1 Peru * 39.27
2 Philippines * 22.45
3 Indonesia 18.73
4 Jamaica 18.14
5 Colombia * 17.30
6 Thailand * 14.18
7 China 13.79
8 Argentina* 13.78
9 Malaysia 11.13
10 Australia 9.87
11 Brazil * 9.61
12 India * 9.16
13 Uruguay * 8.60
14 Turkey 8.47
15 Chile * 7.02
16 Canada 5.99
17 Norway 5.87
18 United States 5.78
19 Iceland 5.73
20 Spain 5.70
21 Czech Republic 4.93
22 Croatia 4.87
23 South Africa 4.83
24 Greece 4.69
25 Mexico * 4.48
26 Ireland 4.20
27 Hungary 4.05
28 Finland 4.04
29 Latvia 3.92
30 Singapore 3.75
31 United Kingdom 3.61
32 Netherlands 3.60
33 Denmark 3.30
34 Italy 3.06
35 Japan 2.60
36 Germany 2.58
37 Russia 2.57
38 France 2.53
39 Sweden 2.43
40 Slovenia 2.29
41 Belgium 1.04
42 United Arab Emirates 0.29
Average for all countries 7.72
Average for countries in the
upper-middle income group 6.55
Highlights and Italics = countries within the upper-middle income group
Source:http://web.worldbank.org. Accessed 2006/11/14.
46
When South Africa’s TEA index is compared with that of developing countries
(see countries indicated by means of * in Table 41), South Africa’s TEA rate of
4.83% is well below the average of 13.70%.
When focusing only on opportunity and necessity entrepreneurial orientation
South Africa’s women are rated 26
th
and 17
th
respectively (see Table 42).
South Africa is again below the averages of all participating countries and
developing countries specifically.
Table 42: Ranking for women opportunity and necessity
entrepreneurship among women
Ranking Country TEA
Opportunity
Ranking Country TEA
Necessity
1 Peru * 27.35 1 Peru * 11.92
2 Indonesia 15.42 2 Philippines * 10.34
3 Philippines * 12.11 3 Colombia * 7.55
4 Jamaica 11.23 4 China 6.82
5 Argentina* 10.60 5 Jamaica 6.23
6 Malaysia 10.47 6 Brazil * 5.51
7 Colombia * 9.75 7 Thailand * 4.46
8 Thailand * 9.61 8 Uruguay * 4.45
9 Australia 8.84 9 Indonesia 3.30
10 China 6.54 10 Argentina* 3.07
11 India * 5.62 11 Chile * 2.87
12 Turkey 5.57 12 India * 2.71
13 United
States
5.36 13
Croatia
2.51
14 Canada 5.18 14 Turkey 2.32
15
Spain
4.70 15 Czech
Republic
1.61
16 Iceland 4.69 16 Greece 1.34
17 Norway 4.68 17 South Africa 1.22
18 Chile * 4.14 18 Germany 1.05
19 Uruguay * 4.04 19 Australia 1.03
20 Brazil * 4.00 20 Russia 1.02
21 Ireland 3.49 21 Spain 0.97
22 Czech
Republic
3.32 22
Hungary
0.92
23 Netherlands 3.19 23 Mexico * 0.87
24 Finland 3.14 24 France 0.85
25 Hungary 3.13 25 Italy 0.77
26 South
Africa
3.12 26
Norway
0.64
27 Singapore 3.12 27 Latvia 0.63
28 Denmark 3.10 28 Canada 0.61
29 UK 2.92 29 Singapore 0.58
30 Latvia 2.85 30 United Kingdom 0.53
31 Mexico * 2.60 31 Ireland 0.51
32 Croatia 2.35 32 Finland 0.50
33 Japan 2.27 33 United States 0.43
34 Sweden 2.20 34 Iceland 0.36
35 Greece 2.19 35 Japan 0.33
36 Italy 2.11 36 Malaysia 0.30
47
37 Slovenia 1.94 37 Slovenia 0.29
38 France 1.68 38 Netherlands 0.28
39 Russia 1.55 39 Belgium 0.22
40 Germany 1.35 40 Denmark 0.13
41 Belgium 0.83 41 Sweden 0.13
42 United Arab
Emirates
0.19 42 United Arab
Emirates
0.10
Average all
countries
5.30
2.20
Average for
upper-
middle
income
countries
4.48
1.82
Highlights and Italics = countries within the upper-middle income group
Source:http://web.worldbank.org. Accessed 2006/11/14.
When South Africa’s TEA opportunity index is compared with that of
developing countries (see countries indicated by means of * in Tabel 42),
South Africa’s TEA opportunity rate of 3.12% is below the average of 8.45%.
The same applies for the TEA necessity index where South Africa’s index is
1.22% against the average for developing countries which is 5.00%.
• Attitude and culture
Mindset and skills levels influence individual entrepreneurial behaviour.
Various questions tested the respondents’ perceptions. In Tables 18 and 19
(see Chapter 3, paragraph 3.4) the development of indexes to measure these
factors was discussed. In terms of female entrepreneurs, more than 50% of
participants think that they are not entrepreneurial while a relatively low
percentage of 9% think they are entrepreneurial (see Table 43).
Table 43: Individual perception of entrepreneurship
Not
entrepreneurial
One out of three
possible positive
reasons
Two out of three
possible positive
reasons
Three out of
three possible
positive reasons
Total
50.7% 21.7% 18.3% 9.3% 100%
Entrepreneurship is stimulated by a collective entrepreneurial culture existing
in a country. This can be created by various stakeholders on a macro level
such as government, private sector and training institutions. Respondents’
perceptions were again tested by means of various questions. More than
42% of women indicated that an entrepreneurial culture does exist in South
Africa, far higher than their individual perceptions of their own entrepreneurial
capacity (see Table 44). A possible reason for this could be the skills and
educational levels of women entrepreneurs. According to Botha et al. (2006)
women's business and entrepreneurial skills can be improved and directly
linked to the improvement of their entrepreneurial performance.
Table 44: Cultural support for entrepreneurship
No
entrepreneurial
culture
One out of
three possible
positive
Two out of three
possible
positive
Three out of three
possible positive
reasons
Total
48
reasons reasons
28.4% 8.9% 20.0% 42.7% 100%
• Market orientation
One could expect that where a positive entrepreneurial orientation exists more
dynamic growth strategies, such as market expansion, ensue. From Table 45
it is clear that the majority would rather maintain their existing markets than
expand. The rate for profound market expansion and the use of new
technologies could be described as low, especially when compared with
figures for 2005 (which indicated far more positive trends).
Table 45: TEA market expansion mode
Year No market
expansion
Some market
expansion (no
new
technologies)
Some market
expansion
(new
technologies)
Profound
market
expansion
Total
2006 44.8% 46.3% 7.5% 1.5% 100%
2005 38.3% 22.9% 33.3% 5.5% 100%
Market expansion was also compared with export intensity behaviour. The
analysis in Table 46 confirm that the predominant behaviour is to maintain
national markets since 53% indicated that export orientation is not supported.
Table 46: TEA export intensity
Year 75%-100%
support
export
orientation
25%-75%
support
export
orientation
1%-25%
support
export
orientation
No one
supports
export
orientation
Total
2006 11.7% 20.0% 15.0% 53.3% 100%
2005
7.3% 10.8% 32.5% 49.4% 100%
• Growth and employment
The relatively low entrepreneurial orientation observed in the above
paragraphs results in a low orientation regarding the creation of jobs (see
Table 47). A large majority indicated that they would not create jobs in the
future. It is debatable whether the 4% that stated that they would create jobs
will have a significant impact on job creation as a whole.
Table 47: TEA involvement in any jobs now or in 5 years
Involvement in any jobs Expects more than 19 jobs
in 5 years
2005 2006 2005 2006
No 96.1% 96.0% 100.0% 99.9%
Yes 3.9% 4.0% 0.0% 0.1%
Total 100% 100%
A possible reason is that the majority of women entrepreneurs are involved in
a sole proprietorship where job creation is not really the focus (see Table 48).
This begs the question of why women tend to choose this form of
49
proprietorship. Can answers be found in the traditional cultural issues, such as
that women should take care of the family on a social level and therefore don’t
have enough time left for business development, or can this be ascribed to the
educational levels of women where the majority’s qualifications are either a
Grade 12 level or below?
Table 48: TEA number of owners
Number of
Owners
Percentage 2005 Percentage 2006
1 54.6% 68.7%
2 22.5% 16.4%
3 11.4% 6.0%
4
5.6%
1.5%
5
1.9%
0.0%
6
1.8%
3.0%
10 2.2% 4.5%
Total 100% 100%
• Innovation
In terms of innovation, the respondents indicated that the majority of
customers do not regard their product as new or unfamiliar (see Table 49).
The respondents indicated that quite a number of businesses offer the same
product (see Table 50). Respondents also indicated that they use
technologies and procedures that are older than 5 years. From these tables, it
is clear that women entrepreneurs operate in businesses which can be
described as hyper-competitive (many competitors and no new businesses)
and which are easy to start because of existing but old technology and
procedures. This may have an impact on closure of businesses as when such
a business starts up the increased competition may drive another out of the
market.
Table 49: How many customers consider product new/unfamiliar
All Some None Total
19.4% 34.3% 46.3% 100%
Table 50: How many businesses offer the same products?
Many Few None Total
43.3% 38.8% 17.9% 100%
Table 51: Were the technologies/procedures available more than a year
ago?
Very latest (0-1 year) New (1-5 years) None Total
9.0% 32.8% 58.2% 100%
Lack of the use of new technologies in the sectors where women
entrepreneurs are active (see Tables 51 & 52) is observed. Most operate in a
sector where no or low technology is required, called “me-too” businesses.
These types of businesses can provide adequate income for households as
well as allow enough freedom to look after the family. However, the question
arises whether these types of businesses can really challenge and stimulate
50
women to become better entrepreneurs and as such make a better
contribution to the socio-economic development of the country.
Table 52: Use of technology per level
No/low technology
level
Medium technology
level
High technology
level
Total
95.5% 3.0% 1.5% 100%
• Funding
In terms of start-up money most women entrepreneurs obtain funding from
banks or expect government to provide funding (see Table 53). Funding from
close family members ranks only in third place. This issue will be explored
further in the focus group discussions.
Table 53: Sources of funding obtained for start-ups
Close family members 15.4%
Other relatives 7.7%
Work colleagues 7.7%
Strangers 1.9%
Friends/neighbours 3.8%
Banks or financial institutions 25.0%
Government programmes 26.9%
Other resources 11.5%
Total 100%
• Closing of business
Personal reasons were given as the most important reason for closing a
business, followed by financial reasons (see Table 54). Further exploration in
the focus group discussions showed clearly that women get involved in certain
types of businesses that allow them more freedom to look after the family
while creating adequate income. In many cases is only on a part-time basis
until the time is right for them to accept another job.
Table 54: Reasons for closing business
Too much competition 7.8%
Lack of customers 14.6%
Financial reasons 24.2%
Found another job 7.7%
Retirement 0.0%
Personal reasons 30.9%
Other reasons 15.0%
Total 100%
6.3 DATA FROM FOCUS GROUPS
Due to insufficient information received for some of the calculations further
investigation of factors identified in the previous paragraphs was necessary.
The research team identified various questions in this regard (see Table 55).
51
Table 55: Discussion questions
• What are the most important factors that positively influence women to
become entrepreneurs?
• What are the most important factors preventing women from becoming
entrepreneurs?
• Why are women mostly involved in one owner/person businesses?
• Why are women mostly involved in “me-too” businesses?
• What are the reasons why women close down businesses?
• What can be done to improve the education and training levels of
women?
• How can we promote technological literacy amongst women?
• How can we enhance the export orientation of women?
In order to find answers to the above list of questions, two focus groups were
organised - one in Gauteng and one in the Western Cape. Representatives
from the four major cultural groups in South Africa, according to the
percentages used by AC Nielsen in capturing the 2006 data (see Annexure
B), were selected.
Furthermore, only those women planning to start or already involved in a start-
up business were selected i.e. who were typically in the period from 0 months
to 3.5 years. This definition falls within the focus of the GEM study.
The results of the focus group discussions are reported in the following
paragraphs, making sure not to interpret what the focus group members had
said, but rather to provide a fair and accurate reflection of the discussions
during the meetings.
6.3.1 What are the most important factors that positively influence
women to become entrepreneurs?
• Government policies are favouring previously disadvantaged groups
such as women.
• There are more role models for women entrepreneurs.
• Women compete against male entrepreneurs and that motivates them
to prove themselves.
• Networking with other women entrepreneurs helps them to become
better entrepreneurs. There are enough opportunities for networking
but they are not fully utilised.
• Women want to become financially independent and do things on their
own, particularly because they have not previously had the opportunity
to do so.
• Women entrepreneurs experience a flexibility in their businesses that
allows them to organise their business around their personal
requirements such as taking care of the family.
• Women who cannot make it in the corporate environment normally start
their own businesses.
• Women have a passion to work with people.
• The support of family helps women to go into business.
52
• Women entrepreneurs can offer and deliver the same services as
corporate companies at less cost to clients.
• Women start their own businesses to get away from corporate politics
because women are not natural corporate political players.
• Women want to take care of their children and extended family.
• Business presents an opportunity for gaining experience and self-
development and realizing self-potential.
• Women can make a name for themselves in businesses that require a
women’s understanding, such as house cleaning.
6.3.2 What are the most important factors preventing women from
becoming entrepreneurs?
• Women give up very quickly because processes (e.g. franchising) are
too complicated.
• They are not willing to make sacrifices. Their goals are not for the long
term and they want quick and easy jobs.
• They are not exposed to different fields of business and do not know
where to research information if they enter an unknown field of
business.
• When a woman is the head of a family, running a business is a large
risk. What will happen if she loses their last money?
• Women do not have assets which can be used as security to obtain
loans. They sometimes live in shacks and are listed on credit bureaus.
• There is no training for support providers on how to support women.
• They do not have financial management knowledge which prevents
them from expanding.
• They do not know the terminologies used by banks and are therefore
hesitant to approach them.
• Training is not in their mother tongue and therefore they do not
understand it.
• If women entrepreneurs fail, the environment is less sympathetic
towards them.
• Women think that if they start their own business they will be required
to work longer hours which will be too exhausting.
• Lack of confidence as women are told by family and other people that
they cannot make it in the business place.
• Some women cannot find an appropriate location from which they can
operate their business as they may need to be close to home so that
they can meet their family duties.
• Oppression from husbands, who fear that the woman will become
independent.
• Lack of motivation, so for example some women are content with
receiving government grants and handouts.
6.3.3 Why are women mostly involved in one owner/person
businesses?
53
• Money can cause conflict and being only one owner you do not get
diverse and conflicting views.
• People misuse others. They come in and want to share but are not
willing to contribute towards the development of the business.
• Women want control over the business without complicating it.
• It is convenient for women to do a project here and there and still
balance it with family responsibilities. If you have employees, it is more
binding.
• If something goes wrong, she has only herself to blame.
• Women think that they can do everything on their own because they
are used to doing many tasks at home.
• It is easier to take the business into new directions when there is only
one person operating.
• There is the self-belief and self-confidence that one can make it on
one’s own and therefore there is no need to have others in the
business.
• It is difficult to trust others with your life savings that have been
invested in the business as if the business goes down because of the
partners, you will need to bear a portion of the loss.
6.3.4 Why are women mostly involved in “me-too” businesses?
• Their lack of education hinders the identification and exploitation of new
ideas. They are therefore not educated in the right areas.
• They do not have the necessary exposure to technology. Their only
exposure is to businesses such as tuck shops and taxis.
• They perceive the risks to be less in these types of businesses. They
do not want to lose their hard-earned assets earned over time.
• Older women cannot go back to school because of family and business
responsibilities. Therefore, they stay in perceived easier businesses.
• People do not use the opportunities that government provides them to
grow their businesses. A possible reason is that information is not
freely available in the communities where these women entrepreneurs
are located.
• Some individuals are not prepared to go the extra mile.
• Other businesses are too innovative and mostly technical. Women are
not technically inclined.
• To make lots of money is not a motivator for women entrepreneurs. As
long as they make ends meet, they are happy.
• This is because of competition amongst women. When a woman sees
another doing something, she thinks that they are of the same level
and so she too gets involved in the same business.
• It is safer to do what has been done before as then there is direction
and guidance available for the new person.
6.3.5 What are the reasons why women close down businesses?
• A lack of education and training influences the way they manage the
business e.g. such as to “live with the hand in the till”.
54
• They are used to working for somebody else and are comfortable with
earning a salary. They are not disciplined enough to work for
themselves.
• A lack of capital forces them to close their businesses.
• They expect to be rich too soon, not realising what they will get out of
the business.
• In a corporate business you have protection but not in a small
business.
• Women cannot talk about money with clients because they do not
know how.
• Women entrepreneurs are isolated in their businesses and cannot
manage on their own.
• When they move out of a corporate environment they have many
financial commitments that they cannot meet on the earnings of a
smaller business.
• Most women do not know how to handle and save money so they don’t
have money to put back into their business.
• There is too much fraud and if you are not educated properly, you often
lose so much that it leads to business closure.
• Most women mix business and family and that does not work because
too often, family members buy on credit and then fail to settle the debt.
• Loss of focus in the business.
• Women close businesses because they don’t spend enough time in
their businesses because of many other commitments.
6.3.6 How can we improve education and training levels of women?
• Present short courses in basic finances, management and marketing.
• Education and exposure on foreign markets, e.g. what does it mean
and how can it be managed.
• How to relate to international people i.e. what their standards are and
what to expect in the interaction with them.
• Train support service providers in how to give advice on lower levels.
• Women need mentors after receiving training to help them with the
implementation of their new-found knowledge.
• Women should build relationships with banking managers. The latter
should filter the right information through to them. Women do not know
how to build this relationship and what questions to ask.
• Women should start with small goals and motivate themselves on how
to reach them.
• The SME sector is confusing in terms of which service providers and
support to use. A more holistic and integrated approach should be
adapted by service providers.
• They need a set of training programmes from the lowest levels up that
are affordable.
• Some of us who are already in business should go back to the tertiary
institutions and give them our own experiences in the field so that this
can be passed on to new business people.
55
6.3.7 How can we promote technological literacy amongst women?
• They are scared of technology in the beginning but get excited when
they get to grips with it. Technology should therefore be available for
them to use.
• Link technology into education so that they can become competitive in
global markets.
• Start with children to familiarise them with science and technology.
• Highlight women role models in technology.
• Technology should be part of any course from the lowest level so that
they can understand the advantages and be less afraid of it.
6.3.8 How can we enhance the export orientation of women?
• Provide practical courses and assistance on export orientation.
• Women start a business to make their lives easier and less complex.
Exporting is not doing that.
• Introducing initiatives which bring women together as consortiums so
that they can trade more effectively.
• Sending women on trips to other countries so that they can network
with their counterparts and enter into trade agreements.
• There should be a centre/trade unit that advertises women businesses
internationally and regionally so that it is cheaper for women to enter
these markets as advertising and marketing costs may be reduced.
7. CONCLUSIONS AND RECOMMENDATIONS
Some of the information discussed in this chapter is equally applicable to male
entrepreneurs. Reality dictates that entrepreneurs compete in general and no
real distinction is made in this competition between male and female
entrepreneurs. Therefore, some issues will be equally applicable to male and
female entrepreneurs. However, the focus groups provided more specific
information in addition to the GEM data on what influences women to become
or operate as entrepreneurs.
Various important issues were highlighted by this chapter. They are as
follows:
• The TEA index for women entrepreneurs is lower than the averages of
all countries who participated in the GEM 2006 studies. Even when
compared with similar countries the South African indexes are lower
than the averages of these different groups (Tables 41 and 42).
• The TEA rates for women remained constant over years. With more
opportunities opening up one would expect these rates to have grown.
Women are not even graduating to the next level after the start-up
phase (Table 35).
• Individual skills are currently a critical problem. The majority of women
entrepreneurs (71%) have an educational qualification equal to or lower
than Grade 12. This may influence the way women entrepreneurs
56
operate, such as their tendency to be involved in opportunities that do
not require a high level of expertise. The specific entrepreneurial skills
that women entrepreneurs lack are in areas such as financial
management, idea generation skills, conducting feasibility studies,
exporting and technology skills (Table 36).
• Women do not believe that they are entrepreneurial, although they are
in agreement that an entrepreneurial culture exists in South Africa
(Tables 43 and 44).
• Women entrepreneurs are not really concerned about growth and they
are mostly involved in me-too projects (Tables 37, 45, 46, 47 and 48).
• One of the most important findings of this chapter, highlighted by the
GEM data as well as the focus groups, is the issue of culture. It was
made clear that women would rather try to balance their family and
business obligations which led them to be involved in relatively easy
projects where the emphasis is on creating additional income, rather
than on expanding.
• In terms of mindset, women are influenced by various issues such as
tradition which determines that women need to look after the family,
male vs. female comparisons, and the lack of an entrepreneurial
mindset.
The question of what can be done to improve the ratio of women
entrepreneurs in the economy remains. In order to make sure that
recommendations are focused on promoting women entrepreneurship and
that they are integrated (see Table 56), the nine entrepreneurial framework
conditions that are needed to respond to opportunities and start a business
are used as a basis (Reynolds, et al., 2005). These nine framework
conditions are as follows: access to finance; government policies; government
programmes; education and training; transfer of research and development;
commercial, legal and financial infrastructure; openness of the domestic
market; access to physical infrastructure; and extent to which social and
cultural norms support the choice of starting a business as a career option.
Table 56: Recommendations
Category Recommendations
Access to
finance
Finance is necessary to start and grow a business.
However, a lack of assets can influence this
negatively. Therefore:
• A special guarantee fund should exist and be
maintained for women who want to start or grow
businesses.
• Women should get the necessary training and
exposure to the way in which financial institutions
work.
Government policies Women entrepreneurs find themselves in businesses
where their movement is restricted in terms of
attending activities such as workshops, and
information centres. They are not always aware of
what government policies are. Therefore:
• Government should make an extra effort to
57
communicate their policies to women entrepreneurs
in their own environment.
Government
programmes
One criticism is that service providers of government
programmes do not have the necessary
training/expertise to deliver services on the levels
required. They are under- or over- trained for the
specific situation. Therefore:
• Make sure that service providers are empowered to
deliver services on the specific levels required.
Education and
training
This category is one of the most important categories
in promoting women entrepreneurship. The emphasis
on this category was because it prevents women from
becoming more active in the labour market.
Therefore:
• Integrated entrepreneurship training programmes
should exist from the lowest to the highest levels of
operation.
• Give more attention to the formal education of
entrepreneurship and the promotion thereof.
• Investigate the education of older women.
Transfer of research
and development
Expose women to the use of technology and the
generation of new ideas. Therefore:
• Expose women to new technology so that they can
use it in their existing businesses.
• Expose women to new national and international
trends so that they can understand and realise what
businesses can arise from these trends.
Commercial, legal
and
financial
infrastructure
Women regard the SME sector as complicated
because of the numerous regulations they have to
adhere to, while knowing where to go for support.
Therefore:
• Investigate the implementation of information
systems that will allow easy access for women.
• A database of accredited service providers can
further ease the pressure on women entrepreneurs.
Openness of
the domestic
market
Women try to conduct business on their own because
of various factors such as their culture of doing
everything themselves. Therefore:
• Networking of women entrepreneurs should be
encouraged.
• The exposure of women to opportunities within the
domestic market is necessary.
Access to
physical
infrastructure
Without the necessary physical infrastructure, nothing
is possible. Some women find themselves in areas
where a lack of infrastructure exists, e.g. electricity
and roads. Therefore:
• Government should investigate what women
entrepreneurs need and provide where possible.
• Investigate the provision of shared infrastructure in
58
order to lower cost of provision.
• Promote the development of infrastructure so that it
can help women to balance their family role with
that of business.
Social and
cultural norms
This category is another important category for
potential and existing women entrepreneurs.
Responses indicated that an entrepreneurial mindset
does not exist because of various factors such as
tradition and a lack of exposure to entrepreneurship.
Therefore:
• Actively expose women to other women
entrepreneurial role models.
59
CHAPTER 5
FUTURE RESEARCH IN ENTREPRENEURSHIP
5.1 INTRODUCTION
In Chapters 2-4, the importance of information that is focused on the right
areas and that will help South Africa to accelerate socio-economic growth and
development was highlighted. Information from other countries cannot be
accepted as a guideline without first contextualising it for the South African
environment. Although it was indicated in Chapter 1 that the reliability of this
GEM survey has been thoroughly tested, it cannot simply be assumed that the
same is true for information from other countries.
