There has been a significant increase in the Total early-stage Entrepreneurial Activity (TEA) amongst South Africans aged between 18 and 64, according to the Global Entrepreneurship Monitor (GEM) report 2021/2022 released by the Stellenbosch Business School. They are either involved in setting up a business or have been running a business for less than three years.
The report, authored by Angus Bowmaker-Falconer and Natanya Meyer, shows an increase from 10.8% in 2019 to 17.5% in 2021. According to the document, the sector that most people are getting involved in is retail and wholesale, which includes the informal sector, coming in at 56.7%. The number one motivator for entrepreneurship in South Africa is the need to earn a living, followed by the desire for wealth and income.
“These are important findings as these new businesses appear to have survived the startup phase and now have a real possibility of contributing to the country’s economy. If these rates can continue on an upward trajectory, it should lead to a greater depth of established businesses in South Africa,” the report reads. “Although positive, these increased entrepreneurial activity rates could partly be due to many people being forced into survival mode during the pandemic and/or a purposeful choice not to go back to formal employment after losing their jobs during this period.”
The Covid-19 pandemic, a business not being profitable and problems accessing financing are listed as the biggest reasons early-stage entrepreneurs exit their businesses. The report also measured societal attitudes towards entrepreneurship and found that 81.8% of the respondents believe that entrepreneurship is a good career choice. This is up from 78.8% in 2019. Also, it found that 20% of South African adults who are not in business, have entrepreneurial intentions.
“Societal attitudes and perceptions play a central role in shaping the entrepreneurial ecosystem and the national entrepreneurial culture. This is because entrepreneurial activities are leveraged by people living in specific cultural and social contexts. The negative and positives that a given society has about entrepreneurship directly influence entrepreneurial ambitions and influence the extent to which entrepreneurial activity is supported,” the report stated.
The GEM report 2021/2022 was done in collaboration with Small Enterprise Development Agency. It can be accessed on the Stellenbosch Business School and GEM websites.