Ep 129: Entrepreneurial Spirit vs. Systemic Barriers - Angus Bowmaker-Falconer & Prof Natanya Meyer

Michael Avery (0:00)

Welcome to The Monocle Banking Podcast, as always curated by Monocle Solutions. South Africa needs growth above all else, with the capital G. But at the center of all of that lies entrepreneurship. That's why the recently published Global Entrepreneurship Monitor Report is so important. And this week, we unpack the findings, which should worry all of us.

Well, South Africa has an entrepreneurship problem, just not the way we usually told we have. We don't suffer from a shortage of ambition, ideas or sheer bloody mindedness. You spend time in any township or industrial park or university incubator or family run business, and you'll find people making plans, finding customers, keeping companies alive under conditions that would test a much larger balance sheet. The problem is what happens between the idea and the institution, between starting and surviving, and then between surviving and scaling a business. The latest South African report from the Global Entrepreneurship Monitor gives the country's entrepreneurial environment a score of just 3.9 out of 10 That's seventh from the bottom among the 56 economies assessed and well below the global average of 4.7. By way of comparison, India scores 6.1, Indonesia is around 5.8, China scores 5.4, while the UAE leads at 7.1. We're at 3.9. Now comparisons are never perfect. South Africa isn't Dubai or Delhi or Jakarta, but that is also rather the point. The report argues that these differences cannot simply be explained away by income, geography or the supposed temperament of South Africans. They reflect rather a range of choices, functioning digital infrastructure, simpler registration and compliance, better coordinated support programs, more accessible finance and a culture in which building a business is regarded as a serious economic vocation rather than a desperate alternative to unemployment.

Now, to unpack all of this and ultimately where we go and to ask how we can move from beyond learning to hustle harder to creating an ecosystem that really supports entrepreneurship, it's a great pleasure to welcome Angus Bowmaker-Falconer, research fellow at Stellenbosch Business School and co-author of the report, and Professor Natanya Meyer, acting chair in entrepreneurship education at the University of Johannesburg. I must say at the start that the research report was done in partnership by Stellenbosch Business School, the University of Johannesburg, as well as Northwest University and the Small Enterprise Development and Finance Agency. So true cross academia and public sector collaboration, which is great to see. Angus, Natanya, welcome to The Monocle Banking Podcast. Angus, let me just start and maybe begin with you with the headline number. That score of 3.9, 7th from the bottom and virtually no movement in five years.

Is the correct description underperformance with South Africa's entrepreneurial ecosystem just now structurally stuck?

Angus Bowmaker-Falconer (3:22)

I think that South Africans are entrepreneurial, and I think that we underestimate the informal sector, and I think that we do many things that are unique in South Africa. Pretty much like Nigeria, actually. So I don't think we are a country that's underperforming entrepreneurially. Where I think we battle is that the government is totally committed to small business development, and they don't do a very good job at delivering that.

I think that our banking system is not supporting the entrepreneurial culture of this country.

And so we need to change the way we think about making businesses successfully safe. And we're not going to, no, checkers is not going to employ more people. We need to build businesses from the ground up.

Michael Avery (4:16)

I think that is the bottom line. And Natanya, before we get into the mechanics of the index, because I think it's important to understand, just at a headline level and to build on what Angus is saying, you know, the report insists that South Africa doesn't lack entrepreneurial potential. You know, it's not an underperformance from that perspective. We often, and I think too frequently, describe South Africans as resourceful and resilient. It's in our DNA. It sounds positive, but I think it can also conceal some institutional failure underneath.

For you, what is the headline finding from this year's study?

Natanya Meyer (4:54)

Yeah, I totally agree with what, with your fantastic introduction. You couldn't have said it better than what we're going to do, and I agree with what Angus also said. You said it so nicely a few sentences ago. South Africans are resilient. We need to remember two things. There's always a push and there's always a pull factor to why people start businesses. What we do see is if we look from the positive side and the pull factor, lots of people spot opportunities. Because we have so many problems, remember, if you have a problem in a country or in a community or a town or a city, whatever the case may be, there's opportunity for a business to solve that problem. Because we have so many socio-economic problems and other problems in our country, there is a magnitude of opportunities for the positive entrepreneur who's chasing opportunities to start new businesses. That's the one aspect and we've got lots of them. Then we have the other aspect which unfortunately is sometimes seen as a negative, where people enter into entrepreneurship out of purely necessity.