In South Africa, availability of accurate and meaningful information is still a
problem for the entrepreneurial sector. Research is being conducted but not
always in an integrated manner. Researchers are not working towards a
common goal and the research is therefore ad hoc in most circumstances.
South Africa is a developing country with high rates of unemployment, low
levels of formal and higher education, the migration of individuals from rural
areas to cities (causing an increase in the impoverishment of rural
communities), corporate restructuring and government policies and
regulations enforcing the restructuring of larger organisations. The country,
therefore, has an urgent need for entrepreneurs in the small, micro and
medium enterprises (SMMEs) act as a tool to combat unemployment and
crime and to stimulate the economy as a whole. Information that taps into the
ramifications of this unique set of obstacles and is to the South African context
is essential if meaningful development of this sector is to be promoted.
With numerous programmes by the South African Government, the
Department of Trade and Industry (DTI), organisations such as the Small
Enterprise Development Agency (SEDA), Khula Enterprise Finance, Business
and Franchise Partners, Industrial Development Corporation (IDC), local
universities and internal programmes by larger corporations, support is
available to encourage the entrepreneurial environment in South Africa.
Whether this support is adequate remains to be seen.
The issues addressed in this chapter focus on the role of research in
establishing a healthy environment for entrepreneurial activity. More effective,
accelerated and focused research within the South African context is essential
for the establishment and sustainability of entrepreneurship and SMME
development in the South African economy.
5.2 RECENT RESEARCH CONDUCTED IN SOUTH AFRICA
The development of entrepreneurship in South Africa has opened up new
research opportunities. Although these opportunities are not yet being explored
to their full potential, it is important to recognise the important contributions that
they can make to the literature in the future.
60
There is a distinction between research conducted in terms of entrepreneurship
and research relating to business management. Although a relationship
between the two fields of study exists, the distinction is important for the
development of entrepreneurship as a separate field. Recent research projects
on entrepreneurship have included a number of topics. It must be noted that the
research cited here is not the only work that has been conducted on these
specific topics and that some of this research should still be considered as work
in progress, as presented by the authors at conference proceedings.
• Ethnic and cultural entrepreneurship
Due to the cultural diversity within South Africa, ethnic entrepreneurship
focusing on cultural and social structures as well as networks forms an important
part of the business environment. These issues have been investigated in
studies by Radipere (2006) and Nieman and Van Tonder (2006).
• Family businesses
Looking at the history of business development in South Africa, family
businesses have played an important part in the development of the economy.
Research conducted by Van Eeden and Venter (2006) aims to formulate a
theoretical model for sibling and family businesses within the South African
context.
• Corporate entrepreneurship
As an important part of entrepreneurship, corporate entrepreneurship within the
South African context has not received enough attention in the past (Gantsho
2006). Several projects within this field form part of doctoral studies and include
topics such as:
• The relationship between the practice of strategic planning and the
levels of corporate entrepreneurship in South African public companies;
• Corporate venturing;
• Barriers and triggers for corporate entrepreneurship;
• The state of corporate entrepreneurship in South Africa;
• Corporate entrepreneurial training programmes;
• Entrepreneurial orientation and its successes in corporate
entrepreneurship.
• Access to entrepreneurial finance
Access to finance is a major problem for the South African entrepreneur. This
issue must be addressed if an environment promoting entrepreneurship and
SMME development is to be encouraged. Studies have been conducted by a
variety of researchers such as Mutezo and Antonites (2006) on this issue.
Further research is necessary which focuses on the immediate obstacles that
have to be overcome in order to eliminate this factor.
61
• Entrepreneurial learning
Entrepreneurial learning and education is a possible solution to current problems
experienced in South Africa. Research is necessary regarding the paradigm
shift that needs to happen in the educational system. There is a firm belief that
an entrepreneurial attitude must be developed in learners in schools if future
entrepreneurial activities within the economy are to be effectively promoted.
Training models must be tested in order to establish to what extent this is in fact
a crucial factor in economic development (Botha 2006).
5.3 NEW AND EXISTING LITERATURE ON ENTREPRENEURSHIP IN
SOUTH AFRICA
An assessment of the current situation regarding the availability of literature
with specific reference to the South African context highlights numerous
limitations. These limitations include the following:
• There is only a limited amount of useable literature available on the
South African context.
• A limited amount of research is tested empirically within the South
African context. Research should be taken to a higher level of statistical
analysis that can assist in finding valid proof of how best to develop
and support entrepreneurship. Policy makers should be geared
towards using this information in formulating new policies.
• The literature available is mostly descriptive in nature, resulting in the
creation of profiles applied to certain objects or situations based on the
observation of a single event or behaviour.
• There is a tendency among researchers to use and rely on secondary
information published in international sources.
• Researchers fail to apply the information obtained to the South African
context. This is critical as the economic and business environment in
countries such as the USA and various European countries differs from
that in South Africa.
These limitations have a negative influence on the development of the field of
entrepreneurship within the South African context, and highlight the concerns
that must be taken into consideration when evaluating the existing literature
and when identifying future research possibilities.
Having initially focused on the limitations of most of the literature available, it
is also important to state that the picture is not completely bleak as certain
areas within the field of entrepreneurship have been adequately explored and
tested. More effort is currently being made in testing variables affecting the
entrepreneurial field in South Africa and the results have been published for
further exploration and use.
Literature that has been tested for our context and which forms part of
masters and doctoral studies in South Africa is an important resource in
finding ways to improve the current entrepreneurial environment. This set of
available information can be obtained from various South African universities’
62
websites. The University of Pretoria’s website, for example, can provide
information on:
• Entrepreneurial creativity, innovation and opportunity finding
• The level and intensity of corporate entrepreneurship in South African
corporations
• Women entrepreneurs and the effectiveness of training interventions
for this specific group of entrepreneurs
• The contribution of entrepreneurship to specific industries
• The informal sector and related issues
• Financing obstacles experienced by entrepreneurial ventures and
SMMEs
• Entrepreneurship education and training
• Several issues related to entrepreneurial success
Considering the above, it is clear that more research needs to be conducted,
tested and published to include all of the aspects of this dynamic, but still
unexplored field.
5.4 ROLE PLAYERS IN ENTREPRENEURIAL RESEARCH IN SOUTH
AFRICA
Entrepreneurship is a relatively new field within South Africa. With the
government’s belief that it can be the solution to poverty alleviation and
unemployment, the field is in desperate need of applicable research if it is to
address these burning issues effectively. To date the institutions involved with
research in the field of entrepreneurship and SMME development are mainly
academic institutions. These institutions include:
• University of Pretoria – Chair in Entrepreneurship
With the implementation of the programme in entrepreneurship, the University
of Pretoria was the first academic institution to offer entrepreneurship as a
degree course at both graduate and postgraduate levels. The programmes
offered on the postgraduate level in the form of a M Phil and PhD (with
specialisation in Entrepreneurship and Small Business Management) have
opened up the channels for research to be conducted that can contribute to
the literature according to the desired specifications.
• University of Cape Town – Centre for Innovation and
Entrepreneurship
For the last five years, the Centre for Innovation and Entrepreneurship has
been responsible for conducting the South African Global Entrepreneurial
Monitor Report and is currently busy with the 6
th
report. GEM is considered to
be the most prestigious, comprehensive and authoritative study conducted on
entrepreneurship in the world. It is the only report which accurately indicates
the current position of entrepreneurship within South Africa.
63
• University of KwaZulu-Natal – Centre for Entrepreneurship
The Centre for Entrepreneurship of the University of KwaZulu–Natal conducts
several research projects focusing on a variety of topics related to
entrepreneurship.
• University of South Africa (UNISA) – Bureau for Market Research
Although the University of South Africa is offering entrepreneurship as a degree
at undergraduate level, their Bureau for Market Research makes a more
important contribution towards literature, with specific reference to research
done on the informal sector in South Africa.
Various tertiary institutions include modules of entrepreneurship in their degree
programmes. However, the focus on research is not always an integrated
activity at these tertiary institutions. Although the Bureau of Market Research,
(UNISA), for instance, gets more involved in the commercialisation of research
projects, it is seen as a positive step forward in stimulating “higher order”
entrepreneurship.
Lastly, various private companies are involved in research projects addressing
entrepreneurial issues. However, these research activities are mostly client
orientated and not for public use.
5.5 CURRENT AND FUTURE BURNING ISSUES ON
ENTREPRENEURIAL RESEARCH IN SOUTH AFRICA
It is believed that the following burning issues need to be researched to the
highest empirical level to provide solutions and usable, reliable information
that can be used by all stakeholders.
• Establishing an entrepreneurial culture among South Africans
Research is needed on how the South African society’s values, norms and
beliefs can be positively influenced towards entrepreneurship, as
entrepreneurship is not yet part of the general culture. For example, a
correlation between the economic growth rates for a number of years and the
TEA index may reveal that the creation of jobs and economic growth in South
Africa is due to growth in the corporate sector in the economy rather than the
current SMMes.
• The elimination of negative factors associated with
entrepreneurship in South Africa
Research regarding several of the negative factors, e.g. lack of infrastructure
supplied by national, provincial and local government, needs to be conducted.
The implications of these findings need to be communicated to the relevant
stakeholders.
64
• The true effect of BBBEE and other governmental regulations on
small, micro and medium enterprises in South Africa
Empirical research needs to be conducted regarding the effect of the
implementation of the different codes on the success of entrepreneurs. Too
many assumptions are made regarding a number of interventions which are
intended to be to the advantage of entrepreneurs.
• Bringing government regulations in line with entrepreneurship
and SMME development
The impact of the regulatory framework on entrepreneurship success needs to
be researched to be able to determine whether deregulation will really
contribute to the reduction in poverty and unemployment.
• The use of government contracts to establish and to stimulate
SMME development in South Africa
Empirical research must determine the long term contribution and
sustainability of entrepreneurs that successfully tender for these contracts,
and these insights must be communicated to all stakeholders.
• Entrepreneurship as an instrument to alleviate poverty and the
battle against poverty and unemployment in South Africa
The assumption that entrepreneurship and small business will alleviate
poverty and unemployment needs to be researched in a longitudinal study.
The contribution to economic growth cannot be isolated at this stage with the
data currently available.
• The enhancement of entrepreneurship among rural communities
in South Africa
Future research has to be conducted regarding the required variables for
successful entrepreneurship in rural areas of South Africa. Many policy
makers identify variables applicable to urban areas, but the differences
between these markets have not been tested empirically.
• The promotion of entrepreneurship among women in South Africa
The variables that distinguish women and male entrepreneurs in South Africa
in the different provinces and industries can be researched as a guideline for
prospective entrepreneurs.
• Development of an educational model for entrepreneurship as
part of the curriculum in South African schools and other
education and training institutions
Future research regarding this very important topic is crucial for the success
of entrepreneurship in this country. The effect of issues such as content and
teaching approaches in relation to entrepreneurial start-ups as well as
eventual success needs to be investigated to determine the causal
relationships. The requirements of established entrepreneurs with regard to
content and approaches also need to be empirically tested.
65
• The implementation of entrepreneurship in South African schools
The assumption is that the development of entrepreneurship has to start as
early as possible to enhance the culture of entrepreneurship in a country.
Empirical research needs to be done regarding the outcome of such efforts
e.g. how many entrepreneurial start-ups resulted because of this exposure.
The best method to expose learners to entrepreneurship have to be tested
empirically.
• The introduction and implementation of corporate entrepreneur-
ship in medium and larger organisations in South Africa
The effect of entrepreneurship in established corporations needs to be
researched by making use of various research designs. The level of
awareness regarding the necessity of entrepreneurship in an established
organisation also needs to be tested. Research into causal relationships
between corporate entrepreneurship interventions and success needs to be
conducted on a multivariate analysis level.
• The introduction of corporate entrepreneurship in the public
sector
Future research regarding the business models, processes and structures of
public sector organisations will determine the entrepreneurial opportunities in
these organisations.
5.6 AN INTEGRATED RESEARCH PROCESS FOR SOUTH AFRICA
For researchers to conduct research that will contribute to the advancement of
entrepreneurship within South Africa, a model is required that makes provision
for factors relating to and affecting the situation within the economy. The
following model addresses the relevant factors and groups involved, indicating
the role that each should play during the different phases of the process.
• Research Environment
The research environment consists of all the different stakeholders involved in
entrepreneurial research and development in South Africa. These include:
• Academic institutions
• Public sector
• Private sector
It is important that these research institutions and sectors work together in
order to avoid duplication. As the model illustrates, governmental policy and
regulations affect these organisations at the root of entrepreneurial research.
It might also be good governance to appoint an institution as a co-ordinating
body for all research projects so that research will not be duplicated and a
common focus can be obtained. Resources can also be used optimally in this
way.
66
• The research process
Following a basic research process as illustrated in Figure 4 is sufficient in
order to conduct the research itself. The main factor that differs from other
research models, is the involvement of the entrepreneur as the determining
factor when conducting research within the South African context. This is
important in order to conduct industry-related research, leading to findings that
can be implemented and used within South African organisations.
67
Figure 4: An integrated model for conducting research in South Africa
RESEARCH ENVIRONMENT
GOVERNMENT REGULATIONS AND POLICY
PRIVATE SECTOR
ENTREPRENEUR ENTREPRENEUR
RESEARCH PROCESS
- DISCOVER THE DILEMMA
- DEFINE THE QUESTION
- DEFINE THE RESEARCH QUESTION
- REFINE THE RESEARCH QUESTION
RESEARCH PROPOSAL
RESEARCH DESIGN
Data Collection Design Sampling Design
Pilot Testing
Instrument Revision
DATA COLLECTION AND PREPARATION
RESEARCH REPORTING
DATA ANALYSIS AND INTERPRETATION
SOUTH AFRICAN
SOCIETY
COMMUNICATE RESEARCH FINDINGS
PUBLIC SECTOR
ACADEMIC AND
RESEARCH
INVOLVEMENT
BY ALL
STAKEHOLDERS
68
• Research findings
The last stage of the research model makes provision for the reporting of the
findings to the different stakeholders. Three groups are of importance in this
stage, namely:
• The general South African public
In order to establish an entrepreneurial orientation among the South
African public it is important to communicate the findings of the
research studies to them. Through education, awareness and
understanding can be created, which can lead to a positive change in
their behaviour and attitude towards entrepreneurship.
• The entrepreneur
Findings need to be communicated back to the entrepreneur to ensure
the implementation thereof in the South African organisations. The
purpose of this research should be to enhance their business
performance, which will then show the power of entrepreneurship in the
economy.
• The South African government
With the role that the South African government plays in the form of
policies and regulations it is important that research findings are
communicated to them so that these policies and regulations can be
adapted accordingly. This will ensure a healthy environment that, in
turn, will ensure SMME development and entrepreneurial activity.
Resources need to be provided by the government to conduct this
much-needed research. A regulatory environment must be developed
by South Africans for South African entrepreneurs, as international
models are clearly not working in all cases.
5.7 SUMMARY
In evaluating the entrepreneurial research environment one comes to the
conclusion that definite and accurate measures must be taken to achieve
optimal results regarding the promotion and development of entrepreneurship
in South Africa. The information available within the South African context is
not sufficient in addressing the burning issues faced by this country. As a
relatively new field and an applied science, research projects that address
specific issues within the South African environment are needed to deal with
our specific problems and constraints and bring about much needed solutions.
The links between the enabling environment and academic as well as
research institutions need to be strengthened. The stakeholders in this
environment need the research results to foster entrepreneurship on local,
provincial and national levels. The nine framework factors promoting
entrepreneurship can be used as a co-ordinating tool in this regard.
69
CHAPTER 6
INTEGRATED RECOMMENDATIONS
6.1 INTRODUCTION
In discussions in the previous chapters, various limitations regarding early-
stage entrepreneurship were identified such as poor entrepreneurial skills
levels, mindsets that are not entrepreneurial (e.g. growth orientated), and lack
of innovation where old technologies are still being used to compete in
oversaturated or highly competitive markets. The indication in the previous
chapter was also that in a number of areas, research should be conducted in
order to provide specific information needed to formulate policies.
There is not enough information available to formulate policies in this chapter,
therefore recommendations will be provided that can help to formulate policies
for government, private sector or even tertiary training institutions.
6.2 PREVIOUS RECOMMENDATIONS
Since 2001, the GEM reports have made various recommendations. One
needs to take notice of these recommendations because a number of them
are critical and still hold true. There is also the perception that the relevant
stakeholders have, in the past, not addressed all of these recommendations.
These recommendations are summarised in Table 57.
Table 57: Summary of recommendations from previous GEM reports
Category Recommendations
School level • Inculcate “can do” attitude in learners.
• Assist more learners in the development of their self-belief, creativity
and teamwork skills.
• Ensure the teaching of mathematics and science to more scholars by
qualified teachers.
• Create a better understanding of financial management skills.
• More girls should develop entrepreneurial aspirations and skills.
• More students need to attend tertiary institutions.
• Draw in business people from the community to talk about business.
• Move away from rote learning to more experiential learning.
Tertiary
institutions
• Offer entrepreneurship to more people from all disciplines.
• Graduates should have had hands-on experience in identifying and
evaluating entrepreneurial opportunities.
• Entrepreneurship should be included as career path option.
• Use successful entrepreneurs to develop specific skills among
students.
• Tertiary institutions should have at least one academic per
department to manage these entrepreneurship courses.
Reinforcing an
entrepreneurial
culture
• Celebrate entrepreneurial behavior publicly.
• Promote a customer, service-orientated culture in all sectors.
• Introduce service level contracts for government departments.
• Reward good performance within government and public service.
Government
policy
• Reduce the administrative burden on entrepreneurs.
• Expand programmes such as affirmative procurement and share best
practices.
• The regulatory process needs to be simplified, streamlined and
70
condensed.
• National government should prevent the passing of new regulations
before first assessing their impact on small business.
• Make a distinction in the labour law for small businesses to have more
flexibility in their early years.
Government
programmes
• More subtle criteria for grouping entrepreneurs are required because
of different needs.
• Carefully identify the needs, which a government programme has to
address.
• Select highly specific objectives for a programme.
• Reduce turnaround times for processing of applications and
payments.
• Thoroughly investigate the skills required to implement programmes
effectively.
• South Africa needs a national small business organisation run by
experienced and credible people held accountable for performance.
• The DTI needs to articulate and demonstrate publicly its efforts to
encourage entrepreneurial activity and make the public aware of the
available programmes, grants, projects and initiatives.
• The DTI should monitor the recruitment and management of staff for
government programmes.
• Informal sector programmes should have community leaders involved.
• Formal sector programmes need: more research; more effective
partnerships; to distinguish between new and existing business
support; support service centres located in disadvantaged areas to be
accessible to formal entrepreneurs.
Financial
support
• Mechanisms should ensure effective management of risk levels and
delivery costs.
• Develop and implement a low cost and effective mentoring system.
• Government must find successful models for financing the lower end
of the market.
• Government should stimulate competition between financial
institutions to create access to finance for entrepreneurs.
• Khula needs to reprioritise, recapitalise and specialise in the provision
of finance to a particular sector of the small business market.
• Government should contract more institutions to accept government
contracts as collateral for loans. That can increase access to finance
for disadvantaged contractors.
Education and
training
• Training for the informal sector should focus on basic literacy,
numeracy and communication skills with a developmental rather than
a business focus. Training conducted by NGOs.
• Training for the formal sector should focus on administration, financial
management and marketing. To be delivered by quality for-profit
training organisations. Training should also be more practical than
theoretical.
Cultural and
social norms
• Continue to increase exposure of entrepreneurs from all communities.
• Improve the quality of media coverage of entrepreneurship.
• Give greater prominence to women entrepreneurship through the
media.
• Give greater prominence to not-for-profit entrepreneurs.
• Parents should expose children to entrepreneurial opportunities.
Market
openness/Barrie
rs to entry
• Create market linkage programmes and business linkage centres to
bring formal small businesses and established organisations together.
• Make a database of entrepreneurs available to all the government
departments so that more than one department can use the services
of these businesses.
• The tendering process should be simplified and standardised across
government departments.
71
Research and
development
transfer
• Encourage Universities to adopt commercialisation policies which
provide strong incentives for research staff to commercialise new
technology and remain at those institutions.
• Focus public research funding on projects with commercial potential.
• Hold research and educational institutions accountable for ensuring
the communication of their research efforts and recommendations to
the public to ensure that there is sufficient transfer of technology to
the communities that can benefit from it the most.
• Ensure the development of more science parks and incubators for
high tech and R&D start-ups through public-private partnerships.
Access to
physical
infrastructure
• Improve infrastructure in all areas, particularly disadvantaged
communities.
• Upgrade existing infrastructure in townships through public-private
partnerships to create business nodes where it is convenient to trade.
• Franchise the provision of basic services in rural areas to
entrepreneurial members of the community.
• Increase access to fax and internet facilities in townships.
• Create clusters of small businesses.
Commercial and
professional
infrastructure
• Set up legal and accounting clinics that provide affordable services to
small business owners.
• Professionals in the commercial sector should refer entrepreneurs to
relevant service centres that can assist them in developing and
implementing financial and accounting systems that will improve their
business performance management.
• Entrepreneurs need to pay increasing attention to corporate
governance issues and ensure that their businesses comply with
legislation.
Formal
entrepreneurs
• Improve the administrative and financial management capabilities of
entrepreneurs.
• Provide business services by qualified people with business
experience. This should be on a commercial basis in general.
• Reducing crime will significantly improve the environment for
entrepreneurs.
• Build commercially driven supplier networks to link the large-scale
formal economy with the small and medium enterprise sector.
• The government should continue to use BEE procurement to support
small suppliers.
Informal urban
and rural en-
trepreneurs
• The micro-credit industry for entrepreneurship needs strengthening
through the implementation of proven models. These need to include
a strong poverty alleviation bias and need government backing.
• Life-skills and technical training are likely to be the most beneficial
types of training.
• Support, backed by government but channeled through trusted,
community-based organisations working on a not-for-profit basis, is
more likely to be effective.
A number of the recommendations made in the past have been addressed,
e.g. ease on tax burden for small businesses. Equally true is that a number of
recommendations have not been addressed, e.g. improving entrepreneurship
training. This raises a number of questions such as whether it is an automatic
process that stakeholders will start implementing recommendations made in
surveys such as this or whether it is a more managed process. Should there
be a focus on a few recommendations per annum to ensure their
implementation, or should one draw up a lengthy list that stakeholders can
then decide on?
72
In the past, a number of recommendations focused on micro activities. An
integrated entrepreneurial business model is necessary on a macro level in
order to promote entrepreneurship. Activities on a micro level should only then
be addressed.
Whether government alone should be the custodian of entrepreneurship
development is debatable. Many more stakeholders can and should be
actively involved, such as tertiary training institutions, big businesses, and
even smaller boutique companies. It must, however, remain an integrated
and focused approach.
The data in this survey is a combination of both positive and negative factors.
Perhaps the most important factor is that although the entrepreneurial culture
in general is perceived to be improving, individual entrepreneurs cannot live
up to expectations. Entrepreneurship is currently not a natural process in
South Africa and should be managed in a more formal and integrated manner
to achieve desired results.
The suggestion is that the support and development of entrepreneurship be a
managed and co-ordinated effort in South Africa. A number of stakeholders
can be involved in the process but the total process needs a formalised and
integrated management system. However, the focus of this managed
approach should be the same as the entrepreneurial business model.
6.3 INTEGRATED RECOMMENDATIONS
The focus of all recommendations should be to reach the idealised
entrepreneurial environment in South Africa (see Figure 5). The current
situation in South Africa is not ideal as can be deduced from data in Chapters
2-4. When targets are set, South Africa should aim at the average TEA rates
for similar countries. Currently South Africa’s TEA rate is 5.29% and we
should therefore aim for 7.79% (see Table 6).
73
Individual
entrepreneurial
capacity
Culture of
entrepreneurship
Idealised
situation
Low High
High
Current
situation
Figure 5: Idealised situation
Although not the focus of this research, the above target will not be achieved if
entrepreneurship in established companies is not given attention. Medium-
sized to large organizations can support the creation of opportunities for start-
ups down the supply chain, which can have a positive influence on the TEA
rates in South Africa. If medium-sized and large corporations lose their
entrepreneurial flair a number of potential South African entrepreneurs will be
lost and these opportunities will be exploited by entrepreneurs from other
countries. Therefore, development of entrepreneurship by means of direct
development interventions in established organisations and even South
African parastatal organisations seems very important. The above set target is
achievable if all recommendations form an integrated whole and are managed
as discussed in the previous paragraph.
