SA’s economic empowerment history offered easier routes than entrepreneurship

Three periods in South Africa’s history have applied policies making entrepreneurship a last resort for many would-be entrepreneurs.

During these periods the country has offered selective groups less-risky alternatives to becoming entrepreneurs effectively disincentivising entrepreneurship in the country, says Allon Raiz, CEO of enterprise development organisation Raizcorp.

“South Africa’s political history meant that pre-1948, English, white males were almost guaranteed employment; post-1948 offered Afrikaans, white males similar guarantees. Today, the government is applying black economic empowerment,” explains Raiz.

Three times in a short space of history South Africa has enticed entrepreneurs into less-risky economic ventures, “sucking them out of the system.”

This so-called brain drain has contributed to South Africa’s persistent lagging on the global entrepreneurship index, on which we have periodically come stone last, notes Raiz.

According to the Global Entrepreneurship Monitor (GEM) 2014, only 12.8% of South Africans aged 18-64 have entrepreneurial intentions – considerably lower than the rest of sub-Saharan Africa and trailing globally.

Clearly “some entrepreneurial eco-systems work better than others,” says Raiz.

Within an entrepreneurial eco-system, entities collaborate to ensure that entrepreneurs precipitate and that they become successful. It is collaboration between government policies, the education system, enterprise development incubators, venture capitalists and banks and the banking system – these puzzle pieces work in concert to stimulate entrepreneurial activity, says Raiz.

South Africa’s policy history of selective empowerment has weakened the country’s entrepreneurial eco-system, and the current spate of economic empowerment is no different.

Conditions that encourage entrepreneurship

Raiz, recently named entrepreneur-in-residence at the University of Oxford’s Saïd Business School, says procurement professionals tasked with enterprise development need to be aware of certain conditions that need to be present in order for an individual to become a trading entrepreneur.

1) They must see an opportunity or experience a challenge;
2) have a tolerance for pain;
3) have a tolerance for risk;
4) believe in their ability to muster resources; and
5) be able to learn and iterate.

These characteristics develop with experience. “In the US, most successful first-time entrepreneurs were 60 years of age or older – suggesting that entrepreneurs are certainly not “born that way…”