In order to ensure these recommendations stay focused on entrepreneurship
and that they are integrated, the basis should be the nine entrepreneurial
framework conditions as discussed in Chapters 1 and 4 (see Table 59).
Table 58: Specific recommendations
Category Recommendations
Access to
Finance
Develop financial support systems for start-ups and for growth of
businesses on different levels e.g. low technology, middle
technology and high technology.
Government policies All government policies should be investigated in terms of:
• their impact on business creation;
• their regulatory burden on new start-ups; and
• how it is communicated to specific stakeholders.
Government
programmes
Government programmes should be investigated in terms of:
• how and what levels they are focusing on;
• whether a whole and integrated range of programmes exists;
and
• whether service providers are sufficiently trained and educated
to deliver their specific services.
Education and It is important that nobody be scared away from entrepreneurship.
74
Training Therefore, teaching frameworks should:
• allow for the gradual development of entrepreneurial knowledge
and experience over time;
• allow the entrepreneurial philosophy to be included in all subject
matters; and
• ensure that presenters of entrepreneurship are promoting
entrepreneurship and not merely teaching about
entrepreneurship.
Transfer of
research and
development
Not only should research explore ways that can support a true South
African entrepreneurial renaissance but research should also find
ways to disseminate information and experience to other
stakeholders as quickly as possible. Therefore:
• the transfer of research and development needs to be more
focused on start-ups in the medium to high technology sectors;
• contextualised incubator systems should be developed and
implemented for South Africa; and
• a database of higher order ideas should be developed and
researched with the aim of commercialisation.
Commercial, legal and
financial infrastructure
Potential entrepreneurs find it difficult to find their way through all the
regulations normally done by a specialised department in big
organisations. Therefore:
• commercial, legal and financial services should be made more
accessible and affordable for start-up businesses;
• a database of possible accredited suppliers should be available;
and
• Would-be entrepreneurs should be trained in these
requirements before commencing with a start-up business.
Openness of
the domestic
market
The domestic market is the training ground for entrepreneurs before
growing their businesses. Therefore:
• any restraints should be evaluated and acted upon when
needed;
• more focus should be on training potential and existing
entrepreneurs to understand domestic market needs within the
context of global competition; and
• actively encourage networking in the domestic market.
Access to
physical infrastructure
Entrepreneurs need to utilise infrastructure effectively to serve their
market effectively. Therefore:
• clusters of infrastructure supporting start-up businesses should
be created;
• shortcomings of existing infrastructure should be identified; and
• the necessity of more affordable infrastructure should be
investigated.
Social and
cultural norms
The support of the society is crucial in promoting entrepreneurship.
Therefore:
• the advantages and what is meant by entrepreneurship should
be promoted on all levels of society in South Africa;
• specific cultures should be investigated in terms of
entrepreneurship and what can be done to enhance
entrepreneurship without changing cultures; and
• more role models should be identified and promoted in South
Africa.
6.4 SUMMARY
In this chapter data was discussed that was either positive or in certain
instances negative. The indication is also that South Africa’s performance in
terms of TEA activities is sub-standard when compared with other countries.
If, however, coordinated and focused ways of supporting entrepreneurship
75
can be developed and maintained over time the chances of creating and
maintaining a sustainable entrepreneurial South Africa should be high. South
Africa needs more start-ups and entrepreneurs to make it work.
Visibility of success should dominate the media. There should be a
celebration of creativity, innovation, and the commercialisation of ‘cutting
edge’ ideas. This calls for a separate way of measuring entrepreneurship
success. People support what is measured.
76
References
Academic Entrepreneurship Society Conference on Entrepreneurship:
Sustainable African Globalisation. 2006.
Anon. 2006. South Africa’s Entrepreneurial Status. Enterprise, May: 32-33.
Author unknown. 2006. Skills boost for SA businesswomen.
www.southafrica.info. Accessed 7 September 2006.
Botha, M. Nieman, G. and Van Vuuren, J.J. 2006. Measuring the
effectiveness of the Women Entrepreneurship Programme on potential, start-
up and established women entrepreneurs. South African Journal for
Economic and Management Sciences.
Cook, J. 2006. Conditions for Entrepreneurship to flourish. Enterprise, Feb:
30-31.
Driver, A., Wood, E., Segal, N. and Herrington, M. 2001. Global
entrepreneurship monitor: 2001 South African executive report. The UCT
Centre for Innovation and Entrepreneurship.
Entrepreneurship across 29 countries. SCALES-paper N200403, Netherlands
Fin Week. 2006. The homecoming hoax, 5 October 2006, pages 10-12.
Foxcroft, M-L., Wood, E., Kew, J., Herrington, M. and Segal, N. 2002. Global
entrepreneurship monitor: South African executive report. The UCT Centre
for Innovation and Entrepreneurship.
Garth Theunissen. 2006. The homecoming hoax. Fin Week. 5 October
2006. Pages 10-12.
GEM Newsletter, Issue 9, September 2006.
Gordon Institute of Business Science: www.gibsreview.co.za.http://209.85.135.104/search?q=cache
PDvfdvcEhgJ:www.intracen.org/doc
man/PRSR4841.pdf+%22women+entrepreneurs%22+%22initiatives%22+%2
2South+Africa%22&hl=en&gl=za&ct=clnk&cd=3 . Accessed 8 November 2006http://www.southafrica.info/ess_info/sa_glance/demographics/population.htm
International Council for Small Business: www.icsb.org.
International Trade Centre (ITC). 2004. Women exporters contribute to
development.
KPMG. 2006. www.kpmg.co.za. Accessed 12 September 2006.
Kromberg, J. 2006. Size still counts. Enterprise, Jul: 24-25.
Maas, G. and Maas, B. 2004. The story of the first International Chair in
Entrepreneurship in South Africa 1997-2004.
Moneyweb. 2006. www.moneyweb.co.za. Women and entrepreneurship,
Felicity Duncan. Accessed 7 September 2006.
Nel, D. 2005. Business must uplift women. www.southafrica.info. Accessed
7 September 2006.
O’Neill, RC and Viljoen, L. 2001. Support for female entrepreneurs in South
Africa: Improvement or decline? Journal of Ecology and Consumer Sciences,
29, 37-44.
Orford, J., Herrington, M. and Wood, E. 2004. Global entrepreneurship
monitor: South African report. The UCT Centre for Innovation and
Entrepreneurship.
Orford, J., Wood, E., Fischer, C., Herrington, M. and Segal, N. 2003. Global
entrepreneurship monitor: South African executive report 2003. The UCT
Centre for Innovation and Entrepreneurship.
77
Reynolds, P., Bosma, N., Autio, E., Hunt, S., De Bono, N., Servais, I., Lopez-
Garcia, P. and Chin, N. 2005. Global Entrepreneurship Monitor: data
collection design and implementation 1998-2003. Small Business Economics
(2005) 24: 205-231.
SA Institute for Management Scientists, Conference, Stellenbosch. 13-15
September. 2006.
SME Survey Report: www.theworx.biz.
Sokabo, N. 2002. Identification and analysis of the factors that influence the
development of female entrepreneurs in the informal sector. Paper presented
in partial fulfilment of the requirements for the Master’s degree in Business
Administration in the Faculty of Management at Port Elizabeth Technikon.
Source:http://web.worldbank.org. Accessed 2006/11/14.
SSACI. 2005. Whither women entrepreneurs. [Accessed 8 November 2006]http://www.ssaci.org.za/news/news13.doc
Statistics South Africa. 2006. Statistical release P0043. Statistics of
liquidations and insolvencies (preliminary) September 2006.
Statistics South Africa. 2006. Statistical release P0210, Labour Force Survey
March 2006.
Statistics South Africa. 2006. Statistical release P0302, Mid-year population
estimates, South Africa 2006.
The Department of Trade and Industry (DTI) SAWEN - South African Women
Entrepreneurs: A burgeoning force in our economy – A special Report 2005.http://www.dti.gov.za/sawen/SAWENreport2.pdf [accessed 20 August 2006]
The Department of Trade and Industry (DTI). 2003. Women in Businesshttp://www.thedti.gov.za/publications/WomeninBusinessSisebenza.htm
Accessed 8 November 2006
UCT Graduate School of Business: www.gsb.uct.ac.za.
University of Pretoria: www.up.ac.za.
Verwey, C.T. 2003. Developing evaluation constructs in management and
entrepreneurship for women construction SMMEs. Unpublished Doctor of
Business Administration thesis, University of Pretoria.
Von Broemsen, M., Wood, E. and Herrington, M. 2005. Global
entrepreneurship monitor: South African report 2005. The UCT Centre for
Innovation and Entrepreneurship.
White paper by the Department of Trade and Industry. 1995. National strategy
for the development and promotion of small business in South Africa. Pretoria:
Government Printer.
World Bank and International Finance Corporation. 2006: creating jobs.
Doing business in 2006. Washington: World Bank Publishers.
www.cipro.co.za/about_us/registration_stats.asp. Accessed 19 September
2006.
78
Annexure A
List of key informants
Sol Bezuidenhout
Bheki Sibiya
André Diederichs
Jurie van Vuuren
Thandile Gubevu
Mandisa Manjezi
Tsepang Setipa
Elbie Coetzee
John October
Retha Alberts
Malcolm Figg
Melody Kleinsmith
Belinda Vabaza
Jim Maasch
Sandra Musengi
Basil Leonard
Steyn Heckroodt
Vikash Sewram
Giel Naudé
Tommie vd Mescht
A Redman
Suzanne Hattingh
Freddie Marais
Eurico De Freitas
Koos Nel
Truida Prekel
Kobus Serfontein
Ferose Oaten
Gay Mokoena
Drennan Rob
Elize Bezuidenhout
Georg Stemmer
Reg Lascaris
Arthur Goldstuck
Roper, Kate
Dames, Ricardo
Mtshwane, Andile
Jill Sawer
doc_339153906.pdf
This brief file around global entrepeneurship monitor south african report 2006.
Global Entrepeneurship Monitor
South African Report
2006
GEM SPONSORS
2006
GLOBAL ENTREPRENEURSHIP MONITOR
SOUTH AFRICAN EXECUTIVE REPORT 2006
Gideon Maas and Mike Herrington
2
CONTENTS
Page
1. Executive summary 6
2. Chapter 1: Overview of the GEM 2006 report 8
3. Chapter 2: Key informants 2006 16
4. Chapter 3: Adult population questionnaire 2006 21
5. Chapter 4: Women in entrepreneurship 38
6. Chapter 5: Future research in entrepreneurship 59
7. Chapter 6: Integrated recommendations 69
8. References 76
9. Annexure 78
LIST OF TABLES 3
LIST OF FIGURES 5
3
LIST OF TABLES
Page
Table 1: Categories of questions 17
Table 2: Summarised statistics of all categories 17
Table 3: Factors that limit entrepreneurial activity in South Africa 18
Table 4: Factors that contribute to entrepreneurial activity in South
Africa 19
Table 5: Factors that can increase entrepreneurial activity in South
Africa 20
Table 6: Total TEA 2006 index 23
Table 7: Relative ranking from 2001 – 2006 24
Table 8: TEA opportunity index 25
Table 9: TEA necessity index 26
Table 10: Age distribution 27
Table 11: Regional spread of respondents 27
Table 12: Major race groups 28
Table 13: Income levels 28
Table 14: Educational levels 28
Table 15: Stage of activity 29
Table 16: The involvement of the different regions in TEA activities 29
Table 17: Cross-tabulation of TEA indexes with income 30
Table 18: Individual perceptions of entrepreneurship in South Africa 30
Table 19: Cultural support for entrepreneurship in South Africa 31
Table 20: The market expansion mode 31
Table 21: Export intensity 32
Table 22: TEA for new product market cross-tabulated with
educational levels 32
Table 23: Age groups associated with possible product/market
expansion 32
Table 24: Indication of job creation 33
Table 25: Categories of expected number of jobs 33
Table 26: Unemployment rate, March 2001 to March 2006 33
Table 27: Availability of technologies or procedures more than a year
ago 34
Table 28: Technology level of the sector 34
Table 29: Technology compared with age levels 35
Table 30: Sources of funding 35
Table 31: Exit reasons 35
Table 32: Total number of liquidations: 2000 to 2006 35
Table 33: Total number of insolvencies: 200 to 2006 36
Table 34: Total TEA 42
Table 35: Stage of activity 42
Table 36: Educational levels of women involved in TEA 2006 42
Table 37: Income levels of women involved in TEA activities – 2006 43
Table 38: Race groups involved in TEA activities – 2006 43
Table 39: Women involved in TEA activities per region 43
Table 40: Age of women involved in TEA activities 44
Table 41: International TEA comparisons of women 45
Table 42: Ranking for opportunity and necessity
entrepreneurship among women 46
4
Table 43: Individual perception of entrepreneurship 47
Table 44: Cultural support for entrepreneurship 47
Table 45: TEA market expansion mode 48
Table 46: TEA export intensity 48
Table 47: TEA involvement in any jobs now or in 5 years 48
Table 48: TEA number of owners 49
Table 49: How many customers consider products new/unfamiliar? 49
Table 50: How many businesses offer the same product? 49
Table 51: Were the technologies/procedures available more than a
year ago? 49
Table 52: Use of technology per level 50
Table 53: Sources of funding obtained for start-ups 50
Table 54: Reasons for closing business 50
Table 55: Discussion questions 51
Table 56: Recommendations 56
Table 57: Summary of recommendations from previous GEM reports 69
Table 58: Specific recommendations 73
5
LIST OF FIGURES
Page
Figure 1: The GEM conceptual model 13
Figure 2: TEA rates for all countries 22
Figure 3: TEA for women of all participating countries 44
Figure 4: An integrated model for conducting research in South Africa 67
Figure 5: Idealised situation 73
6
EXECUTIVE SUMMARY
South Africa joined the GEM survey study in 2001. Since this date, various
other countries have joined, whereas others have opted not to participate for a
period, and others participated on a once-off basis only. In terms of a survey,
this complicates the measurement of a specific country against others.
However, sufficient data in this report indicated that, although the South
African TEA indexes remained relatively constant over time, South Africa’s
position in the GEM rankings has deteriorated over time despite improved
macro-economic conditions in the country.
The GEM 2006 report therefore focused on trying to isolate the factors that
contribute to this deterioration. Key informants set the scene by indicating
what is currently positive and what is negative in terms of entrepreneurship
promotion. In Chapter 3 these perceptions were tested further. The resultant
data reinforced the earlier conclusions. One of the most important findings is
that potential entrepreneurs lack the mindset and skills to become true
entrepreneurs. Although a positive entrepreneurial culture is starting to form
on a macro level, entrepreneurship on a micro level is not showing any signs
of growth. International markets are not penetrated, employment creation is
not encouraged and innovation is under pressure. The low levels of
educational qualifications may be an important reason why this discrepancy
persists. However, the lead-time in education is far too long to wait for a
general overall improvement before entrepreneurship is encouraged. Dual
strategies need to be developed and implemented, thus encouraging
entrepreneurship.
When women entrepreneurs specifically were analysed it was evident that
skills and mindset are the two most important determinants influencing the
accelerated entrance into the formal labour market. An additional determinant
identified which influences women entrepreneurs negatively is
culture/tradition. Women want to or are expected to look after their families
and therefore opt for businesses that are either flexible enough to allow them
time to care for their families, or are easy enough to operate. Again, the levels
of education proved to be too low to allow for the exploitation of modern
opportunities.
A key issue debated in South Africa for far too long, and shown to be crucial in
the discussions of this GEM 2006 report, is the impact of information.
Although there are pockets of information and the execution of research,
these seem to be very un-organised and un-coordinated. Without reliable
information, no policies can be formulated that can help accelerate the TEA
rates of South Africa. It is, therefore, of utmost importance that information be
researched and implemented in a coordinated and integrated manner. The
research model and focus areas in this GEM report address this and can be of
tremendous help to tertiary institutions involved in this type of activity. A
similar exercise carried out by the Academic Entrepreneurship Society
showed encouraging results but for various reasons this has not been
continued. If done in an integrated and coordinated manner this should benefit
the South African environment within a short period.
7
Various recommendations have been made in the past, some of which have
been addressed and others not. These have been included to avoid re-
inventing the wheel and to refresh minds. Entrepreneurship should, however,
be developed as an integrated system. We used an integrated framework to
illustrate how to go about creating and implementing recommendations in an
orderly way. The development and implementation of micro-recommendations
is not possible without such an integrated macro entrepreneurial framework,
supported by all stakeholders.
Lastly, what this GEM 2006 reports highlights is that Total Early-Stage
Entrepreneurial Activities (i.e. from 0 months up to 3.5 years) are not up to
standard if South Africa wants to sustain economic growth rates that will
create wealth for everybody. With a young population, more pressure will be
exerted on existing businesses to create enough wealth for all. If the TEA
activities are not improved quickly enough, the danger exists that the
dependency level on existing businesses will become too much.
8
CHAPTER 1
OVERVIEW OF THE GEM 2006 REPORT
1.1 ACKNOWLEDGEMENTS
The Global Entrepreneurship Monitor (GEM) for South Africa would not have
been possible without the support of various individuals and organisations.
Firstly, we would like to thank our four sponsors for their financial support,
namely Liberty Life, South African Breweries Limited, Standard Bank of South
Africa and the National Research Foundation.
We express our appreciation to the 38 key informants who so willingly gave of
their time and shared their insights into the state of entrepreneurship in South
Africa.
Thank you to Rothko International for designing the report and INCE for
printing the report.
To AC Nielsen, who did the adult population survey. Thank you for a job well
done!
The GEM project is dependent on the enormous effort of the GEM global
team at the London Business School and Babson College. The South African
team would like to thank them and acknowledge their contribution.
A special thank you goes to the extended South African team who provided
valuable input on various issues. They are Professors Christo Boshoff and
Jurie van Vuuren, Ms Sandra Musengi, Mrs Beulah Maas and Mrs Lynette
Goosen.
Most importantly, the South African entrepreneurs without whom this study
would have no meaning - thank you for your support.
1.2 THE GLOBAL ENTREPRENEURSHIP MONITOR STUDY
Von Broemsen, Wood and Herrington (2005: 10) summarised the reason for
the GEM study as follows:
“The Global Entrepreneurship Monitor (GEM) was started in 1999 as a joint
project by academics at London Business School and Babson College in the
United States.
The raison d’être behind the study was to:
• compare countries in terms of their entrepreneurial activity;
• establish which factors encourage entrepreneurship;
• determine whether the rate of entrepreneurship in a country affects
national economic growth; and
9
• identify policies that encourage entrepreneurial activity”.
Teams from 42 countries around the globe have participated in the GEM 2006
study. It is the largest and most rigorous longitudinal study of
entrepreneurship in the world. South Africa joined GEM in 2001, which means
that South Africa is in its sixth year of participation.
Although the GEM study acknowledges the economic contribution of large
corporations, GEM's specific focus is on two sets of businesses: those that
are in the process of start-up (0-3 months) and those that are more
established but still relatively new (3 months to three and a half years). These
businesses form the new basis from which an economy can expand and
stimulate accelerated socio-economic growth and development. It is critical
that readers keep this focus in mind when reading and interpreting this report.
Von Broemsen et al. (2006:10) make an important point by indicating
that the “GEM is a monitor, which allows for international comparative
analysis. The purpose of the research is not to provide the annual
definitive analysis of the small business sector. Rather, it is to
understand trends - both internationally and within nations - to create
benchmarks and to provide a rich source of longitudinal data for
researchers and government departments”.
Due to a general lack of primary data on small businesses in South Africa, this
year’s GEM report focuses much more on providing specific data which can
be used by other researchers and policy formulators.
1.3 UCT CENTRE FOR INNOVATION AND ENTREPRENEURSHIP
In 2001 the Graduate School of Business at the University of Cape Town
established the UCT Centre for Innovation and Entrepreneurship, with
financial assistance from Liberty Life, the World Bank Group and the Gatsby
Charitable Foundation. The ambition was bold – to make the Graduate School
of Business Africa’s leading tertiary institution in entrepreneurship teaching
and research, and to become internationally recognised as an authority in this
field in developing economies.
The Centre, building on initiatives started in the late 1990s, was organised
around three distinct and mutually reinforcing sets of activities: teaching and
material development, research and public policy, and business creation and
growth. The core focus of the Centre is on the delivery of quality
entrepreneurship education at academic and all other levels of society. The
Graduate School of Business’s philosophy of entrepreneurship education is
that to be effective, it must be practical. Our students therefore have
meaningful interactions with entrepreneurs, are involved in actual
entrepreneurial projects, work in multi-disciplinary project teams and are
evaluated by entrepreneurs and investors, as well as by academic staff. The
entrepreneurship courses delivered by the Centre are closely integrated with
new venture activity in the local business and investment communities. The
intention is not to compete with incubators or other business promotion
10
projects, but to seek partnership with the most successful of these for mutual
benefit. The Centre’s core activity of ‘quality entrepreneurship education’ has
significantly enhanced its ability to establish such partnerships. The Centre is
involved in high-value-added and high-potential new ventures and in both
township and other community-based enterprises. Since its establishment, the
Centre has assisted over 70 township enterprises by providing practical
business advice and access to finance and training, with the objective of
enabling them to become independent, sustainable businesses with greater
potential for expansion. The Centre, with the co-operation of the Grassroots
Business Initiative of the International Finance Corporation, is also involved
with assisting socially orientated organisations through mentoring and
financial support. The Centre is currently involved in numerous other activities
including:
• research that aims to develop a better understanding of the capacities
and needs of all the different categories of entrepreneurs in South
Africa so that advisory services and finance can be more precisely
targeted;
• advising academics on the commercialisation of their intellectual
property;
• assembling a group of high-profile entrepreneurs in the Western Cape
in order to finance and assist high-growth business ventures;
• offering coaching and mentoring services to entrepreneurs; and
• assisting large companies in nurturing innovative and entrepreneurial
behaviour in their organisations.
The Centre is proud to be a participant in the international GEM project. We
believe that the research spearheaded by GEM is essential to the
development of global entrepreneurial activity and we are committed to that
purpose in South Africa.
1.4 THE GEM TEAM
Mike Herrington is the team leader of GEM South Africa and the principal
author of the GEM 2006 report is Gideon Maas.
Dr Mike Herrington
Mike Herrington is the Director of the UCT Centre for Innovation and
Entrepreneurship at the Graduate School of Business. He is a recognised
entrepreneur, having started four businesses – one in New Zealand and three
in South Africa. He was responsible for starting the CIE and is keenly
interested in entrepreneurship and all levels of business creation. His leading
activities are in the areas of entrepreneurship, business planning, venture
capital and the internationalisation of businesses.
Dr Gideon Maas
Gideon Maas is Director of Global Entrepreneurial Business Consultants
(GEBC), his own company focusing on entrepreneurship and family
businesses, and contracted to conduct research for this GEM study. He was
11
the holder of the first International Chair in Entrepreneurship in South Africa
and is also an Adjunct Professor of the University of Limerick in Ireland.
The above team was also assisted by four specialists who provided support
with various chapters. They are:
• Prof. Christo Boshoff
Christo Boshoff holds a Ph D from the University of Pretoria in South Africa.
His research interests are service quality as a competitive strategy, the role of
risk perceptions in service marketing and the management of service
recovery. He has published papers on these and related topics in several
international journals. He teaches Marketing and Marketing Research at the
Department of Business Management, University of Stellenbosch. He has
also taught on the MBA courses of Rhodes University (South Africa), the
University of Otago (New Zealand) and Nyenrode Business School in the
Netherlands. He is co-author of three marketing textbooks used at South
African universities.
• Prof. Jurie van Vuuren
Dr van Vuuren is a Professor at the University of Pretoria, South Africa and
co-ordinator of the Danie Cronje SAB Chair of Entrepreneurship in the
Department of Business Management. He initiated and developed the first
Bachelors Degree with specialisation in Entrepreneurship in South Africa and
was instrumental in developing the first lectured Masters and PhD degrees
offered by the Department. In 1992 he started up a company in
Entrepreneurship, Education, Training and Consultation that has since trained
over 2 000 delegates. He is the author of a number of articles in various South
African journals and in more than 20 international conference proceedings
from all over the globe.
• Sandra Musengi
Sandra joined Rhodes University after her graduation and was with them from
2002 to May 2006 as a lecturer in the Principles of Management, Financial
Management and Entrepreneurship. In June 2006 she joined Cida City
Campus in Johannesburg as their Head of Education Operations. She has
received a number of academic and research funding awards, including the
International Chair in Entrepreneurship (ICE) Scholarship award to further her
studies in the field of Entrepreneurship at a Masters level. She is also a
founding member of the Institute for Family Business of Africa (IFBA).
• Beulah Maas
Beulah has been a director of Global Entrepreneurial Business Consultants
(GEBC) since its inception in 1999. She holds an M.Comm (Industrial
Psychology) degree from the University of Stellenbosch and is a registered
Industrial Psychologist. She focuses mainly on the ‘softer’ issues of
entrepreneurship and family businesses, which includes the analysing and
interpretation of profiles, the development of entrepreneurial training plans for
individuals and human resource aspects which are applicable to normal
businesses. She is also a founding member of the Institute for Family
12
Business of Africa (IFBA) and the Academic Entrepreneurship Society of
Southern Africa (AcES).
1.5 FOCUS OF 2006 REPORT
South Africa joined the GEM study group during 2001. Up until this point, data
on entrepreneurship was relatively ad hoc and very general in nature. The
South African GEM studies proved to be a valuable instrument in unlocking
data, which lead to an increased debate on this important topic.
The GEM 2006 report now takes this debate and research to a new level,
focusing on finding more detailed links, in order to develop a macro model
which will allow the research into and development of entrepreneurship to be
done in a more integrated manner. Recommendations, not necessarily linked
to policy, will be made to encourage a focused approach for the future and in
turn lead to accelerated support for entrepreneurship in South Africa.
In order to achieve the above, the outline of the GEM 2006 report is as
follows:
• Chapter 2: Data from key informants;
• Chapter 3: Adult population questionnaire;
• Chapter 4: Women in entrepreneurship;
• Chapter 5: Future research in entrepreneurship;
• Chapter 6: Integrated recommendations.
1.6 RESEARCH METHODOLOGY
The GEM 2006 study relies on various sets of data, namely:
• Data from key informants
Data was obtained from 38 key informants by doing in-depth, face-to-face
interviews; through the completion of a detailed structured questionnaire; and
from involvement in fine-tuning the data obtained from interviews. The list of
key informants is contained in the appendix.
• An adult population survey (APS)
This data set is a survey of the adult population, namely people between the
ages of 18 and 64. In South Africa, the questionnaire was translated into six
languages and 3 251 people were interviewed. Details of this set of data will
be discussed in Chapter 3.
• Other secondary data
Other data was obtained from a variety of reliable secondary resources such
as the World Bank reports, information from Statistics South Africa and
research conducted by various academics.
All the resources used were chosen to fit with the GEM conceptual model.
The primary aim of the GEM conceptual model is to explore the contribution of
entrepreneurial activity to national economic growth. The GEM conceptual
framework (see Figure 1) was discussed in detail by Von Broemsen et al.
13
(2006:12-13) in the GEM 2005 report. It was decided to include this
discussion again in this report because of various misunderstandings of this
study in the past.
Figure 1: The GEM conceptual model
Source: Adapted from the GEM 2004 Executive Report
The following discussion of the GEM model is obtained from Von Broemsen et
al. (2006:12-13):
“General business conditions affect the ability of large corporations to
compete effectively and to start new or ancillary businesses. When conditions
are such that businesses are able to compete effectively and new or ancillary
businesses are started, this in turn creates jobs. These conditions are
determined by the openness of the economy in terms of trade, the level of
government intervention in the market, the efficiency of financial markets, the
sophistication of physical infrastructure, the availability of management skills,
the flexibility of labour markets and the extent to which the laws of the country
are applied impartially and consistently. The interplay of these conditions is
very specific to each country and creates a unique environment in which to do
business.
The decision by individuals whether or not to respond to an opportunity and
start a business is influenced by an additional set of factors, referred to as
entrepreneurial framework conditions. These conditions refer to the
following nine factors: access to finance; government policies; government
programmes; education and training; transfer of research and development;
the commercial, legal and financial infrastructure; the openness of the
domestic market; access to physical infrastructure; and the extent to which
cultural and social norms support the choice of starting a business as a career
option.
14
The primary measure of entrepreneurship that GEM uses is the Total Early-
Stage Entrepreneurial Activity (TEA) index. The TEA index measures the
percentage of individuals between the ages of 18 and 64 that are involved in
starting a new business. Individuals may start the business on their own
account. They may also start the business in collaboration with or on behalf of
an existing business. They do need to own the business, either partly or
wholly, and to manage it, either on their own or with others. The creation of a
new business is a process, which GEM sees as a two-phase process. The
first phase is the start-up phase, a three-month period during which (one or
more) individuals identify the products or services that the business will trade
in, access resources (such as finance) and put in place the necessary
infrastructure, which would include staff. When the business is in this phase of
development, it is referred to as a start-up firm.
The next phase, a period of 3–42 months, is when this new business begins
to trade and compete with other firms in the market place. When the business
is in this phase of development, it is referred to as a new firm. The definition
of a new firm is a business that has paid salaries or wages for longer than
three months. Once a business has established itself and is more than 42
months old, it is referred to as an established firm.
The TEA index, the primary measure used to compare the rate of
entrepreneurship both amongst countries as well as annual variations within a
specific country, measures how many new businesses are started in a given
year. The key question in the survey that is used to establish the TEA rate is,
‘Are you, alone or with others, expecting to start a new business, including
any type of self-employment, within the next three years?’
The TEA rate therefore includes start-up businesses and new firms, but
does not include established firms. In other words, it measures early-
stage entrepreneurial activity only.
The TEA rate captures individual entrepreneurship, but does not capture
another equally important source – the launch of a new business venture by
the owner-manager of an established firm. This prompted the need to re-
define TEA as ‘Total Early-stage Activity’, rather than Total Entrepreneurial
Activity. Therefore, whenever TEA appears in this report, it refers to ‘Total
Early-stage Entrepreneurial Activity’.
‘New firms’ describes a continuum of businesses, with a street trader in an
informal settlement on the one end of the continuum and a business such as a
small, structured finance firm on the other. They differ fundamentally, not least
in terms of the turnover and the quality of employment generated.
The tool that GEM has identified to distinguish between businesses that
generate quality employment for the owner and potentially for others, and
businesses that are little more than a survival strategy, is to ask interviewees
about their motivation for starting a business. If the individual is starting the
business because he/she has no other way of earning a living, then this
15
business is referred to as one motivated by necessity. If, on the other hand,
the individual is starting a business in response to an opportunity (whether an
opportunity in the market place, or an opportunity to lead a different lifestyle or
to earn more money), this business is referred to as one motivated by
opportunity. The report therefore refers to both necessity entrepreneurship
and opportunity entrepreneurship”.
1.7 RELIABILITY OF GEM
Various questions were raised in the past regarding the reliability of the GEM
study. The reliability of the GEM studies (the extent to which the measurement
outcome can be replicated by others) has been tested extensively. Reynolds
et al. (2005: 222) concluded that “while there is no direct test of the reliability
of the GEM survey based measure of entrepreneurial activity, a variety of
indirect measures suggests that this procedure, despite the small sample
sizes, is reflecting the same phenomena as a wide range of other efforts to
track new firm creation, using a range of national administrative data bases”.
Reynolds et al. (2005: 224) also concluded that, after refining the interview
schedules, “the reliability of all 17 multi-item scales was 0.63 or higher; 15
were 0.70 or higher, and 7 were 0.80 or higher; this is consistent with current
standards for index reliability in social sciences”.
It can be deduced from the above that readers need have no concern about
the reliability of the study as it is in line with accepted statistical and academic
norms.
1.8 HOW TO READ THE GEM REPORT
The GEM Report is not an entrepreneurship monitor that will provide an exact
picture of the state of entrepreneurship in a country. It is a comparative study
among countries where differences are highlighted. The GEM also has the
advantage that it stimulates debate on what the data is showing and how best
to react to the findings. As indicated in paragraph 1.7 the methods used in this
survey are sound and the data obtained can be trusted.
Therefore, when reading through this report let the data talk to you; talk to the
data; reflect and try to find solutions for the South African situation.
1.9 SUMMARY
When evaluating a country in isolation it is easy to create a highly skewed
image of that country. However, by measuring that country against other
countries over time, a more accurate image is created. It is the intention of the
GEM report to provide a factual image of what is currently happening in South
Africa. Some data shows positive trends but equally there are trends that are
quite negative and should be attended to. In a true entrepreneurial spirit, one
needs to study the data and then decide what to do to improve the future.
Although to simply dwell on the past will not stimulate entrepreneurship, one
can identify lessons that can be useful when formulating plans for the future.
16
CHAPTER 2
DATA FROM KEY INFORMANTS
2.1 INTRODUCTION
Key informants supplied data through in-depth interviews, the completion of a
structured questionnaire and a round of voting for the most important
suggestions. This data provides the GEM 2006 report with an overview of
entrepreneurial activity in South Africa.
Although the data referred to in this chapter is based on perceptions it
provides valuable information which aids in the understanding of
entrepreneurial activity, and determining policies which should be
focused on to help improve entrepreneurship in South Africa.
The GEM consortium defines a country expert as “a professional or an
entrepreneur who is directly involved in delivering or assessing a major aspect
of an entrepreneurial framework condition in his/her country. They are
individuals with knowledge of entrepreneurship which results from various
experiences and perspectives”.
The key informants’ questionnaire is based on framework conditions that can
promote entrepreneurship in a country. The nine framework conditions are
financial support; government policies; government programmes; education
and training; research and development; access to commercial and
professional infrastructure; market openness; access to physical
infrastructure; and cultural and social norms.
According to guidelines from the GEM Projects Committee, South Africa had
to submit data from 36 experts of which 18 had to be experts consulted in
previous years. A database of previous experts was used (more than 184
from 2001) to identify a list of previously consulted experts. Of the 65 experts
contacted, only nine were willing to participate. One of the problems
experienced was that contact details were no longer relevant which meant
that the data was not up to date. Others simply did not wish to participate for
various reasons.
In order to comply with the requirement of 36 experts, we decided to involve a
larger number of new experts. Of the new experts, 29 were willing to
participate. In total there were 38 key experts (29 new and 9 from previous
years). Of these, 16 were Black, 22 White, 25 male, and 13 female (see list of
participants in Annexure A).
2.2 SUMMARY OF QUESTIONNAIRE DATA
The questionnaire presents questions and statements about various factors of
entrepreneurship. Questions were divided into 15 categories (see Table 1)
with 82 questions in total. Each response was measured on a standardised
Likert scale.
17
Table 1: Categories of questions
Category
Finance
Government policy
Government programmes
Education
Technology transfer
Business services
Market openness
Physical infrastructure
Social and cultural norms
Entrepreneurial opportunities
Entrepreneurial capacity
Respect for entrepreneurs
Intellectual property protection
Women entrepreneurs
High growth
The data obtained from the 38 respondents by means of a structured
questionnaire was analysed per category. The mean and standard deviations
of each category of questions were calculated and are summarised in Table 2.
From the data it is clear that only four of the fifteen categories (physical
infrastructure, entrepreneurial opportunities, respect for entrepreneurs and
women entrepreneurs) are perceived to be average or better than average.
On a Likert scale of five, the mean is three.
As the focus in this GEM report is on women entrepreneurs it was decided to
check whether the women key informants were in agreement that they are
supported and encouraged adequately. The average for this category in
Table 2 is 3.07, but that includes both the male and female perceptions of the
key informants. When the perceptions of female key informants only were
calculated, the average was 2.83, which clearly indicated that women
respondents are of the opinion that this category is also sub-standard and that
not enough support and encouragement is available for the development of
women entrepreneurs specifically. Women entrepreneurs will be analysed
and discussed in detail in Chapter 4.
Table 2: Summarised statistics of all categories
Category Mean Standard
deviation
Finance 2.70 0.88
Government policy 2.43 0.61
Government programmes 2.22 0.67
Education 2.44 0.69
Technology transfer 2.03 0.54
Business services 2.86 0.77
Market openness 2.52 0.63
Physical infrastructure 3.07 0.91
Social and cultural norms 2.67 0.87
Entrepreneurial opportunities 3.48 0.77
Entrepreneurial capacity 2.13 0.74
Respect for entrepreneurs 3.51 0.73
Intellectual property protection 2.82 1.07
Women entrepreneurs 3.07 0.95
High growth 2.93 0.79
18
The categories that are perceived to be the most underdeveloped areas (see
the highlighted categories in Table 2) are government programmes (e.g.
general support programmes from government for entrepreneurs), technology
transfer (e.g. research data transferred into business practices) and
entrepreneurial capacity (e.g. the skills a potential or existing entrepreneur
has in order to exploit opportunities).
The responses (see Table 2) portray a negative situation regarding
entrepreneurship in South Africa in general. The only two positive points are
that the infrastructure promotes entrepreneurship and that there are more
than enough opportunities to exploit. This supports the findings in Chapter 3
where South Africa fares below average on a number of critical factors, even
when compared with developing countries – the category within which South
Africa falls.
2.3 SUMMARY OF INTERVIEWS
One-on-one interviews also took place. These interviews allowed for the further
gathering of opinions from the respondents about aspects of entrepreneurial
activities they considered important. The interview aimed to gather and analyse
opinions about:
• the major factors that limit entrepreneurial activity, including the number
of independent and/or corporate start-ups in South Africa;
• the major factors that contribute to entrepreneurial activity, including the
number of independent and/or corporate start-ups in South Africa; and
• what is necessary to increase the entrepreneurial activity, including the
number of independent and/or corporate start-ups in South Africa.
Information generated during this phase was in some instances too general,
vague or diverse to produce meaningful conclusions. We decided to have
further rounds of interviews where we added issues or clarified others and
where respondents had to indicate what, to them, were the most important
issues. The results of this phase are summarised in Tables 3, 4 and 5.
Table 3: Factors that limit entrepreneurial activity in South Africa
The education system does not encourage entrepreneurship as a career – it is seen as
something you do when you cannot find a job or do not have a profession.
There is a lack of resources available to start one’s own business - banks want too much
security.
Regulations create huge administrative burdens and high costs when starting a business.
South Africa is not highly entrepreneurial due to factors such as sanctions of the past and the
education system that does not encourage entrepreneurship.
The environment in which children grow up influences them to believe that it is better to find a
job and be safe.
Starting a business is a risky process that often involves cycles of failure. South Africa has a
harsh attitude towards failure, which inhibits many potential entrepreneurs.
Infrastructure and the necessary skills required for the development of entrepreneurship are
lacking.
A paradigm of entrepreneurship does not exist. The expectation is that big business,
19
government and others should create jobs, rather than that one can create one’s own
employment.
Competencies such as management and entrepreneurial skills are lacking amongst
entrepreneurs.
The perceived reasons hindering entrepreneurship (see Table 3) can be
grouped together in the following three major areas:
• Culture
Culture refers to both a business culture (i.e. a feel for the world of business
and new ideas) and a personal culture (i.e. upbringing - to seek formal work
rather than create one’s own).
• Skills
Skills refer to knowledge and experience needed to become an entrepreneur.
This can be from primary and secondary schooling to tertiary education and
beyond, and is perceived not to be furthering entrepreneurship development
as much as it should.
• Support
This refers to government and private sector support for the creation and
development of new and existing enterprises.
• Access to finance
The respondents indicated that although there seems to be sufficient funds
available it remains difficult to access these funds, especially for start-ups.
Factors perceived to be contributing towards entrepreneurship in South Africa
are outlined in Table 4 and are divided into the following two broad categories:
• Push factors
Push factors are the more negative factors such as unemployment and
retrenchment which force people to become entrepreneurial in order to
survive.
• Pull factors
Pull factors refers to the more positive factors (e.g. government support which
is becoming more focused, and role models) which are helping people to
consider the option of entrepreneurship as a career choice.
In an ideal entrepreneurial environment, the pull factors should outweigh the
rest. Only then can one say that a true entrepreneurial culture exists in a
country.
Table 4: Factors that contribute to entrepreneurial activity in South Africa
Entrepreneurship is becoming a key focus of the government.
Economic conditions are stable and favourable for the development of entrepreneurship.
Government tries to encourage the development of entrepreneurship through regulations
such as lower taxation rates.
The implementation of a central integrated organisation such as the Small Enterprise
Development Agency (Seda) is a step in the right direction.
Policies are starting to fall into place although the execution still lacks focus.
Schools are starting to encourage entrepreneurship education.
An entrepreneurial awareness is starting to be developed among younger generations.
20
Unemployment pushes people to become more entrepreneurial.
More role models in entrepreneurship – also women and people from various cultural groups
– are observable in South Africa.
People who are retrenched are forced to become entrepreneurs because jobs are scarce.
Respondents were also required to indicate what activities they thought should
be implemented or focused on in future in order to accelerate the development
of entrepreneurship in South Africa (see Table 5).
Table 5: Factors that can increase entrepreneurial activity in South Africa
Provide clear definitions for key concepts such as political and economic development,
poverty alleviation and economic development.
Entrepreneurship should be developed from an early age through the education system. The
right skills for modern entrepreneurship should be developed.
Access to cheaper and different funding models must be developed i.e. quasi-funding, grants.
A one-stop shop and integrated approach for the development of entrepreneurship is
necessary e.g. the development of Seda and the Business Place.
Corruption and nepotism must be ruled out by the politically powerful.
Integrated support services such as training, research and consulting must be developed and
implemented.
Access to venture capital must be improved.
Service delivery on various government levels must improve drastically.
Policy conflicts should be highlighted and solved between government departments.
Different support measurements should exist for the development of different entrepreneurial
groups e.g. necessity and opportunity entrepreneurial groups.
From Table 5 it is clear that the emphasis falls on a focused, integrated and
modern approach of supporting entrepreneurship. The approach should be
focused in the sense that it must be clear which groups need to be targeted
for support and how the specific groups should be supported. The “one-
system fits all” approach is not promoting an entrepreneurial environment. A
portfolio of support measurements should be developed and implemented.
Secondly, integration between all the role players is necessary. A focused,
coherent and integrated macro model should exist to promote
entrepreneurship in South Africa. This will be dealt with in Chapters 5 and 6.
Lastly, entrepreneurs should be developed to fit into the paradigm of modern
entrepreneurship. A change of outdated skills and mindsets into modern ways
of thinking and competing is necessary. More modern ideas and opportunities
are required.
2.4 CONCLUSION
From the range of responses received during this phase it was clear that there
was consensus on the fact that the promotion and support of entrepreneurship
is, in general, below standard in South Africa. The respondents also agree
that although there are movements in the right direction, speed, focus and
integration of activities are still lacking. These perceptions will be dealt with in
more detail in the following chapters before recommendations are made in
Chapter 6.
21
CHAPTER 3
ADULT POPULATION QUESTIONNAIRE
3.1 INTRODUCTION
The GEM’s principle measure of entrepreneurial activity is the Total Early-
stage Entrepreneurial Activity (TEA). The TEA rate estimates the percentage
of people aged between 18-64 years who are actively involved in starting or
managing a business which they wholly or partly own and which is less than
three-and-a-half years old. It is a measure of the national rate of new
business formation. Data in this chapter is primarily from the Adult Population
Survey 2006 compiled by AC Nielsen. However, additional data is included
from various sources when needed.
3.2 METHODOLOGY
In South Africa AC Nielsen interviewed 3 251 people during the first half of
2006. The OMNIBUS Survey, a multi-ethnic syndicated survey, was used
which covers different areas of enquiry for a number of different clients.
Personal “at-home” interviews were conducted in the home language, or
preferred language of the respondent. The interviews were conducted using a
structured questionnaire on a CAPI (Computer Assisted Personal Interview)
machine as well as interviewing aids. The questionnaire was translated into
Afrikaans, Zulu, Xhosa, Tswana, South Sotho and North Sotho. The
OMNIBUS survey covered Black, Coloured, Indian and White adults.
Coverage for Blacks and Whites included metros, cities, towns and villages
throughout South Africa. In the case of Blacks, live-in domestic workers and
mine workers were excluded. Coloured coverage included the major metro
areas of Cape Town, Durban, East London, Port Elizabeth and Gauteng.
Indian coverage included the major metro areas of Durban, Pietermaritzburg
and Gauteng. The total coverage represents 94% of the urban adult
population of South Africa and 56% of the total adult population. An area-
stratified, probability sample of 3 300 households was drawn from AC
Nielsen’s Customized Research computerised dwelling unit census. The
sample was divided into 50% males and 50% females. In each household a
male or female was chosen to be interviewed, using a random selection grid.
Three calls were made before substituting it with an adjacent household and a
person of the same sex.
The advantages of a probability sample, in contrast with a quota sample, are:
• Respondent selection bias has been eliminated.
• Results can be evaluated within known limits of error.
• Results can be weighted up to the total population being studied.
• Findings from different surveys are statistically comparable.
• Standard statistical procedures can be applied.
Fieldwork was done by trained, experienced interviewers. Investigators
worked under the direction of regional supervisors and field managers. A
20% validation check was done personally or telephonically on the work of
each interviewer.
22
Raw data was provided to the international GEM project team at London
Business School who checked all data and performed statistical calculations
on a uniform basis on all participating countries’ data. They provided two sets
of data to individual countries, namely an international comparison and the
individual country’s data. These data used the same weightings (18-64 years)
which facilitated the conducting of comparative evaluations. The South
African team performed further analysis on this data using the computer
programme SPSS versions 13 and 14.
From the above discussion and from analysing the raw demographic data, it is
clear that the respondents accurately represented the composition of the
South African environment.
3.3 DISCUSSION OF DATA
Two broad sets of data were used for this particular section. Countries that
participated in the GEM 2006 survey were compared in the first set of data
and in the second set of data South Africa was analysed in depth.
3.3.1 GLOBAL PERSPECTIVE
• Total early-stage entrepreneurial activity
In Figure 2, the TEA rates for all countries are highlighted.
0
5
10
15
20
25
30
35
40
45
B
e
l
g
i
u
m
J
a
p
a
n
S
w
e
d
e
n
I
t
a
l
y
U
n
i
t
e
d
A
r
a
b
E
m
i
r
a
t
e
s
G
e
r
m
a
n
y
F
r
a
n
c
e
S
l
o
v
e
n
i
a
S
i
n
g
a
p
o
r
e
R
u
s
s
i
a
F
i
n
l
a
n
d
M
e
x
i
c
o
S
o
u
t
h
A
f
r
i
c
a
D
e
n
m
a
r
k
N
e
t
h
e
r
l
a
n
d
s
U
K
T
u
r
k
e
y
H
u
n
g
a
r
y
L
a
t
v
i
a
C
a
n
a
d
a
S
p
a
i
n
I
r
e
l
a
n
d
C
z
e
c
h
R
e
p
u
b
l
i
c
G
r
e
e
c
e
C
r
o
a
t
i
a
U
n
i
t
e
d
S
t
a
t
e
s
N
o
r
w
a
y
C
h
i
l
e
A
r
g
e
n
t
i
n
a
I
n
d
i
a
M
a
l
a
y
s
i
a
I
c
e
l
a
n
d
B
r
a
z
i
l
A
u
s
t
r
a
l
i
a
U
r
u
g
u
a
y
T
h
a
i
l
a
n
d
C
h
i
n
a
I
n
d
o
n
e
s
i
a
J
a
m
a
i
c
a
P
h
i
l
i
p
p
i
n
e
s
C
o
l
o
m
b
i
a
P
e
r
u
Figure 2: TEA rates for all countries
In order to determine where South Africa is positioned in comparison with
other countries, the average TEA for all countries was calculated. The
average for all countries is 9.43%. When this is compared with the TEA rate
for South Africa (5.29%) it is clear that South Africa is positioned below the
average of all other countries (see Table 6). However, this list includes
countries on different levels of development. According to the World
23
Development Indicator Database of the World Bank 2006, South Africa falls
within the “upper-middle income countries” category, where the per capita
income is between $3 466 and $10 725. Other countries that fall within this
category are highlighted in Table 6. The average TEA for all these countries is
7.79%. Compared with South Africa’s TEA rate it is again clear that even in
this category South Africa performs below average. In the past, South Africa
was compared with certain countries labelled as “developing countries”.
These countries are indicated by means of an asterisk in Table 6. The
average of these countries’ TEA rates is 14.80%. The large discrepancy
between this figure and South Africa’s TEA rate of 5,29% is certainly cause for
concern.
Table 6: Total TEA 2006 index
Ranking
Country
TEA 2006
1 Peru * 40.15
2 Colombia * 22.48
3 Philippines * 20.44
4 Jamaica 20.32
5 Indonesia 19.28
6 China 16.19
7 Thailand * 15.20
8 Uruguay * 12.56
9 Australia 11.96
10 Brazil * 11.65
11 Iceland 11.26
12 Malaysia 11.09
13 India * 10.42
14 Argentina* 10.18
15 Chile * 9.19
16 Norway 9.14
17 United States 8.82
18 Croatia 8.58
19 Greece 7.90
20 Czech Republic 7.85
21 Ireland 7.35
22 Spain 7.27
23 Canada 7.12
24 Latvia 6.57
25 Hungary 6.04
26 Turkey 5.96
27 UK 5.77
28 Netherlands 5.42
29 Denmark 5.32
30 South Africa 5.29
31 Mexico * 5.26
32 Finland 4.99
33 Russia 4.86
34 Singapore 4.85
35 Slovenia 4.63
36 France 4.39
37 Germany 4.21
38 United Arab Emirates 3.74
24
39 Italy 3.47
40 Sweden 3.45
41 Japan 2.90
42 Belgium 2.73
Average all countries 9.43
Average for countries in upper-middle income group 7.79
Highlights and Italics = countries within the upper-middle income group
Source:http://web.worldbank.org. Accessed 2006/11/14.
The above table represents only one year. How, has South Africa done over
the years especially since it became part of the study in 2001? It is difficult to
accurately rank South Africa’s performance because not all countries
participated every year. Certain countries only participated on an ad hoc
basis. One cannot therefore determine South Africa’s overall performance by
comparing it to the countries that participated each year because this will
provide a selective image. The median (the middle of a distribution) was
therefore calculated. The calculations in Table 7 show that South Africa’s
performance in terms of relative position has consistently been below the
median, which means that South Africa’s position has not improved since
2001.
Table 7: Relative ranking from 2001-2006
2001 2002 2003 2004 2005 2006
South
Africa’s
TEA
ranking
14
th
out of
28
countries
20
th
out of
37
countries
22nd out of
31
countries
20
th
out of
34
countries
25
th
out of
34
countries
30
th
out of
42
countries
South
Africa’s
TEA rate
9.4 6.3 4.3 5.4 5.15 5.29
Median 14 19 16 17 17 21
Number of
positions
below the
median
0 1 6 3 8 9
Source: GEM 2001-2005
• Motivation of entrepreneurs
The GEM study makes a distinction between opportunity and necessity
entrepreneurial motivation. Opportunity entrepreneurs are people who take
advantage of a business opportunity while necessity entrepreneurs are people
who have no better options for work.
This category determines whether respondents were pro-active participants in
starting and managing a business or whether they had no other option than to
create a new business because they had no other source of income. Both
necessity and opportunity can be seen as prime motivational factors.
However, in a country with an entrepreneurial culture one would expect the
focus to be orientated towards effective utilisation of opportunity, rather than
an option forced on desperate people.
25
South Africa’s TEA opportunity index of 3.47% for 2006 is far below the
average of 6.82% for all participating countries. Compared with countries in
the upper-middle income category only, South Africa’s index is still lower than
the average of 5.46%. South Africa is in the 33
rd
position out of the 40
participating countries as far as opportunity orientation is concerned (see
Table 8).
Table 8: TEA opportunity index
Ranking
2006
Country
TEA 2006
1 Peru * 29.57
2 Indonesia 16.67
3 Colombia * 13.68
4 Jamaica 12.91
5 Philippines * 11.11
6 Australia 10.64
7 Thailand * 10.23
8 Malaysia 10.12
9 Iceland 9.81
10 China 9.59
11 Norway 8.36
12 Uruguay * 7.87
13 Argentina* 7.49
14 United States 7.44
15 India * 6.71
16 Chile * 6.57
17 Ireland 6.20
18 Spain 6.12
19 Canada 6.00
20 Brazil * 5.99
21 Czech Republic 5.45
22 Latvia 5.05
23 Greece 5.01
24 Denmark 4.94
25 Netherlands 4.94
26 United Kingdom 4.70
27 Hungary 4.64
28 Croatia 4.41
29 Singapore 4.10
30 Slovenia 4.05
31 Finland 3.74
32 Turkey 3.60
33 South Africa 3.47
34 Mexico * 3.41
35 Russia 3.39
36 Sweden 3.01
37 United Arab Emirates 2.95
38 France 2.70
39 Italy 2.61
40 Germany 2.46
41 Japan 2.45
42 Belgium 2.36
26
Average all countries 6.82
Average for countries in the
upper-middle income group
5.46
Highlights and Italics = countries within the upper-middle income group
Source:http://web.worldbank.org. Accessed 2006/11/14.
When South Africa’s TEA opportunity index is compared with that of
developing countries (see countries indicated by means of * in Table 8), South
Africa’s TEA opportunity rate of 3.47% is below the average of 9.65%.
South Africa’s TEA necessity index is 1.51% for 2006, which is below the
average of 2.35% for all participating countries. Compared with countries in
the upper-middle income group only, South Africa’s index is also lower than
the average of 2.07%. South Africa is ranked 19
th
of the 40 countries (see
Table 9). When South Africa’s TEA necessity index is compared with that of
developing countries (see countries indicated by means of * in Table 9), South
Africa’s TEA necessity rate of 1.51% is below the average of 4.93%.
Table 9: TEA necessity index
Ranking
2006
Country
TEA 2006
1 Peru * 10.57
2 Philippines * 9.32
3 Colombia * 8.74
4 Jamaica 6.60
5 China 6.27
6 Brazil * 5.55
7 Thailand * 4.75
8 Uruguay * 4.57
9 Croatia 3.81
10 India * 2.86
11 Argentina* 2.63
12 Indonesia 2.62
13 Chile * 2.59
14 Czech Republic 2.40
15 Turkey 1.77
16 France 1.70
17 Greece 1.63
18 Germany 1.52
19 South Africa 1.51
20 Russia 1.44
21 Hungary 1.33
22 Australia 1.28
23 United States 1.19
24 Mexico * 1.17
25 Spain 1.11
26 Latvia 1.04
27 Canada 1.02
28 Iceland 0.95
29 United Kingdom 0.89
30 Italy 0.78
27
31 Ireland 0.76
32 Finland 0.71
33 Singapore 0.65
34 Malaysia 0.53
35 Slovenia 0.47
36 Japan 0.45
37 Netherlands 0.33
38 United Arab Emirates 0.32
39 Norway 0.32
40 Sweden 0.25
41 Denmark 0.19
42 Belgium 0.19
Average all countries 2.35
Average upper-middle income
countries
2.07
Highlights and Italics = countries within the upper-middle income group
Source:http://web.worldbank.org. Accessed 2006/11/14.
3.4 SOUTH AFRICA 2006 OVERVIEW
• Total TEA
South Africa’s Total TEA index for 2006 was 5.29%. The profile of people who
are categorised as entrepreneurs within the TEA definition shows that 2.8%
are male and 2.5% female. The majority of respondents are in the age group
25-34 years (see Table 10). If one takes into account that South Africa has a
relatively young population where 42.63% is below 20 years of age and a
further 18.83% between the ages of 20 and 29 (mid-year population
estimates, South Africa 2006), then the data in Table 10 represents a positive
situation where a larger number of younger entrepreneurs are entering the
market.
Table 10: Age distribution
Age categories Frequency Percent
18-24 years 31 21.7%
25-34 years
45 31.5%
35-44 years 34 23.8%
45-54 years 18 12.6%
55-64 years 15 10.5%
Total
143 100.0
The TEA respondents are mostly from Gauteng, followed by KwaZulu-Natal
and Western Cape (see Table 11).
Table 11: Regional spread of respondents
Region Frequency Percent
Gauteng 57 40.1%
KwaZulu-Natal 30 21.1%
Western Cape
19 13.4%
Mpumalanga/Limpopo
15 10.6%
28
Eastern Cape 10 7.0%
Free State
7 4.9%
Northwest/Northern Cape
4 2.8%
Total 142 100.0
In absolute terms the entrepreneurs are mostly from the Black population,
followed by the White population (see Table 12). However, when taking into
account the size of the different race groups, the group that is most
represented is the Indian group, followed by the White group, the Black group
and then the Coloured group.
Table 12: Major race groups
Race Frequency Percent South African
population
(1)
Percentage
of race
groups
involved in
TEA activities
Black 91 63.6% 37.7m 0.00024
Coloured 7 4.9% 4.2m 0.00017
Indian 13 9.1% 1.2m 0.00108
White 32 22.4% 4.4m 0.00073
Total
143 100
47.6m
(1)http://www.southafrica.info/ess_info/sa_glance/demographics/population.htm
The income distribution of TEA respondents is mainly within the R8 000 and
higher category (see Table 13). However, the group in the R800-R3 999
income category is also quite high. One could argue that in order to make
meaningful contributions towards the economic growth of a country that the
income levels should be higher. This data could also indicate that lower levels
of ideas are exploited which only provide a lower level of income.
Table 13: Income levels
Income Frequency Percent
R8000 plus 49 34.5%
R4000-R7999 34 23.9%
R800-R3999 46 32.4%
R1-R799
13 9.2%
Total
142 100.0
The majority of TEA respondents (75%) have a qualification equal to or lower
than Grade 12 level (see Table 14). In a global competitive environment
characterised by high levels of innovation and technological involvement one
would expect educational levels to be higher than Grade 12.
Table 14: Educational levels
Level Frequency Percent
No school 1 0.7%
Some primary school 2 1.4%
Primary school completed 3 2.1%
Some high school 37 26.1%
29
High school completed 64 45.1%
Some university 7 4.9%
University completed 12 8.5%
Other post-Grade 12
qualification
16 11.3%
Total 142 100
• Stage of activity
The respondents were further classified into the two stages of the TEA
definition i.e. the start-up phase (0-3 months) and baby businesses or new
firms (3 months -3.5 years) (see Table 15). From the table it is clear that the
majority of activities (67%) are in the start-up phase with far fewer activities
(33%) in the baby business stage. What is interesting to note, is that although
the activities of nascent entrepreneurs decrease over a three year period, the
number of baby businesses shows a positive trend which means that more
entrepreneurs are graduating to the next level.
Table 15: Stage of activity
Stage 2004 2005 2006
Nascent entrepreneur (0-3 months) 71.3 69.3 67.1
Baby business owner-manager (3
months -3.5 years)
28.7 30.7 32.9
Total 100.0 100.0 100.0
• Opportunity and necessity TEA
In order to classify respondents as either opportunity or necessity
entrepreneurs, they were asked whether they got involved in an
entrepreneurial activity because they took advantage of an opportunity or
whether they got involved because they had no other choice of work. 3.5%
replied that they got involved in opportunity early-stage entrepreneurial activity
and 1.5% got involved in necessity early-stage entrepreneurial activity. 0.3%
of the respondents could not be classified as either opportunity or necessity
entrepreneurs.
In terms of a regional perspective Gauteng is still first in terms of opportunity
entrepreneurs and KwaZulu-Natal first in terms of necessity entrepreneurs
(see Table 16).
Table 16: The involvement of the different regions in TEA activities
Region Total TEA TEA: opportunity TEA: necessity
Gauteng 40.1% 44.1% 26.8%
KwaZulu-Natal 21.1% 15.1% 36.6%
Western Cape 13.4% 16.1% 9.8%
Mpumalanga/Limpopo 10.6% 7.5% 14.6%
Eastern Cape 7.0% 5.4% 12.2%
Free State 4.9% 7.5% 0.0%
Northwest/North Cape 2.8% 4.3% 0.0%
Total 100 100 100
In terms of the TEA necessity index the majority of the respondents could be
catagorised into the lower income brackets (see Table 17). This is to be
30
expected because necessity entrepreneurs are involved in “start-ups” only
because they have no other choice.
The TEA opportunity index, however, does not reflect a trend where the
majority of respondents are in the higher income brackets. As mentioned
earlier, this is problematic if entrepreneurs are to make a meaningful
contribution to economic growth in a country.
One is forced to ask whether a person with a lower income can really exploit
opportunities that can have a positive influence on the economy. This might
well be a reason why South Africa’s total TEA index is in all respects lower
than that of its counterparts in the world. The positive trend in terms of
nascent to baby businesses can, on the other hand, be seen as a starting
phase whereby respondents are migrating from lower levels of
entrepreneurship to higher levels, thus assisting in the stimulation of the
economy.
Table 17: Cross-tabulation of TEA indexes with income
TEA categories R8000 plus R4000-R7999 R800-R3999 R1-R799 Total
TEA index 34.5% 23.9% 32.4% 9.2% 100%
TEA opportunity
index
43.0% 22.6% 28.0% 6.5% 100%
TEA necessity
index
15.0% 30.0% 37.5% 17.5% 100%
• Attitude and culture
Each respondent had to answer questions relating to individual perceptions or
perceptions related to the culture in South Africa as a whole. Individual
questions related to the following: whether the respondent knows someone
personally who has started a business; whether there will be good
opportunities to start a business in the next few months; whether the person
has the skills and experience to start a new business; and whether fear of
failure will prevent the respondent from trying. These questions were
translated into an index and measured on a scale which provides an indication
of individual perceptions on entrepreneurship. A negative perception of 48%
and a comprehensive positive perception of only 12.2% was indicated
regarding entrepreneurship (see Table 18). This means that the majority of
respondents do not regard themselves as entrepreneurial. This supports the
views of the key experts as discussed in Chapter 2.
Table 18: Individual perceptions of entrepreneurship in South Africa
Number of positive reasons
provided
Frequency Valid Percent
Not entrepreneurial 503 48.0
One out of three possible positive
reasons
221 21.1
Two out of three possible positive
reasons
196 18.7
Three out of three possible positive
reasons
128 12.2
Total
1048 100.0
31
Whether an entrepreneurial culture exists was tested by asking questions
such as whether people would prefer everybody to have a similar standard of
living; whether starting up your own business is a desirable career choice;
whether people starting their own businesses have a high standard of living;
and whether positive stories are published in the media regarding successful
businesses. These questions were translated into an index and measured on
a scale which provides an indication of whether an entrepreneurial culture
exists in South Africa. In Table 19,29% indicated that such a culture does not
exist whilst 42.1% indicated that such a culture does exist.
One can conclude that although the environment is becoming more positive
as far as entrepreneurship is concerned, not all individuals are ready for it yet.
Although systems are being implemented to assist in making
entrepreneurship possible, development and the mindsets of potential
entrepreneurs are clearly not on the same level. Both the World Bank and the
International Finance Corporation 2006 reports support this finding where
South Africa is rated 28
th
of the top 30 countries in the world in terms of ease
of doing business.
Table 19: Cultural support for entrepreneurship in South Africa
Number of positive reasons
provided
Frequency Valid Percent
No entrepreneurial culture in South
Africa
315 28.8
One out of three possible positive
reasons
101 9.2
Two out of three possible positive
reasons
219 20.0
Three out of three possible positive
reasons
461 42.1
Total 1096 100.0
• Market orientation
The market orientation is derived from questions focusing on the percentage
of customers in South Africa or elsewhere, distance from supplier, and
dependency on a single large customer (see Table 20). In a more classical
entrepreneurial approach one would expect to see a growth orientation within
entrepreneurs. However, in Table 20, 50% of the respondents indicated that
they have no desire to grow, and only 2.3% indicated the highest order of
market orientation.
Table 20: The market expansion mode
Level of market expansion Frequency Valid Percent
No market expansion 71 50.1
Some market expansion (no new
technologies)
49 34.3
Some market expansion (new
technologies)
19 13.3
Profound market expansion 3 2.3
Total
142 100.0
32
Exports can help to exploit and grow markets. However, the majority of people
interviewed are not focusing on international markets (see Table 21).
Table 21: Export intensity
Percentage of export involvement Frequency Valid Percent
75%-100% involvement 10 7.7
25%-75% involvement
21 17.1
1%-25% involvement 27 21.6
No involvement 67 53.6
Total 125 100.0
The above phenomenon, i.e. why respondents are not geared towards market
expansion or exporting, was further explored by cross-tabulating a mindset for
product/market development with educational levels (see Table 22). From this
table it is clear that only 13.8% have university training, 13.8% have other
post-Grade 12 qualifications and the majority are without post-school
qualifications. One would expect qualification levels associated with exports to
be higher because of the complexity and technological nature of this
competitive environment.
Table 22: TEA for new product market cross-tabulated with educational
levels
Educational level Positive indication
No schooling 0.0%
Some primary schooling 0.0%
Primary school completed 6.9%
Some high schooling 24.1%
High school completed 34.5%
Some university 13.8%
University completed 6.9%
Other post matric qualifications 13.8%
Total 100.0%
Further exploration indicated that the age groups associated with
product/market expansion peaks were within the 35-44 years bracket (see
Table 23).
Table 23: Age groups associated with possible product/market
expansion
Age group Positive indication
18-24 years 20.7%
25-34 years 20.7%
35-44 years 27.6%
45-54 years 13.8%
55-64 years 17.2%
Total 100.0%
The above phenomenon might have various interpretations. One such link
exists with Table 18 where it is indicated that entrepreneurs do not have the
know-how and experience to exploit opportunities coming their way. A number
of questions arise. Are people appropriately trained and exposed to
33
entrepreneurship? Do we have enough suitably qualified graduates that can
exploit opportunities in a modern global competitive environment? Can this
phenomenon also be ascribed to the fact that the majority of entrepreneurs
are in the lower income bracket, not enabling them to operate on a more
sophisticated level?
• Growth in employment
Growth in employment is needed to stimulate socio-economic development in
South Africa. The mindset, however, of the majority of the respondents is not
geared towards growing employment in the near future (see Table 24).
Table 24: Indication of job creation
Mindset to grow
employment
2004 2005 2006
Yes 4.6% 4.3% 4.8%
No 95.4% 95.7% 95.2%
Total 100.0 100.0 100.0
Source: GEM 2004-2005 data
Those that will grow business in terms of employment will expect to do so
mainly in the 1-5 jobs category (see Table 25).
Table 25: Categories of expected number of jobs
2004 2005 2006
1-5 jobs 65.5% 81.7% 78.6%
6-19 jobs 24.5% 15.4% 15.5%
20+ jobs 10.0% 2.9% 5.9%
Total 100.0 100.0 100.0
Source: GEM 2004-2005 data
The above has serious implications for South Africa where 25.6% of the
labour force is currently unemployed (see Table 26). Furthermore, with a
population of 47.4 million (Labour Force Survey, March 2006) which is
growing at a rate of 2.7%, the absorption rate of the labour force is low on
41.7% - i.e. only 4 out of 10 newcomers to the labour force can be
accommodated (Labour Force Survey, March 2006).
Table 26: Unemployment rate, March 2001 to March 2006
2001 2002 2003 2004 2005 2006
26.4 29.7 31.2 27.9 26.5 25.6
Labour Force Survey, March 2006
A further important statistic is that the average size of companies has dropped
from 35 people in the eighties to 13 people currently (Fin Week, 5 October
2006). This must be seen against the trend that during 1999 there were an
estimated 812 000 active companies in South Africa whilst the current
estimate is 1 717 756 active entities (12 June 2006) of which close
corporations form the majority (74.29%).
(www.cipro.co.za/about_us/registration_stats.asp).
34
Therefore, more businesses need to be created in order to accommodate
more people in the labour force. However, the South African TEA rates and
stage of business analyses indicate that not enough businesses are being
created to offset the number of new entrants into the labour market.
• Innovation
The innovation index is derived from three questions, namely whether
potential customers consider this product or service new and unfamiliar;
whether there are other businesses offering the same products or services to
potential customers; and whether the technologies and procedures required
for this product and service were available more than a year ago. Nascent
entrepreneurs are generally more optimistic about innovation than existing
businesses.
The majority of respondents (60.2%) indicated that they actually use no new
technologies – they use technology more than 5 years old (see Table 27).
Table 27: Availability of technologies or procedures more than a year
ago?
Level of involvement Frequency Valid Percent
Very latest technology (newer than one year) 22 15.5
New technology (one to 5 years) 35 24.3
No new technology (more than 5 years) 86 60.2
Total 142 100.0
The sectors that are using new technologies are mostly in the low or non-
technological category (95.5%) with the medium and high technological
sectors making up the rest (See Table 28).
Table 28: Technology level of the sector
Level of technology Frequency Valid Percent
No/low technologies 136 95.5
Medium-tech 2 1.2
High-tech 5 3.3
Total 142 100.0
When the level of technology was measured against age levels the most
important categories were the 25-34 years and 35-44 years categories (see
Table 29). In terms of new technology between 1 and 5 years old the most
important category is 18-24 years followed by the 25-34 years old cohort.
35
Table 29: Technology compared with age levels
Latest technology
(0-1 years)
New technology
(1-5 years)
No new technology
18-24 years 13.6% 38.2% 17.6%
25-34 years 36.4% 26.5% 32.9%
35-44 years 36.4% 8.8% 27.1%
45-54 years 4.5% 8.8% 16.3%
55-64 years 9.1% 17.6% 7.1%
Total 100 100 100
• Funding
This section focuses on the source of funding during the start-up phase. The
most important sources tend to be banks/financial institutions and the
government (see Table 30).
Table 30: Sources of funding
Source Count Percentage
Close family members 9 13.8
Other relatives 5 7.7
Work colleagues 6 9.2
Strangers 1 1.5
Friends or neighbours 3 4.6
Banks or financial institutions 18 27.7
Government programmes 16 24.6
Other sources 7 10.8
Total 65 100.0
• Closing of business
This section focuses on possible reasons for closing down a business. In
Table 31, the most important reasons were financial and personal. A positive
trend is that there is a decline in the number of liquidations and insolvencies
(see Tables 32 and 33). This could be a possible explanation as to why more
entrepreneurs are graduating to higher levels of entrepreneurial activity (see
Table 15).
Table 31: Exit reasons
Reason Frequency Valid Percent
Too much competition 6 11.8
Lack of customers 6 11.3
Financial reasons
17 32.1
Found another job
2 4.3
Retirement 1 2.7
Personal reasons 12 23.1
Other reasons 8 14.7
Total
52 100.0
Table 32: Total number of liquidations: 2000 to 2006
Month 2000 2001 2002 2003 2004 2005 2006
Total 3804 4156 3911 4086 3510 3225 2228
Companies 1626 1671 1858 2110 1532 1604 1100
Close
Corporations
2179 2485 2053 1976 1978 1621 1128
Statistics of liquidations and insolvencies, September 2006
36
Table 33: Total number of insolvencies: 2000 to 2006
Month 2000 2001 2002 2003 2004 2005 2006
Total 4693 3935 3043 2639 1947 1567 879
Statistics of liquidations and insolvencies, September 2006
3.5 SUMMARY
From the research, it is clear that a country needs to embark on creating more
businesses that can stimulate economic growth and development. In this
chapter, it is clear that South Africa performs below average on most of the
criteria when compared with other countries. The number of people that are
involved in TEA activities is also a clear indication that South Africa is not
succeeding in creating enough businesses in this category. If the composition
of South Africa’s population is taken into consideration (i.e. where the majority
are under the age of 30 years) then one would expect a better performance in
the creation of businesses that can help with economic growth and the
subsequent growth in employment. The TEA rates indicate that, to a certain
degree, this is not the current situation and that the pressure on existing
businesses is increasing to provide the needed impetus for socio-economic
growth and development.
The above information is supported by the following main findings in this
chapter:
• South Africa performs below average as compared with other countries
(Table 6).
• South Africa has actually declined in performance since 2001 (Table 7).
• The mindset in South Africa is not in line with entrepreneurship (Tables
8 and 9).
• A negative individual entrepreneurial mindset exists (Tables 8, 9 and
18).
• To a certain degree a reason for the lack of entrepreneurial activities is
that the majority have an educational qualification of Grade 12 or less
(Table 14).
• The growth orientation of respondents is also not in line with an
entrepreneurial mindset (Tables 20, 21, 22, 24 and 25).
• Deduced from above tables and highlighted by Tables 13, 14, 17, 20
and 21, entrepreneurs are mostly involved in lower order
entrepreneurial ideas (commonly referred to as “me too” projects).
• There is a perception that the entrepreneurial culture in South Africa is
improving (Table 19).
• Fewer businesses are liquidated and more people seem to be
graduating from the start-up phase to the next phase of operation
(Tables 32, 33 and 15).
One could argue that to promote entrepreneurship a total balanced systems
approach should exist. From the above interpretation, however, it is clear that
because of individual entrepreneurial capacity problems the current system is
not balanced. This influences the way policies should be formulated e.g.
focusing on the unlocking of markets will not have the desired impact because
37
entrepreneurs do not know how to identify and exploit opportunities in such a
market. Different mechanisms should be found and formulated to provide a
balanced system that will address the unique problems of the South African
environment.
Focusing on improving individual entrepreneurial capabilities on all levels
should therefore be a priority for all stakeholders involved in the promotion of
entrepreneurship in South Africa.
38
CHAPTER 4
WOMEN IN ENTREPRENEURSHIP
1. INTRODUCTION
Worldwide female entrepreneurs outnumber male entrepreneurs. This has led
to the renewed focus on gender entrepreneurship and the development of
appropriate entrepreneurship interventions for gender-specific groups
internationally. In Chile, a developing country, the estimation is that there are
513 000 women entrepreneurs, which is 33% of all entrepreneurs and has
increased from 20% three years ago. The estimate is that by 2010 female
entrepreneurs will equal male entrepreneurs and create more than 50% of the
jobs in new enterprises (GEM Newsletter, September 2006). Similarly,
Canada has experienced a 200% growth in the number of women
entrepreneurs over the last 20 years (ITC, 2004). In the African context, taking
Cameroon as an example, women entrepreneurs manage 57% of small and
micro businesses whilst in Uganda, women entrepreneurs form the majority of
the country’s business people in the areas of farming and small to medium-
sized companies (ITC, 2004).
The question is whether South Africa can experience the same growth as far
as women entrepreneurship is concerned. Growing women entrepreneurs to
the detriment of male entrepreneurs will, however, not provide an impetus for
accelerated socio-economic growth of a country. It will be necessary to
enlarge the economic cake before both male and female entrepreneurs can
prosper.
This chapter has as its focus how to promote women entrepreneurship in
South Africa without simply switching ratios around between male and female
entrepreneurs. Therefore, the emphasis in this chapter is to look at women
entrepreneurs as a whole and to compare them not with male entrepreneurs
but with women entrepreneurs in other countries.
The first part of this chapter focuses on a theoretical background description
of women entrepreneurship. Thereafter, we will look at information taken from
the Adult Population Survey. Thirdly, an analysis is made of important trends
from this primary research which were discussed in two focus groups of
women entrepreneurs in order to determine how best to develop women
entrepreneurs in South Africa. The emphasis is not so much on what went
wrong in the past but rather on what to do in future. This chapter ends off with
various recommendations.
2. THE ROLE OF WOMEN IN THE SOUTH AFRICAN ECONOMY
In South Africa, women make up 52% of the adult population. Of this, only
41% are regarded as being part of the active working population and only
14.7% find themselves in executive managerial positions (KPMG, 2006).
Furthermore, a study commissioned by the South African Department of
Trade and Industry (DTI) (2005:2) highlights that “women in South Africa
39
make up half of the business force and their contribution has not been
adequately nurtured.” The study further indicated that the majority of South
African women entrepreneurs operate within the crafts, hawking, personal
services and retail sectors.
Research on women entrepreneurship in the South African context remains
limited with few empirical studies in existence. This has an influence on the
formulation and implementation of policies and support programmes. The
government does accept the importance of women in entrepreneurship, as
reflected in a speech of the President, Mr. Thabo Mbeki during 2005 when he
indicated that businesses should appoint more women to middle and top
management positions (Nel, 2005).
Over the last few years, the government has undertaken a range of initiatives
e.g. SAWEN (South African Women Entrepreneurs Network), SAWIMA
(South African Women in Mining), TWIB (Technology for Women in Business)
all with the aim of advancing women’s economic empowerment (The DTI,
2005).
According to Duncan (www.moneyweb), the DTI is also considering
developing a set of incentives for women entrepreneurs, such as business
incubation, training and the creation of a networking organisation for women
entrepreneurs and business people. The DTI also has an initiative called
Technology for Women in Business that focuses on women entrepreneurs at
all levels of business to fast-track their skills development and enable them to
embrace appropriate technologies. Various science councils and
organisations are partners in the initiative, offering training and mentorship
programmes (www.southafrica.info).
It is realised that without factual, reliable information on the status as well as
the profile of the women entrepreneurs it will be difficult to make a fair
assessment of the representation and participation of women in business. It is
questionable whether any organisation can play a meaningful role in the
absence of reliable information. This does not mean that organisations should
not to get involved in the promotion of women entrepreneurship. Rather,
organisations should all contribute to the generation of reliable information in
order to accelerate such support.
According to the DTI Special Report (2005), support should focus on:
• education from dependency and entitlement to self-sufficiency and
economic growth;
• development/facilitation of information and communication technologies
that bridge the gap between new enterprises and established
businesses;
• establishment of networking links, international partnerships,
community participation and access to national and global markets;
• development of partnerships between stakeholders (government,
private sector, NGOs, trading partners);
40
• provision of business skills training, facilitation of business incubation,
mentoring and support services;
• establishment of appropriate changes to trade, investment and tax
policies that promote sustainability and do not stifle the economic
dreams of women entrepreneurs; and
• review/changing of regulatory frameworks that stifle women
entrepreneurs and hinder economic growth.
3. FACTORS INFLUENCING FEMALE ENTREPRENEURS
The critical areas in developing women entrepreneurs (discussed in
paragraph 2) can only be tailor-made when all the factors influencing women
entrepreneurs are considered. Starting and operating any entrepreneurial
business involves considerable risks and effort, particularly due to the high
failure rate. Nieman, Hough and Nieuwenhuizen (2003) are of the opinion
that the risk is perhaps even greater for woman entrepreneurs, not only
because they have to deal with the problems associated with operating in a
traditionally male-dominated area but also due to their lack of education and
training in this specific field. Although men and women find it difficult to start
up an enterprise limited access to financial resources, lack of support for
women entrepreneurs specifically, negative prevailing socio-cultural attitudes,
gender discrimination or bias and personal difficulties seem to be specific
barriers that women entrepreneurs are grappling with.
Women also seem to have low credibility when it comes to dealing with
suppliers, banking institutions and clients. Although 72% of micro-enterprises
are owned by women, the success of their businesses was impacted by
internal and external barriers ranging from basic life skills such as self-
confidence, assertiveness, self-motivation, achievement orientation, reliability
and communication skills as well as the absence of mentorship opportunities,
marketing and basic holistic management training (Nieman, et al. (2003).
Furthermore, Nieman, et al. (2003) and Sokabo (2002) also highlighted the
following barriers specific to women entrepreneurs:
• Limited networking for women within specific industries;
• Women entrepreneurs lack start-up funds;
• Banks/financial institutions readily criticise women’s business plans
without giving direction and guidance;
• Exposure to the media is very expensive;
• No database of women entrepreneurs by sector is available;
• There is replication and duplication of too many craft centres or groups
in an area; and
• Courses offered by training institutions focus on training the traditional
manager and not the entrepreneur.
A special report by the DTI, Women in Business (2003), states that some of
the challenges facing women entrepreneurs include:
41
• The regulatory environment, where some legislation limits women’s
contractual rights which in turn limits women’s participation in the
economy
• A lack of education opportunities and education systems which has the
potential to limit women’s participation in entrepreneurial activities as
women are often the ones to experience limited access to education
• Cultural factors, societal views and societal perceptions that did not
encourage women entrepreneurship
• A lack of management training and job opportunities as in some cases
women did not have the same access to appropriate training in
organisations they worked in
• Family responsibilities could limit women engaging in entrepreneurial
activities because these responsibilities were a financial priority
Various research projects have been conducted on women entrepreneurship,
such as those done by Sokabo (2002), DTI (2005), O’Neill and Viljoen (2001)
and Verwey (2003). Although these research projects were mostly ad hoc in
nature with relatively small and sometimes unrepresentative samples, they
have provided some ideas in terms of how best to promote entrepreneurship
among women. Some of the recommendations include the development of
women-specific training programmes, active promotion of the importance of
women entrepreneurs, and bridging the information and digital divide.
The information stemming from various research projects as discussed in the
above paragraphs may be seen as fairly general and vague in nature. Some
concerns are equally true to both male and female entrepreneurs such as
skills, lack of networking opportunities for smaller entrepreneurs, the forming
of appropriate partnerships, and obtaining finance. The question which this
research should be addressing, however, is “What is different?” Is the fact that
data is vague, non-existent or too general in nature not the underlying reason
why support for women entrepreneurs seems underdeveloped or to be
missing the point?
In the next paragraph, data is scrutinised to try to find specific and meaningful
pointers regarding the development of women entrepreneurs.
4. RESEARCH
4.1 INTRODUCTION
The basis for the analysis is the GEM 2006 data but in some instances, data
from previous years is also included in an attempt to find specific and
meaningful clues. Based on the data, two focus groups were identified which
further supported the generation of specific data and recommendations (see
paragraph 6.3 for details on the focus groups).
4.2 DATA FROM GEM SURVEY 2006
The first step was to identify the demographical data from the GEM 2006
survey. Thereafter, a more specific data identification and discussion took
42
place. The specific focus area of all the data was, women. Whenever this is
not the case, the reader will be informed accordingly.
• Total TEA
The TEA for women follows the general trend of the total TEA (see Table 35).
The last three years show a more stable trend for women.
Table 34: Total TEA
Category 2002 2003 2004 2005 2006
Total TEA 6.3 4.3 5.4 5.15 5.29
TEA female 2.9 2.0 2.5 2.4 2.5
When the TEA data is further analysed in terms of stage of activity, it is noted
that more women were involved in starting a business (the 0-3 month stage)
and fewer were involved in the young business (3 months-3.5 years) phase
during 2006 (see Table 36). One would expect to see a higher percentage in
the latter category if more women were graduating to higher levels of
entrepreneurship. This is not evident from the data.
Table 35: Stage of activity
Stage 2002 2003 2004 2005 2006
Nascent (0-3
months)
73.3% 67.4% 68.2% 67.7% 74.6%
Baby business
owner-
manager (3
months-3.5
years)
26.7% 32.6% 31.8% 32.3% 25.4%
Total 100% 100% 100% 100% 100%
The question arises whether there is specific data that can explain why
women are not that involved in early-stage entrepreneurial activities and why
they are not graduating to higher levels of entrepreneurship. The profile of
women involved in TEA activities was analysed to find some clues.
In terms of educational levels, 71.2% of women involved in TEA activities in
2006 have a Grade 12 or lower educational qualification (see Table 36). This
could influence the exploitation of “higher order” entrepreneurial opportunities
because generally, due their complexity, these opportunities demand higher
levels of education.
Table 36: Educational levels of women involved in TEA - 2006
Level of education Involved in TEA
No school 1.5%
Some primary school 1.5%
Primary school completed 1.5%
Some high school 27.3%
High school completed 39.4%
Some university 3.0%
University completed 7.6%
Other post-Grade 12 qualification 18.2%
Total 100.0
43
The majority of women entrepreneurs earn less than R3 999 per month (see
Table 37). One can deduce from this that the type of businesses women
entrepreneurs are involved in do not allow for higher income levels. However,
one must be cautious here because the type of business referred to in this
category is generally in the start-up phase, and might have the potential to
grow over time. Table 35 indicates that women entrepreneurs are not often
graduating to these higher levels of activities over time, which will necessarily
hinder their financial prospects.
Table 37: Income levels of women involved in TEA activities - 2006
Income level Involved in TEA
R8000 plus 28.4%
R4000-R7999 23.9%
R800-R3999 41.8%
R1-R799 6.0%
Total 100
The race groups involved indicates that the majority of women involved in the
TEA activities are Black women, followed by White women (see Table 38).
This is supported by an article in Fin Week (5 October 2006: 11) which also
indicated that Black females are most involved in entrepreneurial activities,
followed by White females, Indian females and Coloured females.
Table 38: Race groups involved in TEA activities - 2006
Group Involved in TEA
Black 71.6%
Coloured 6.0%
Indian 7.5%
White 14.9%
Total 100
Gauteng is making the biggest contribution in terms of women entrepreneurs,
followed by KwaZulu-Natal and the Western Cape (see Table 39). This is no
surprise because these three provinces are regarded as the growth points in
South Africa.
Table 39: Women involved in TEA activities per region
Region Involved in TEA
Gauteng 43.9%
KwaZulu-Natal 21.2%
Western Cape 12.1%
Mpumalanga/Limpopo 12.1%
Free State 7.6%
Eastern Cape 1.5%
Northwest/Northern Cape 1.5%
Total 100
More than 57% of women involved in TEA entrepreneurial activities are less
than 34 years of age (see Table 40). This is in contrast with the 45.3% for the
same age category during 2005 and is clearly a positive sign that more
women entrepreneurs are getting involved in such activities. The focus should
now be to ensure that women who enter the labour market as entrepreneurs
44
can sustain their involvement over time and graduate to higher levels of
entrepreneurial activities.
Table 40: Age of women involved in TEA activities
Age level Involved in TEA 2006 Involved in TEA 2005
18-24 years 27.9% 15.6%
25-34 years 30.9% 29.7%
35-44 years 17.6% 28.1%
45-54 years 14.7% 12.5%
55-64 years 8.8% 14.1%
Total 100 100
When comparing the women involved in TEA activities with the general profile
of responses we observe the same trends, namely the lack of education, their
involvement in activities that do not create high levels of income and women
who are not graduating to higher entrepreneurial levels.
• International comparisons for 2006
The above data should not be look at in isolation. South Africa’s ranking for
the total TEA (male and female included) is 30
th
yet South Africa’s female
entrepreneur’s ranking is 23rd place
(see Figure 3).
0
5
10
15
20
25
30
35
40
45
U
n
i
t
e
d
A
r
a
b
E
m
i
r
a
t
e
s
B
e
l
g
i
u
m
S
l
o
v
e
n
i
a
S
w
e
d
e
n
F
r
a
n
c
e
R
u
s
s
i
a
G
e
r
m
a
n
y
J
a
p
a
n
I
t
a
l
y
D
e
n
m
a
r
k
N
e
t
h
e
r
l
a
n
d
s
U
n
i
t
e
d
K
i
n
g
d
o
m
S
i
n
g
a
p
o
r
e
L
a
t
v
i
a
F
i
n
l
a
n
d
H
u
n
g
a
r
y
I
r
e
l
a
n
d
M
e
x
i
c
o
G
r
e
e
c
e
S
o
u
t
h
A
f
r
i
c
a
C
r
o
a
t
i
a
C
z
e
c
h
R
e
p
u
b
l
i
c
S
p
a
i
n
I
c
e
l
a
n
d
U
n
i
t
e
d
S
t
a
t
e
s
N
o
r
w
a
y
C
a
n
a
d
a
C
h
i
l
e
T
u
r
k
e
y
U
r
u
g
u
a
y
I
n
d
i
a
B
r
a
z
i
l
A
u
s
t
r
a
l
i
a
M
a
l
a
y
s
i
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
T
h
a
i
l
a
n
d
C
o
l
o
m
b
i
a
J
a
m
a
i
c
a
I
n
d
o
n
e
s
i
a
P
h
i
l
i
p
p
i
n
e
s
P
e
r
u
Figure 3: TEA for women of all participating countries
When the average for women entrepreneurs involved in TEA activities for all
countries is calculated, South Africa’s 4.83% is below the average of 7.72%.
When South Africa’s TEA is compared with the average of countries within the
upper-middle income group, then South Africa’s average for women is also
lower than the average of these countries, i.e. 6.55% (see Table 41).
45
Table 41: International TEA comparisons of women
Ranking Country Female TEA 2006
1 Peru * 39.27
2 Philippines * 22.45
3 Indonesia 18.73
4 Jamaica 18.14
5 Colombia * 17.30
6 Thailand * 14.18
7 China 13.79
8 Argentina* 13.78
9 Malaysia 11.13
10 Australia 9.87
11 Brazil * 9.61
12 India * 9.16
13 Uruguay * 8.60
14 Turkey 8.47
15 Chile * 7.02
16 Canada 5.99
17 Norway 5.87
18 United States 5.78
19 Iceland 5.73
20 Spain 5.70
21 Czech Republic 4.93
22 Croatia 4.87
23 South Africa 4.83
24 Greece 4.69
25 Mexico * 4.48
26 Ireland 4.20
27 Hungary 4.05
28 Finland 4.04
29 Latvia 3.92
30 Singapore 3.75
31 United Kingdom 3.61
32 Netherlands 3.60
33 Denmark 3.30
34 Italy 3.06
35 Japan 2.60
36 Germany 2.58
37 Russia 2.57
38 France 2.53
39 Sweden 2.43
40 Slovenia 2.29
41 Belgium 1.04
42 United Arab Emirates 0.29
Average for all countries 7.72
Average for countries in the
upper-middle income group 6.55
Highlights and Italics = countries within the upper-middle income group
Source:http://web.worldbank.org. Accessed 2006/11/14.
46
When South Africa’s TEA index is compared with that of developing countries
(see countries indicated by means of * in Table 41), South Africa’s TEA rate of
4.83% is well below the average of 13.70%.
When focusing only on opportunity and necessity entrepreneurial orientation
South Africa’s women are rated 26
th
and 17
th
respectively (see Table 42).
South Africa is again below the averages of all participating countries and
developing countries specifically.
Table 42: Ranking for women opportunity and necessity
entrepreneurship among women
Ranking Country TEA
Opportunity
Ranking Country TEA
Necessity
1 Peru * 27.35 1 Peru * 11.92
2 Indonesia 15.42 2 Philippines * 10.34
3 Philippines * 12.11 3 Colombia * 7.55
4 Jamaica 11.23 4 China 6.82
5 Argentina* 10.60 5 Jamaica 6.23
6 Malaysia 10.47 6 Brazil * 5.51
7 Colombia * 9.75 7 Thailand * 4.46
8 Thailand * 9.61 8 Uruguay * 4.45
9 Australia 8.84 9 Indonesia 3.30
10 China 6.54 10 Argentina* 3.07
11 India * 5.62 11 Chile * 2.87
12 Turkey 5.57 12 India * 2.71
13 United
States
5.36 13
Croatia
2.51
14 Canada 5.18 14 Turkey 2.32
15
Spain
4.70 15 Czech
Republic
1.61
16 Iceland 4.69 16 Greece 1.34
17 Norway 4.68 17 South Africa 1.22
18 Chile * 4.14 18 Germany 1.05
19 Uruguay * 4.04 19 Australia 1.03
20 Brazil * 4.00 20 Russia 1.02
21 Ireland 3.49 21 Spain 0.97
22 Czech
Republic
3.32 22
Hungary
0.92
23 Netherlands 3.19 23 Mexico * 0.87
24 Finland 3.14 24 France 0.85
25 Hungary 3.13 25 Italy 0.77
26 South
Africa
3.12 26
Norway
0.64
27 Singapore 3.12 27 Latvia 0.63
28 Denmark 3.10 28 Canada 0.61
29 UK 2.92 29 Singapore 0.58
30 Latvia 2.85 30 United Kingdom 0.53
31 Mexico * 2.60 31 Ireland 0.51
32 Croatia 2.35 32 Finland 0.50
33 Japan 2.27 33 United States 0.43
34 Sweden 2.20 34 Iceland 0.36
35 Greece 2.19 35 Japan 0.33
36 Italy 2.11 36 Malaysia 0.30
47
37 Slovenia 1.94 37 Slovenia 0.29
38 France 1.68 38 Netherlands 0.28
39 Russia 1.55 39 Belgium 0.22
40 Germany 1.35 40 Denmark 0.13
41 Belgium 0.83 41 Sweden 0.13
42 United Arab
Emirates
0.19 42 United Arab
Emirates
0.10
Average all
countries
5.30
2.20
Average for
upper-
middle
income
countries
4.48
1.82
Highlights and Italics = countries within the upper-middle income group
Source:http://web.worldbank.org. Accessed 2006/11/14.
When South Africa’s TEA opportunity index is compared with that of
developing countries (see countries indicated by means of * in Tabel 42),
South Africa’s TEA opportunity rate of 3.12% is below the average of 8.45%.
The same applies for the TEA necessity index where South Africa’s index is
1.22% against the average for developing countries which is 5.00%.
• Attitude and culture
Mindset and skills levels influence individual entrepreneurial behaviour.
Various questions tested the respondents’ perceptions. In Tables 18 and 19
(see Chapter 3, paragraph 3.4) the development of indexes to measure these
factors was discussed. In terms of female entrepreneurs, more than 50% of
participants think that they are not entrepreneurial while a relatively low
percentage of 9% think they are entrepreneurial (see Table 43).
Table 43: Individual perception of entrepreneurship
Not
entrepreneurial
One out of three
possible positive
reasons
Two out of three
possible positive
reasons
Three out of
three possible
positive reasons
Total
50.7% 21.7% 18.3% 9.3% 100%
Entrepreneurship is stimulated by a collective entrepreneurial culture existing
in a country. This can be created by various stakeholders on a macro level
such as government, private sector and training institutions. Respondents’
perceptions were again tested by means of various questions. More than
42% of women indicated that an entrepreneurial culture does exist in South
Africa, far higher than their individual perceptions of their own entrepreneurial
capacity (see Table 44). A possible reason for this could be the skills and
educational levels of women entrepreneurs. According to Botha et al. (2006)
women's business and entrepreneurial skills can be improved and directly
linked to the improvement of their entrepreneurial performance.
Table 44: Cultural support for entrepreneurship
No
entrepreneurial
culture
One out of
three possible
positive
Two out of three
possible
positive
Three out of three
possible positive
reasons
Total
48
reasons reasons
28.4% 8.9% 20.0% 42.7% 100%
• Market orientation
One could expect that where a positive entrepreneurial orientation exists more
dynamic growth strategies, such as market expansion, ensue. From Table 45
it is clear that the majority would rather maintain their existing markets than
expand. The rate for profound market expansion and the use of new
technologies could be described as low, especially when compared with
figures for 2005 (which indicated far more positive trends).
Table 45: TEA market expansion mode
Year No market
expansion
Some market
expansion (no
new
technologies)
Some market
expansion
(new
technologies)
Profound
market
expansion
Total
2006 44.8% 46.3% 7.5% 1.5% 100%
2005 38.3% 22.9% 33.3% 5.5% 100%
Market expansion was also compared with export intensity behaviour. The
analysis in Table 46 confirm that the predominant behaviour is to maintain
national markets since 53% indicated that export orientation is not supported.
Table 46: TEA export intensity
Year 75%-100%
support
export
orientation
25%-75%
support
export
orientation
1%-25%
support
export
orientation
No one
supports
export
orientation
Total
2006 11.7% 20.0% 15.0% 53.3% 100%
2005
7.3% 10.8% 32.5% 49.4% 100%
• Growth and employment
The relatively low entrepreneurial orientation observed in the above
paragraphs results in a low orientation regarding the creation of jobs (see
Table 47). A large majority indicated that they would not create jobs in the
future. It is debatable whether the 4% that stated that they would create jobs
will have a significant impact on job creation as a whole.
Table 47: TEA involvement in any jobs now or in 5 years
Involvement in any jobs Expects more than 19 jobs
in 5 years
2005 2006 2005 2006
No 96.1% 96.0% 100.0% 99.9%
Yes 3.9% 4.0% 0.0% 0.1%
Total 100% 100%
A possible reason is that the majority of women entrepreneurs are involved in
a sole proprietorship where job creation is not really the focus (see Table 48).
This begs the question of why women tend to choose this form of
49
proprietorship. Can answers be found in the traditional cultural issues, such as
that women should take care of the family on a social level and therefore don’t
have enough time left for business development, or can this be ascribed to the
educational levels of women where the majority’s qualifications are either a
Grade 12 level or below?
Table 48: TEA number of owners
Number of
Owners
Percentage 2005 Percentage 2006
1 54.6% 68.7%
2 22.5% 16.4%
3 11.4% 6.0%
4
5.6%
1.5%
5
1.9%
0.0%
6
1.8%
3.0%
10 2.2% 4.5%
Total 100% 100%
• Innovation
In terms of innovation, the respondents indicated that the majority of
customers do not regard their product as new or unfamiliar (see Table 49).
The respondents indicated that quite a number of businesses offer the same
product (see Table 50). Respondents also indicated that they use
technologies and procedures that are older than 5 years. From these tables, it
is clear that women entrepreneurs operate in businesses which can be
described as hyper-competitive (many competitors and no new businesses)
and which are easy to start because of existing but old technology and
procedures. This may have an impact on closure of businesses as when such
a business starts up the increased competition may drive another out of the
market.
Table 49: How many customers consider product new/unfamiliar
All Some None Total
19.4% 34.3% 46.3% 100%
Table 50: How many businesses offer the same products?
Many Few None Total
43.3% 38.8% 17.9% 100%
Table 51: Were the technologies/procedures available more than a year
ago?
Very latest (0-1 year) New (1-5 years) None Total
9.0% 32.8% 58.2% 100%
Lack of the use of new technologies in the sectors where women
entrepreneurs are active (see Tables 51 & 52) is observed. Most operate in a
sector where no or low technology is required, called “me-too” businesses.
These types of businesses can provide adequate income for households as
well as allow enough freedom to look after the family. However, the question
arises whether these types of businesses can really challenge and stimulate
50
women to become better entrepreneurs and as such make a better
contribution to the socio-economic development of the country.
Table 52: Use of technology per level
No/low technology
level
Medium technology
level
High technology
level
Total
95.5% 3.0% 1.5% 100%
• Funding
In terms of start-up money most women entrepreneurs obtain funding from
banks or expect government to provide funding (see Table 53). Funding from
close family members ranks only in third place. This issue will be explored
further in the focus group discussions.
Table 53: Sources of funding obtained for start-ups
Close family members 15.4%
Other relatives 7.7%
Work colleagues 7.7%
Strangers 1.9%
Friends/neighbours 3.8%
Banks or financial institutions 25.0%
Government programmes 26.9%
Other resources 11.5%
Total 100%
• Closing of business
Personal reasons were given as the most important reason for closing a
business, followed by financial reasons (see Table 54). Further exploration in
the focus group discussions showed clearly that women get involved in certain
types of businesses that allow them more freedom to look after the family
while creating adequate income. In many cases is only on a part-time basis
until the time is right for them to accept another job.
Table 54: Reasons for closing business
Too much competition 7.8%
Lack of customers 14.6%
Financial reasons 24.2%
Found another job 7.7%
Retirement 0.0%
Personal reasons 30.9%
Other reasons 15.0%
Total 100%
6.3 DATA FROM FOCUS GROUPS
Due to insufficient information received for some of the calculations further
investigation of factors identified in the previous paragraphs was necessary.
The research team identified various questions in this regard (see Table 55).
51
Table 55: Discussion questions
• What are the most important factors that positively influence women to
become entrepreneurs?
• What are the most important factors preventing women from becoming
entrepreneurs?
• Why are women mostly involved in one owner/person businesses?
• Why are women mostly involved in “me-too” businesses?
• What are the reasons why women close down businesses?
• What can be done to improve the education and training levels of
women?
• How can we promote technological literacy amongst women?
• How can we enhance the export orientation of women?
In order to find answers to the above list of questions, two focus groups were
organised - one in Gauteng and one in the Western Cape. Representatives
from the four major cultural groups in South Africa, according to the
percentages used by AC Nielsen in capturing the 2006 data (see Annexure
B), were selected.
Furthermore, only those women planning to start or already involved in a start-
up business were selected i.e. who were typically in the period from 0 months
to 3.5 years. This definition falls within the focus of the GEM study.
The results of the focus group discussions are reported in the following
paragraphs, making sure not to interpret what the focus group members had
said, but rather to provide a fair and accurate reflection of the discussions
during the meetings.
6.3.1 What are the most important factors that positively influence
women to become entrepreneurs?
• Government policies are favouring previously disadvantaged groups
such as women.
• There are more role models for women entrepreneurs.
• Women compete against male entrepreneurs and that motivates them
to prove themselves.
• Networking with other women entrepreneurs helps them to become
better entrepreneurs. There are enough opportunities for networking
but they are not fully utilised.
• Women want to become financially independent and do things on their
own, particularly because they have not previously had the opportunity
to do so.
• Women entrepreneurs experience a flexibility in their businesses that
allows them to organise their business around their personal
requirements such as taking care of the family.
• Women who cannot make it in the corporate environment normally start
their own businesses.
• Women have a passion to work with people.
• The support of family helps women to go into business.
52
• Women entrepreneurs can offer and deliver the same services as
corporate companies at less cost to clients.
• Women start their own businesses to get away from corporate politics
because women are not natural corporate political players.
• Women want to take care of their children and extended family.
• Business presents an opportunity for gaining experience and self-
development and realizing self-potential.
• Women can make a name for themselves in businesses that require a
women’s understanding, such as house cleaning.
6.3.2 What are the most important factors preventing women from
becoming entrepreneurs?
• Women give up very quickly because processes (e.g. franchising) are
too complicated.
• They are not willing to make sacrifices. Their goals are not for the long
term and they want quick and easy jobs.
• They are not exposed to different fields of business and do not know
where to research information if they enter an unknown field of
business.
• When a woman is the head of a family, running a business is a large
risk. What will happen if she loses their last money?
• Women do not have assets which can be used as security to obtain
loans. They sometimes live in shacks and are listed on credit bureaus.
• There is no training for support providers on how to support women.
• They do not have financial management knowledge which prevents
them from expanding.
• They do not know the terminologies used by banks and are therefore
hesitant to approach them.
• Training is not in their mother tongue and therefore they do not
understand it.
• If women entrepreneurs fail, the environment is less sympathetic
towards them.
• Women think that if they start their own business they will be required
to work longer hours which will be too exhausting.
• Lack of confidence as women are told by family and other people that
they cannot make it in the business place.
• Some women cannot find an appropriate location from which they can
operate their business as they may need to be close to home so that
they can meet their family duties.
• Oppression from husbands, who fear that the woman will become
independent.
• Lack of motivation, so for example some women are content with
receiving government grants and handouts.
6.3.3 Why are women mostly involved in one owner/person
businesses?
53
• Money can cause conflict and being only one owner you do not get
diverse and conflicting views.
• People misuse others. They come in and want to share but are not
willing to contribute towards the development of the business.
• Women want control over the business without complicating it.
• It is convenient for women to do a project here and there and still
balance it with family responsibilities. If you have employees, it is more
binding.
• If something goes wrong, she has only herself to blame.
• Women think that they can do everything on their own because they
are used to doing many tasks at home.
• It is easier to take the business into new directions when there is only
one person operating.
• There is the self-belief and self-confidence that one can make it on
one’s own and therefore there is no need to have others in the
business.
• It is difficult to trust others with your life savings that have been
invested in the business as if the business goes down because of the
partners, you will need to bear a portion of the loss.
6.3.4 Why are women mostly involved in “me-too” businesses?
• Their lack of education hinders the identification and exploitation of new
ideas. They are therefore not educated in the right areas.
• They do not have the necessary exposure to technology. Their only
exposure is to businesses such as tuck shops and taxis.
• They perceive the risks to be less in these types of businesses. They
do not want to lose their hard-earned assets earned over time.
• Older women cannot go back to school because of family and business
responsibilities. Therefore, they stay in perceived easier businesses.
• People do not use the opportunities that government provides them to
grow their businesses. A possible reason is that information is not
freely available in the communities where these women entrepreneurs
are located.
• Some individuals are not prepared to go the extra mile.
• Other businesses are too innovative and mostly technical. Women are
not technically inclined.
• To make lots of money is not a motivator for women entrepreneurs. As
long as they make ends meet, they are happy.
• This is because of competition amongst women. When a woman sees
another doing something, she thinks that they are of the same level
and so she too gets involved in the same business.
• It is safer to do what has been done before as then there is direction
and guidance available for the new person.
6.3.5 What are the reasons why women close down businesses?
• A lack of education and training influences the way they manage the
business e.g. such as to “live with the hand in the till”.
54
• They are used to working for somebody else and are comfortable with
earning a salary. They are not disciplined enough to work for
themselves.
• A lack of capital forces them to close their businesses.
• They expect to be rich too soon, not realising what they will get out of
the business.
• In a corporate business you have protection but not in a small
business.
• Women cannot talk about money with clients because they do not
know how.
• Women entrepreneurs are isolated in their businesses and cannot
manage on their own.
• When they move out of a corporate environment they have many
financial commitments that they cannot meet on the earnings of a
smaller business.
• Most women do not know how to handle and save money so they don’t
have money to put back into their business.
• There is too much fraud and if you are not educated properly, you often
lose so much that it leads to business closure.
• Most women mix business and family and that does not work because
too often, family members buy on credit and then fail to settle the debt.
• Loss of focus in the business.
• Women close businesses because they don’t spend enough time in
their businesses because of many other commitments.
6.3.6 How can we improve education and training levels of women?
• Present short courses in basic finances, management and marketing.
• Education and exposure on foreign markets, e.g. what does it mean
and how can it be managed.
• How to relate to international people i.e. what their standards are and
what to expect in the interaction with them.
• Train support service providers in how to give advice on lower levels.
• Women need mentors after receiving training to help them with the
implementation of their new-found knowledge.
• Women should build relationships with banking managers. The latter
should filter the right information through to them. Women do not know
how to build this relationship and what questions to ask.
• Women should start with small goals and motivate themselves on how
to reach them.
• The SME sector is confusing in terms of which service providers and
support to use. A more holistic and integrated approach should be
adapted by service providers.
• They need a set of training programmes from the lowest levels up that
are affordable.
• Some of us who are already in business should go back to the tertiary
institutions and give them our own experiences in the field so that this
can be passed on to new business people.
55
6.3.7 How can we promote technological literacy amongst women?
• They are scared of technology in the beginning but get excited when
they get to grips with it. Technology should therefore be available for
them to use.
• Link technology into education so that they can become competitive in
global markets.
• Start with children to familiarise them with science and technology.
• Highlight women role models in technology.
• Technology should be part of any course from the lowest level so that
they can understand the advantages and be less afraid of it.
6.3.8 How can we enhance the export orientation of women?
• Provide practical courses and assistance on export orientation.
• Women start a business to make their lives easier and less complex.
Exporting is not doing that.
• Introducing initiatives which bring women together as consortiums so
that they can trade more effectively.
• Sending women on trips to other countries so that they can network
with their counterparts and enter into trade agreements.
• There should be a centre/trade unit that advertises women businesses
internationally and regionally so that it is cheaper for women to enter
these markets as advertising and marketing costs may be reduced.
7. CONCLUSIONS AND RECOMMENDATIONS
Some of the information discussed in this chapter is equally applicable to male
entrepreneurs. Reality dictates that entrepreneurs compete in general and no
real distinction is made in this competition between male and female
entrepreneurs. Therefore, some issues will be equally applicable to male and
female entrepreneurs. However, the focus groups provided more specific
information in addition to the GEM data on what influences women to become
or operate as entrepreneurs.
Various important issues were highlighted by this chapter. They are as
follows:
• The TEA index for women entrepreneurs is lower than the averages of
all countries who participated in the GEM 2006 studies. Even when
compared with similar countries the South African indexes are lower
than the averages of these different groups (Tables 41 and 42).
• The TEA rates for women remained constant over years. With more
opportunities opening up one would expect these rates to have grown.
Women are not even graduating to the next level after the start-up
phase (Table 35).
• Individual skills are currently a critical problem. The majority of women
entrepreneurs (71%) have an educational qualification equal to or lower
than Grade 12. This may influence the way women entrepreneurs
56
operate, such as their tendency to be involved in opportunities that do
not require a high level of expertise. The specific entrepreneurial skills
that women entrepreneurs lack are in areas such as financial
management, idea generation skills, conducting feasibility studies,
exporting and technology skills (Table 36).
• Women do not believe that they are entrepreneurial, although they are
in agreement that an entrepreneurial culture exists in South Africa
(Tables 43 and 44).
• Women entrepreneurs are not really concerned about growth and they
are mostly involved in me-too projects (Tables 37, 45, 46, 47 and 48).
• One of the most important findings of this chapter, highlighted by the
GEM data as well as the focus groups, is the issue of culture. It was
made clear that women would rather try to balance their family and
business obligations which led them to be involved in relatively easy
projects where the emphasis is on creating additional income, rather
than on expanding.
• In terms of mindset, women are influenced by various issues such as
tradition which determines that women need to look after the family,
male vs. female comparisons, and the lack of an entrepreneurial
mindset.
The question of what can be done to improve the ratio of women
entrepreneurs in the economy remains. In order to make sure that
recommendations are focused on promoting women entrepreneurship and
that they are integrated (see Table 56), the nine entrepreneurial framework
conditions that are needed to respond to opportunities and start a business
are used as a basis (Reynolds, et al., 2005). These nine framework
conditions are as follows: access to finance; government policies; government
programmes; education and training; transfer of research and development;
commercial, legal and financial infrastructure; openness of the domestic
market; access to physical infrastructure; and extent to which social and
cultural norms support the choice of starting a business as a career option.
Table 56: Recommendations
Category Recommendations
Access to
finance
Finance is necessary to start and grow a business.
However, a lack of assets can influence this
negatively. Therefore:
• A special guarantee fund should exist and be
maintained for women who want to start or grow
businesses.
• Women should get the necessary training and
exposure to the way in which financial institutions
work.
Government policies Women entrepreneurs find themselves in businesses
where their movement is restricted in terms of
attending activities such as workshops, and
information centres. They are not always aware of
what government policies are. Therefore:
• Government should make an extra effort to
57
communicate their policies to women entrepreneurs
in their own environment.
Government
programmes
One criticism is that service providers of government
programmes do not have the necessary
training/expertise to deliver services on the levels
required. They are under- or over- trained for the
specific situation. Therefore:
• Make sure that service providers are empowered to
deliver services on the specific levels required.
Education and
training
This category is one of the most important categories
in promoting women entrepreneurship. The emphasis
on this category was because it prevents women from
becoming more active in the labour market.
Therefore:
• Integrated entrepreneurship training programmes
should exist from the lowest to the highest levels of
operation.
• Give more attention to the formal education of
entrepreneurship and the promotion thereof.
• Investigate the education of older women.
Transfer of research
and development
Expose women to the use of technology and the
generation of new ideas. Therefore:
• Expose women to new technology so that they can
use it in their existing businesses.
• Expose women to new national and international
trends so that they can understand and realise what
businesses can arise from these trends.
Commercial, legal
and
financial
infrastructure
Women regard the SME sector as complicated
because of the numerous regulations they have to
adhere to, while knowing where to go for support.
Therefore:
• Investigate the implementation of information
systems that will allow easy access for women.
• A database of accredited service providers can
further ease the pressure on women entrepreneurs.
Openness of
the domestic
market
Women try to conduct business on their own because
of various factors such as their culture of doing
everything themselves. Therefore:
• Networking of women entrepreneurs should be
encouraged.
• The exposure of women to opportunities within the
domestic market is necessary.
Access to
physical
infrastructure
Without the necessary physical infrastructure, nothing
is possible. Some women find themselves in areas
where a lack of infrastructure exists, e.g. electricity
and roads. Therefore:
• Government should investigate what women
entrepreneurs need and provide where possible.
• Investigate the provision of shared infrastructure in
58
order to lower cost of provision.
• Promote the development of infrastructure so that it
can help women to balance their family role with
that of business.
Social and
cultural norms
This category is another important category for
potential and existing women entrepreneurs.
Responses indicated that an entrepreneurial mindset
does not exist because of various factors such as
tradition and a lack of exposure to entrepreneurship.
Therefore:
• Actively expose women to other women
entrepreneurial role models.
59
CHAPTER 5
FUTURE RESEARCH IN ENTREPRENEURSHIP
5.1 INTRODUCTION
In Chapters 2-4, the importance of information that is focused on the right
areas and that will help South Africa to accelerate socio-economic growth and
development was highlighted. Information from other countries cannot be
accepted as a guideline without first contextualising it for the South African
environment. Although it was indicated in Chapter 1 that the reliability of this
GEM survey has been thoroughly tested, it cannot simply be assumed that the
same is true for information from other countries.
In South Africa, availability of accurate and meaningful information is still a
problem for the entrepreneurial sector. Research is being conducted but not
always in an integrated manner. Researchers are not working towards a
common goal and the research is therefore ad hoc in most circumstances.
South Africa is a developing country with high rates of unemployment, low
levels of formal and higher education, the migration of individuals from rural
areas to cities (causing an increase in the impoverishment of rural
communities), corporate restructuring and government policies and
regulations enforcing the restructuring of larger organisations. The country,
therefore, has an urgent need for entrepreneurs in the small, micro and
medium enterprises (SMMEs) act as a tool to combat unemployment and
crime and to stimulate the economy as a whole. Information that taps into the
ramifications of this unique set of obstacles and is to the South African context
is essential if meaningful development of this sector is to be promoted.
With numerous programmes by the South African Government, the
Department of Trade and Industry (DTI), organisations such as the Small
Enterprise Development Agency (SEDA), Khula Enterprise Finance, Business
and Franchise Partners, Industrial Development Corporation (IDC), local
universities and internal programmes by larger corporations, support is
available to encourage the entrepreneurial environment in South Africa.
Whether this support is adequate remains to be seen.
The issues addressed in this chapter focus on the role of research in
establishing a healthy environment for entrepreneurial activity. More effective,
accelerated and focused research within the South African context is essential
for the establishment and sustainability of entrepreneurship and SMME
development in the South African economy.
5.2 RECENT RESEARCH CONDUCTED IN SOUTH AFRICA
The development of entrepreneurship in South Africa has opened up new
research opportunities. Although these opportunities are not yet being explored
to their full potential, it is important to recognise the important contributions that
they can make to the literature in the future.
60
There is a distinction between research conducted in terms of entrepreneurship
and research relating to business management. Although a relationship
between the two fields of study exists, the distinction is important for the
development of entrepreneurship as a separate field. Recent research projects
on entrepreneurship have included a number of topics. It must be noted that the
research cited here is not the only work that has been conducted on these
specific topics and that some of this research should still be considered as work
in progress, as presented by the authors at conference proceedings.
• Ethnic and cultural entrepreneurship
Due to the cultural diversity within South Africa, ethnic entrepreneurship
focusing on cultural and social structures as well as networks forms an important
part of the business environment. These issues have been investigated in
studies by Radipere (2006) and Nieman and Van Tonder (2006).
• Family businesses
Looking at the history of business development in South Africa, family
businesses have played an important part in the development of the economy.
Research conducted by Van Eeden and Venter (2006) aims to formulate a
theoretical model for sibling and family businesses within the South African
context.
• Corporate entrepreneurship
As an important part of entrepreneurship, corporate entrepreneurship within the
South African context has not received enough attention in the past (Gantsho
2006). Several projects within this field form part of doctoral studies and include
topics such as:
• The relationship between the practice of strategic planning and the
levels of corporate entrepreneurship in South African public companies;
• Corporate venturing;
• Barriers and triggers for corporate entrepreneurship;
• The state of corporate entrepreneurship in South Africa;
• Corporate entrepreneurial training programmes;
• Entrepreneurial orientation and its successes in corporate
entrepreneurship.
• Access to entrepreneurial finance
Access to finance is a major problem for the South African entrepreneur. This
issue must be addressed if an environment promoting entrepreneurship and
SMME development is to be encouraged. Studies have been conducted by a
variety of researchers such as Mutezo and Antonites (2006) on this issue.
Further research is necessary which focuses on the immediate obstacles that
have to be overcome in order to eliminate this factor.
61
• Entrepreneurial learning
Entrepreneurial learning and education is a possible solution to current problems
experienced in South Africa. Research is necessary regarding the paradigm
shift that needs to happen in the educational system. There is a firm belief that
an entrepreneurial attitude must be developed in learners in schools if future
entrepreneurial activities within the economy are to be effectively promoted.
Training models must be tested in order to establish to what extent this is in fact
a crucial factor in economic development (Botha 2006).
5.3 NEW AND EXISTING LITERATURE ON ENTREPRENEURSHIP IN
SOUTH AFRICA
An assessment of the current situation regarding the availability of literature
with specific reference to the South African context highlights numerous
limitations. These limitations include the following:
• There is only a limited amount of useable literature available on the
South African context.
• A limited amount of research is tested empirically within the South
African context. Research should be taken to a higher level of statistical
analysis that can assist in finding valid proof of how best to develop
and support entrepreneurship. Policy makers should be geared
towards using this information in formulating new policies.
• The literature available is mostly descriptive in nature, resulting in the
creation of profiles applied to certain objects or situations based on the
observation of a single event or behaviour.
• There is a tendency among researchers to use and rely on secondary
information published in international sources.
• Researchers fail to apply the information obtained to the South African
context. This is critical as the economic and business environment in
countries such as the USA and various European countries differs from
that in South Africa.
These limitations have a negative influence on the development of the field of
entrepreneurship within the South African context, and highlight the concerns
that must be taken into consideration when evaluating the existing literature
and when identifying future research possibilities.
Having initially focused on the limitations of most of the literature available, it
is also important to state that the picture is not completely bleak as certain
areas within the field of entrepreneurship have been adequately explored and
tested. More effort is currently being made in testing variables affecting the
entrepreneurial field in South Africa and the results have been published for
further exploration and use.
Literature that has been tested for our context and which forms part of
masters and doctoral studies in South Africa is an important resource in
finding ways to improve the current entrepreneurial environment. This set of
available information can be obtained from various South African universities’
62
websites. The University of Pretoria’s website, for example, can provide
information on:
• Entrepreneurial creativity, innovation and opportunity finding
• The level and intensity of corporate entrepreneurship in South African
corporations
• Women entrepreneurs and the effectiveness of training interventions
for this specific group of entrepreneurs
• The contribution of entrepreneurship to specific industries
• The informal sector and related issues
• Financing obstacles experienced by entrepreneurial ventures and
SMMEs
• Entrepreneurship education and training
• Several issues related to entrepreneurial success
Considering the above, it is clear that more research needs to be conducted,
tested and published to include all of the aspects of this dynamic, but still
unexplored field.
5.4 ROLE PLAYERS IN ENTREPRENEURIAL RESEARCH IN SOUTH
AFRICA
Entrepreneurship is a relatively new field within South Africa. With the
government’s belief that it can be the solution to poverty alleviation and
unemployment, the field is in desperate need of applicable research if it is to
address these burning issues effectively. To date the institutions involved with
research in the field of entrepreneurship and SMME development are mainly
academic institutions. These institutions include:
• University of Pretoria – Chair in Entrepreneurship
With the implementation of the programme in entrepreneurship, the University
of Pretoria was the first academic institution to offer entrepreneurship as a
degree course at both graduate and postgraduate levels. The programmes
offered on the postgraduate level in the form of a M Phil and PhD (with
specialisation in Entrepreneurship and Small Business Management) have
opened up the channels for research to be conducted that can contribute to
the literature according to the desired specifications.
• University of Cape Town – Centre for Innovation and
Entrepreneurship
For the last five years, the Centre for Innovation and Entrepreneurship has
been responsible for conducting the South African Global Entrepreneurial
Monitor Report and is currently busy with the 6
th
report. GEM is considered to
be the most prestigious, comprehensive and authoritative study conducted on
entrepreneurship in the world. It is the only report which accurately indicates
the current position of entrepreneurship within South Africa.
63
• University of KwaZulu-Natal – Centre for Entrepreneurship
The Centre for Entrepreneurship of the University of KwaZulu–Natal conducts
several research projects focusing on a variety of topics related to
entrepreneurship.
• University of South Africa (UNISA) – Bureau for Market Research
Although the University of South Africa is offering entrepreneurship as a degree
at undergraduate level, their Bureau for Market Research makes a more
important contribution towards literature, with specific reference to research
done on the informal sector in South Africa.
Various tertiary institutions include modules of entrepreneurship in their degree
programmes. However, the focus on research is not always an integrated
activity at these tertiary institutions. Although the Bureau of Market Research,
(UNISA), for instance, gets more involved in the commercialisation of research
projects, it is seen as a positive step forward in stimulating “higher order”
entrepreneurship.
Lastly, various private companies are involved in research projects addressing
entrepreneurial issues. However, these research activities are mostly client
orientated and not for public use.
5.5 CURRENT AND FUTURE BURNING ISSUES ON
ENTREPRENEURIAL RESEARCH IN SOUTH AFRICA
It is believed that the following burning issues need to be researched to the
highest empirical level to provide solutions and usable, reliable information
that can be used by all stakeholders.
• Establishing an entrepreneurial culture among South Africans
Research is needed on how the South African society’s values, norms and
beliefs can be positively influenced towards entrepreneurship, as
entrepreneurship is not yet part of the general culture. For example, a
correlation between the economic growth rates for a number of years and the
TEA index may reveal that the creation of jobs and economic growth in South
Africa is due to growth in the corporate sector in the economy rather than the
current SMMes.
• The elimination of negative factors associated with
entrepreneurship in South Africa
Research regarding several of the negative factors, e.g. lack of infrastructure
supplied by national, provincial and local government, needs to be conducted.
The implications of these findings need to be communicated to the relevant
stakeholders.
64
• The true effect of BBBEE and other governmental regulations on
small, micro and medium enterprises in South Africa
Empirical research needs to be conducted regarding the effect of the
implementation of the different codes on the success of entrepreneurs. Too
many assumptions are made regarding a number of interventions which are
intended to be to the advantage of entrepreneurs.
• Bringing government regulations in line with entrepreneurship
and SMME development
The impact of the regulatory framework on entrepreneurship success needs to
be researched to be able to determine whether deregulation will really
contribute to the reduction in poverty and unemployment.
• The use of government contracts to establish and to stimulate
SMME development in South Africa
Empirical research must determine the long term contribution and
sustainability of entrepreneurs that successfully tender for these contracts,
and these insights must be communicated to all stakeholders.
• Entrepreneurship as an instrument to alleviate poverty and the
battle against poverty and unemployment in South Africa
The assumption that entrepreneurship and small business will alleviate
poverty and unemployment needs to be researched in a longitudinal study.
The contribution to economic growth cannot be isolated at this stage with the
data currently available.
• The enhancement of entrepreneurship among rural communities
in South Africa
Future research has to be conducted regarding the required variables for
successful entrepreneurship in rural areas of South Africa. Many policy
makers identify variables applicable to urban areas, but the differences
between these markets have not been tested empirically.
• The promotion of entrepreneurship among women in South Africa
The variables that distinguish women and male entrepreneurs in South Africa
in the different provinces and industries can be researched as a guideline for
prospective entrepreneurs.
• Development of an educational model for entrepreneurship as
part of the curriculum in South African schools and other
education and training institutions
Future research regarding this very important topic is crucial for the success
of entrepreneurship in this country. The effect of issues such as content and
teaching approaches in relation to entrepreneurial start-ups as well as
eventual success needs to be investigated to determine the causal
relationships. The requirements of established entrepreneurs with regard to
content and approaches also need to be empirically tested.
65
• The implementation of entrepreneurship in South African schools
The assumption is that the development of entrepreneurship has to start as
early as possible to enhance the culture of entrepreneurship in a country.
Empirical research needs to be done regarding the outcome of such efforts
e.g. how many entrepreneurial start-ups resulted because of this exposure.
The best method to expose learners to entrepreneurship have to be tested
empirically.
• The introduction and implementation of corporate entrepreneur-
ship in medium and larger organisations in South Africa
The effect of entrepreneurship in established corporations needs to be
researched by making use of various research designs. The level of
awareness regarding the necessity of entrepreneurship in an established
organisation also needs to be tested. Research into causal relationships
between corporate entrepreneurship interventions and success needs to be
conducted on a multivariate analysis level.
• The introduction of corporate entrepreneurship in the public
sector
Future research regarding the business models, processes and structures of
public sector organisations will determine the entrepreneurial opportunities in
these organisations.
5.6 AN INTEGRATED RESEARCH PROCESS FOR SOUTH AFRICA
For researchers to conduct research that will contribute to the advancement of
entrepreneurship within South Africa, a model is required that makes provision
for factors relating to and affecting the situation within the economy. The
following model addresses the relevant factors and groups involved, indicating
the role that each should play during the different phases of the process.
• Research Environment
The research environment consists of all the different stakeholders involved in
entrepreneurial research and development in South Africa. These include:
• Academic institutions
• Public sector
• Private sector
It is important that these research institutions and sectors work together in
order to avoid duplication. As the model illustrates, governmental policy and
regulations affect these organisations at the root of entrepreneurial research.
It might also be good governance to appoint an institution as a co-ordinating
body for all research projects so that research will not be duplicated and a
common focus can be obtained. Resources can also be used optimally in this
way.
66
• The research process
Following a basic research process as illustrated in Figure 4 is sufficient in
order to conduct the research itself. The main factor that differs from other
research models, is the involvement of the entrepreneur as the determining
factor when conducting research within the South African context. This is
important in order to conduct industry-related research, leading to findings that
can be implemented and used within South African organisations.
67
Figure 4: An integrated model for conducting research in South Africa
RESEARCH ENVIRONMENT
GOVERNMENT REGULATIONS AND POLICY
PRIVATE SECTOR
ENTREPRENEUR ENTREPRENEUR
RESEARCH PROCESS
- DISCOVER THE DILEMMA
- DEFINE THE QUESTION
- DEFINE THE RESEARCH QUESTION
- REFINE THE RESEARCH QUESTION
RESEARCH PROPOSAL
RESEARCH DESIGN
Data Collection Design Sampling Design
Pilot Testing
Instrument Revision
DATA COLLECTION AND PREPARATION
RESEARCH REPORTING
DATA ANALYSIS AND INTERPRETATION
SOUTH AFRICAN
SOCIETY
COMMUNICATE RESEARCH FINDINGS
PUBLIC SECTOR
ACADEMIC AND
RESEARCH
INVOLVEMENT
BY ALL
STAKEHOLDERS
68
• Research findings
The last stage of the research model makes provision for the reporting of the
findings to the different stakeholders. Three groups are of importance in this
stage, namely:
• The general South African public
In order to establish an entrepreneurial orientation among the South
African public it is important to communicate the findings of the
research studies to them. Through education, awareness and
understanding can be created, which can lead to a positive change in
their behaviour and attitude towards entrepreneurship.
• The entrepreneur
Findings need to be communicated back to the entrepreneur to ensure
the implementation thereof in the South African organisations. The
purpose of this research should be to enhance their business
performance, which will then show the power of entrepreneurship in the
economy.
• The South African government
With the role that the South African government plays in the form of
policies and regulations it is important that research findings are
communicated to them so that these policies and regulations can be
adapted accordingly. This will ensure a healthy environment that, in
turn, will ensure SMME development and entrepreneurial activity.
Resources need to be provided by the government to conduct this
much-needed research. A regulatory environment must be developed
by South Africans for South African entrepreneurs, as international
models are clearly not working in all cases.
5.7 SUMMARY
In evaluating the entrepreneurial research environment one comes to the
conclusion that definite and accurate measures must be taken to achieve
optimal results regarding the promotion and development of entrepreneurship
in South Africa. The information available within the South African context is
not sufficient in addressing the burning issues faced by this country. As a
relatively new field and an applied science, research projects that address
specific issues within the South African environment are needed to deal with
our specific problems and constraints and bring about much needed solutions.
The links between the enabling environment and academic as well as
research institutions need to be strengthened. The stakeholders in this
environment need the research results to foster entrepreneurship on local,
provincial and national levels. The nine framework factors promoting
entrepreneurship can be used as a co-ordinating tool in this regard.
69
CHAPTER 6
INTEGRATED RECOMMENDATIONS
6.1 INTRODUCTION
In discussions in the previous chapters, various limitations regarding early-
stage entrepreneurship were identified such as poor entrepreneurial skills
levels, mindsets that are not entrepreneurial (e.g. growth orientated), and lack
of innovation where old technologies are still being used to compete in
oversaturated or highly competitive markets. The indication in the previous
chapter was also that in a number of areas, research should be conducted in
order to provide specific information needed to formulate policies.
There is not enough information available to formulate policies in this chapter,
therefore recommendations will be provided that can help to formulate policies
for government, private sector or even tertiary training institutions.
6.2 PREVIOUS RECOMMENDATIONS
Since 2001, the GEM reports have made various recommendations. One
needs to take notice of these recommendations because a number of them
are critical and still hold true. There is also the perception that the relevant
stakeholders have, in the past, not addressed all of these recommendations.
These recommendations are summarised in Table 57.
Table 57: Summary of recommendations from previous GEM reports
Category Recommendations
School level • Inculcate “can do” attitude in learners.
• Assist more learners in the development of their self-belief, creativity
and teamwork skills.
• Ensure the teaching of mathematics and science to more scholars by
qualified teachers.
• Create a better understanding of financial management skills.
• More girls should develop entrepreneurial aspirations and skills.
• More students need to attend tertiary institutions.
• Draw in business people from the community to talk about business.
• Move away from rote learning to more experiential learning.
Tertiary
institutions
• Offer entrepreneurship to more people from all disciplines.
• Graduates should have had hands-on experience in identifying and
evaluating entrepreneurial opportunities.
• Entrepreneurship should be included as career path option.
• Use successful entrepreneurs to develop specific skills among
students.
• Tertiary institutions should have at least one academic per
department to manage these entrepreneurship courses.
Reinforcing an
entrepreneurial
culture
• Celebrate entrepreneurial behavior publicly.
• Promote a customer, service-orientated culture in all sectors.
• Introduce service level contracts for government departments.
• Reward good performance within government and public service.
Government
policy
• Reduce the administrative burden on entrepreneurs.
• Expand programmes such as affirmative procurement and share best
practices.
• The regulatory process needs to be simplified, streamlined and
70
condensed.
• National government should prevent the passing of new regulations
before first assessing their impact on small business.
• Make a distinction in the labour law for small businesses to have more
flexibility in their early years.
Government
programmes
• More subtle criteria for grouping entrepreneurs are required because
of different needs.
• Carefully identify the needs, which a government programme has to
address.
• Select highly specific objectives for a programme.
• Reduce turnaround times for processing of applications and
payments.
• Thoroughly investigate the skills required to implement programmes
effectively.
• South Africa needs a national small business organisation run by
experienced and credible people held accountable for performance.
• The DTI needs to articulate and demonstrate publicly its efforts to
encourage entrepreneurial activity and make the public aware of the
available programmes, grants, projects and initiatives.
• The DTI should monitor the recruitment and management of staff for
government programmes.
• Informal sector programmes should have community leaders involved.
• Formal sector programmes need: more research; more effective
partnerships; to distinguish between new and existing business
support; support service centres located in disadvantaged areas to be
accessible to formal entrepreneurs.
Financial
support
• Mechanisms should ensure effective management of risk levels and
delivery costs.
• Develop and implement a low cost and effective mentoring system.
• Government must find successful models for financing the lower end
of the market.
• Government should stimulate competition between financial
institutions to create access to finance for entrepreneurs.
• Khula needs to reprioritise, recapitalise and specialise in the provision
of finance to a particular sector of the small business market.
• Government should contract more institutions to accept government
contracts as collateral for loans. That can increase access to finance
for disadvantaged contractors.
Education and
training
• Training for the informal sector should focus on basic literacy,
numeracy and communication skills with a developmental rather than
a business focus. Training conducted by NGOs.
• Training for the formal sector should focus on administration, financial
management and marketing. To be delivered by quality for-profit
training organisations. Training should also be more practical than
theoretical.
Cultural and
social norms
• Continue to increase exposure of entrepreneurs from all communities.
• Improve the quality of media coverage of entrepreneurship.
• Give greater prominence to women entrepreneurship through the
media.
• Give greater prominence to not-for-profit entrepreneurs.
• Parents should expose children to entrepreneurial opportunities.
Market
openness/Barrie
rs to entry
• Create market linkage programmes and business linkage centres to
bring formal small businesses and established organisations together.
• Make a database of entrepreneurs available to all the government
departments so that more than one department can use the services
of these businesses.
• The tendering process should be simplified and standardised across
government departments.
71
Research and
development
transfer
• Encourage Universities to adopt commercialisation policies which
provide strong incentives for research staff to commercialise new
technology and remain at those institutions.
• Focus public research funding on projects with commercial potential.
• Hold research and educational institutions accountable for ensuring
the communication of their research efforts and recommendations to
the public to ensure that there is sufficient transfer of technology to
the communities that can benefit from it the most.
• Ensure the development of more science parks and incubators for
high tech and R&D start-ups through public-private partnerships.
Access to
physical
infrastructure
• Improve infrastructure in all areas, particularly disadvantaged
communities.
• Upgrade existing infrastructure in townships through public-private
partnerships to create business nodes where it is convenient to trade.
• Franchise the provision of basic services in rural areas to
entrepreneurial members of the community.
• Increase access to fax and internet facilities in townships.
• Create clusters of small businesses.
Commercial and
professional
infrastructure
• Set up legal and accounting clinics that provide affordable services to
small business owners.
• Professionals in the commercial sector should refer entrepreneurs to
relevant service centres that can assist them in developing and
implementing financial and accounting systems that will improve their
business performance management.
• Entrepreneurs need to pay increasing attention to corporate
governance issues and ensure that their businesses comply with
legislation.
Formal
entrepreneurs
• Improve the administrative and financial management capabilities of
entrepreneurs.
• Provide business services by qualified people with business
experience. This should be on a commercial basis in general.
• Reducing crime will significantly improve the environment for
entrepreneurs.
• Build commercially driven supplier networks to link the large-scale
formal economy with the small and medium enterprise sector.
• The government should continue to use BEE procurement to support
small suppliers.
Informal urban
and rural en-
trepreneurs
• The micro-credit industry for entrepreneurship needs strengthening
through the implementation of proven models. These need to include
a strong poverty alleviation bias and need government backing.
• Life-skills and technical training are likely to be the most beneficial
types of training.
• Support, backed by government but channeled through trusted,
community-based organisations working on a not-for-profit basis, is
more likely to be effective.
A number of the recommendations made in the past have been addressed,
e.g. ease on tax burden for small businesses. Equally true is that a number of
recommendations have not been addressed, e.g. improving entrepreneurship
training. This raises a number of questions such as whether it is an automatic
process that stakeholders will start implementing recommendations made in
surveys such as this or whether it is a more managed process. Should there
be a focus on a few recommendations per annum to ensure their
implementation, or should one draw up a lengthy list that stakeholders can
then decide on?
72
In the past, a number of recommendations focused on micro activities. An
integrated entrepreneurial business model is necessary on a macro level in
order to promote entrepreneurship. Activities on a micro level should only then
be addressed.
Whether government alone should be the custodian of entrepreneurship
development is debatable. Many more stakeholders can and should be
actively involved, such as tertiary training institutions, big businesses, and
even smaller boutique companies. It must, however, remain an integrated
and focused approach.
The data in this survey is a combination of both positive and negative factors.
Perhaps the most important factor is that although the entrepreneurial culture
in general is perceived to be improving, individual entrepreneurs cannot live
up to expectations. Entrepreneurship is currently not a natural process in
South Africa and should be managed in a more formal and integrated manner
to achieve desired results.
The suggestion is that the support and development of entrepreneurship be a
managed and co-ordinated effort in South Africa. A number of stakeholders
can be involved in the process but the total process needs a formalised and
integrated management system. However, the focus of this managed
approach should be the same as the entrepreneurial business model.
6.3 INTEGRATED RECOMMENDATIONS
The focus of all recommendations should be to reach the idealised
entrepreneurial environment in South Africa (see Figure 5). The current
situation in South Africa is not ideal as can be deduced from data in Chapters
2-4. When targets are set, South Africa should aim at the average TEA rates
for similar countries. Currently South Africa’s TEA rate is 5.29% and we
should therefore aim for 7.79% (see Table 6).
73
Individual
entrepreneurial
capacity
Culture of
entrepreneurship
Idealised
situation
Low High
High
Current
situation
Figure 5: Idealised situation
Although not the focus of this research, the above target will not be achieved if
entrepreneurship in established companies is not given attention. Medium-
sized to large organizations can support the creation of opportunities for start-
ups down the supply chain, which can have a positive influence on the TEA
rates in South Africa. If medium-sized and large corporations lose their
entrepreneurial flair a number of potential South African entrepreneurs will be
lost and these opportunities will be exploited by entrepreneurs from other
countries. Therefore, development of entrepreneurship by means of direct
development interventions in established organisations and even South
African parastatal organisations seems very important. The above set target is
achievable if all recommendations form an integrated whole and are managed
as discussed in the previous paragraph.
In order to ensure these recommendations stay focused on entrepreneurship
and that they are integrated, the basis should be the nine entrepreneurial
framework conditions as discussed in Chapters 1 and 4 (see Table 59).
Table 58: Specific recommendations
Category Recommendations
Access to
Finance
Develop financial support systems for start-ups and for growth of
businesses on different levels e.g. low technology, middle
technology and high technology.
Government policies All government policies should be investigated in terms of:
• their impact on business creation;
• their regulatory burden on new start-ups; and
• how it is communicated to specific stakeholders.
Government
programmes
Government programmes should be investigated in terms of:
• how and what levels they are focusing on;
• whether a whole and integrated range of programmes exists;
and
• whether service providers are sufficiently trained and educated
to deliver their specific services.
Education and It is important that nobody be scared away from entrepreneurship.
74
Training Therefore, teaching frameworks should:
• allow for the gradual development of entrepreneurial knowledge
and experience over time;
• allow the entrepreneurial philosophy to be included in all subject
matters; and
• ensure that presenters of entrepreneurship are promoting
entrepreneurship and not merely teaching about
entrepreneurship.
Transfer of
research and
development
Not only should research explore ways that can support a true South
African entrepreneurial renaissance but research should also find
ways to disseminate information and experience to other
stakeholders as quickly as possible. Therefore:
• the transfer of research and development needs to be more
focused on start-ups in the medium to high technology sectors;
• contextualised incubator systems should be developed and
implemented for South Africa; and
• a database of higher order ideas should be developed and
researched with the aim of commercialisation.
Commercial, legal and
financial infrastructure
Potential entrepreneurs find it difficult to find their way through all the
regulations normally done by a specialised department in big
organisations. Therefore:
• commercial, legal and financial services should be made more
accessible and affordable for start-up businesses;
• a database of possible accredited suppliers should be available;
and
• Would-be entrepreneurs should be trained in these
requirements before commencing with a start-up business.
Openness of
the domestic
market
The domestic market is the training ground for entrepreneurs before
growing their businesses. Therefore:
• any restraints should be evaluated and acted upon when
needed;
• more focus should be on training potential and existing
entrepreneurs to understand domestic market needs within the
context of global competition; and
• actively encourage networking in the domestic market.
Access to
physical infrastructure
Entrepreneurs need to utilise infrastructure effectively to serve their
market effectively. Therefore:
• clusters of infrastructure supporting start-up businesses should
be created;
• shortcomings of existing infrastructure should be identified; and
• the necessity of more affordable infrastructure should be
investigated.
Social and
cultural norms
The support of the society is crucial in promoting entrepreneurship.
Therefore:
• the advantages and what is meant by entrepreneurship should
be promoted on all levels of society in South Africa;
• specific cultures should be investigated in terms of
entrepreneurship and what can be done to enhance
entrepreneurship without changing cultures; and
• more role models should be identified and promoted in South
Africa.
6.4 SUMMARY
In this chapter data was discussed that was either positive or in certain
instances negative. The indication is also that South Africa’s performance in
terms of TEA activities is sub-standard when compared with other countries.
If, however, coordinated and focused ways of supporting entrepreneurship
75
can be developed and maintained over time the chances of creating and
maintaining a sustainable entrepreneurial South Africa should be high. South
Africa needs more start-ups and entrepreneurs to make it work.
Visibility of success should dominate the media. There should be a
celebration of creativity, innovation, and the commercialisation of ‘cutting
edge’ ideas. This calls for a separate way of measuring entrepreneurship
success. People support what is measured.
76
References
Academic Entrepreneurship Society Conference on Entrepreneurship:
Sustainable African Globalisation. 2006.
Anon. 2006. South Africa’s Entrepreneurial Status. Enterprise, May: 32-33.
Author unknown. 2006. Skills boost for SA businesswomen.
www.southafrica.info. Accessed 7 September 2006.
Botha, M. Nieman, G. and Van Vuuren, J.J. 2006. Measuring the
effectiveness of the Women Entrepreneurship Programme on potential, start-
up and established women entrepreneurs. South African Journal for
Economic and Management Sciences.
Cook, J. 2006. Conditions for Entrepreneurship to flourish. Enterprise, Feb:
30-31.
Driver, A., Wood, E., Segal, N. and Herrington, M. 2001. Global
entrepreneurship monitor: 2001 South African executive report. The UCT
Centre for Innovation and Entrepreneurship.
Entrepreneurship across 29 countries. SCALES-paper N200403, Netherlands
Fin Week. 2006. The homecoming hoax, 5 October 2006, pages 10-12.
Foxcroft, M-L., Wood, E., Kew, J., Herrington, M. and Segal, N. 2002. Global
entrepreneurship monitor: South African executive report. The UCT Centre
for Innovation and Entrepreneurship.
Garth Theunissen. 2006. The homecoming hoax. Fin Week. 5 October
2006. Pages 10-12.
GEM Newsletter, Issue 9, September 2006.
Gordon Institute of Business Science: www.gibsreview.co.za.http://209.85.135.104/search?q=cache
PDvfdvcEhgJ:www.intracen.org/docman/PRSR4841.pdf+%22women+entrepreneurs%22+%22initiatives%22+%2
2South+Africa%22&hl=en&gl=za&ct=clnk&cd=3 . Accessed 8 November 2006http://www.southafrica.info/ess_info/sa_glance/demographics/population.htm
International Council for Small Business: www.icsb.org.
International Trade Centre (ITC). 2004. Women exporters contribute to
development.
KPMG. 2006. www.kpmg.co.za. Accessed 12 September 2006.
Kromberg, J. 2006. Size still counts. Enterprise, Jul: 24-25.
Maas, G. and Maas, B. 2004. The story of the first International Chair in
Entrepreneurship in South Africa 1997-2004.
Moneyweb. 2006. www.moneyweb.co.za. Women and entrepreneurship,
Felicity Duncan. Accessed 7 September 2006.
Nel, D. 2005. Business must uplift women. www.southafrica.info. Accessed
7 September 2006.
O’Neill, RC and Viljoen, L. 2001. Support for female entrepreneurs in South
Africa: Improvement or decline? Journal of Ecology and Consumer Sciences,
29, 37-44.
Orford, J., Herrington, M. and Wood, E. 2004. Global entrepreneurship
monitor: South African report. The UCT Centre for Innovation and
Entrepreneurship.
Orford, J., Wood, E., Fischer, C., Herrington, M. and Segal, N. 2003. Global
entrepreneurship monitor: South African executive report 2003. The UCT
Centre for Innovation and Entrepreneurship.
77
Reynolds, P., Bosma, N., Autio, E., Hunt, S., De Bono, N., Servais, I., Lopez-
Garcia, P. and Chin, N. 2005. Global Entrepreneurship Monitor: data
collection design and implementation 1998-2003. Small Business Economics
(2005) 24: 205-231.
SA Institute for Management Scientists, Conference, Stellenbosch. 13-15
September. 2006.
SME Survey Report: www.theworx.biz.
Sokabo, N. 2002. Identification and analysis of the factors that influence the
development of female entrepreneurs in the informal sector. Paper presented
in partial fulfilment of the requirements for the Master’s degree in Business
Administration in the Faculty of Management at Port Elizabeth Technikon.
Source:http://web.worldbank.org. Accessed 2006/11/14.
SSACI. 2005. Whither women entrepreneurs. [Accessed 8 November 2006]http://www.ssaci.org.za/news/news13.doc
Statistics South Africa. 2006. Statistical release P0043. Statistics of
liquidations and insolvencies (preliminary) September 2006.
Statistics South Africa. 2006. Statistical release P0210, Labour Force Survey
March 2006.
Statistics South Africa. 2006. Statistical release P0302, Mid-year population
estimates, South Africa 2006.
The Department of Trade and Industry (DTI) SAWEN - South African Women
Entrepreneurs: A burgeoning force in our economy – A special Report 2005.http://www.dti.gov.za/sawen/SAWENreport2.pdf [accessed 20 August 2006]
The Department of Trade and Industry (DTI). 2003. Women in Businesshttp://www.thedti.gov.za/publications/WomeninBusinessSisebenza.htm
Accessed 8 November 2006
UCT Graduate School of Business: www.gsb.uct.ac.za.
University of Pretoria: www.up.ac.za.
Verwey, C.T. 2003. Developing evaluation constructs in management and
entrepreneurship for women construction SMMEs. Unpublished Doctor of
Business Administration thesis, University of Pretoria.
Von Broemsen, M., Wood, E. and Herrington, M. 2005. Global
entrepreneurship monitor: South African report 2005. The UCT Centre for
Innovation and Entrepreneurship.
White paper by the Department of Trade and Industry. 1995. National strategy
for the development and promotion of small business in South Africa. Pretoria:
Government Printer.
World Bank and International Finance Corporation. 2006: creating jobs.
Doing business in 2006. Washington: World Bank Publishers.
www.cipro.co.za/about_us/registration_stats.asp. Accessed 19 September
2006.
78
Annexure A
List of key informants
Sol Bezuidenhout
Bheki Sibiya
André Diederichs
Jurie van Vuuren
Thandile Gubevu
Mandisa Manjezi
Tsepang Setipa
Elbie Coetzee
John October
Retha Alberts
Malcolm Figg
Melody Kleinsmith
Belinda Vabaza
Jim Maasch
Sandra Musengi
Basil Leonard
Steyn Heckroodt
Vikash Sewram
Giel Naudé
Tommie vd Mescht
A Redman
Suzanne Hattingh
Freddie Marais
Eurico De Freitas
Koos Nel
Truida Prekel
Kobus Serfontein
Ferose Oaten
Gay Mokoena
Drennan Rob
Elize Bezuidenhout
Georg Stemmer
Reg Lascaris
Arthur Goldstuck
Roper, Kate
Dames, Ricardo
Mtshwane, Andile
Jill Sawer
doc_339153906.pdf