THE ENTREPRENEURIAL ECOSYSTEM OF SOUTH AFRICA: A STRATEGY FOR GLOBAL LEADERSHIP 2017 This report was commissioned and funded by SAB Foundation and Allan Gray Orbis Foundation, in partnership with the The Global Entrepreneurship and Development Institute, The Global Entrepreneurship Network South Africa and SEA Africa. Contents

Introduction...... 4

1. Literature review...... 8 1.1 Structural context of the South African economy...... 8 1.2 Context of entrepreneurship data for africa...... 9

2. TEA vs GEI: contrasting pictures of the entrepreneurial ecosystems...... 10

3. Analysis of the entrepreneurial ecosystem of South Africa...... 14 3.1 The building blocks of the ecosystem...... 14 3.2 A unique position: South Africa’s leadership in aspirations and examples from the ecosystem...... 16 3.2 South Africa in the context of sub-Saharan Africa...... 16 3.3 Strengths of the South African entrepreneurial ecosystem...... 17 3.4 South Africa in the global entrepreneurial ecosystem...... 19

4. Causal map of the South African entrepreneurship ecosystem...... 22 4.1 Ecosystem bottlenecks...... 22 Figure 14: Survey validation with GEI data:...... 25 4.3 Structural causes of bottlenecks...... 24 4.4 Impact of bottlenecks...... 26

5. Policy recommendations...... 28 The entrepreneurial ecosystem of South Africa: 5.1 Improving startup skills...... 28 A strategy for global leadership 5.2 Banking and finance for all...... 30 5.3 Technology absorption...... 30 South Africa is an entrepreneurial leader in sub-Saharan Africa. The country has made significant progress to overcome structural factors and produce some of the most innovative 6. Conclusion...... 32 and successful enterprises on the continent. The country provides the institutional support necessary for high-growth businesses to emerge and thrive, while government policies work to Appendix A: GEDI methodology ...... 33 close historical gaps. With the addition of targeted, coordinated policies to address remaining bottlenecks, the country is poised to achieve greater growth through entrepreneurship. Introduction

To develop a strategy for action in the generating the greatest impact for and growth-oriented entrepreneurs entrepreneurship ecosystem of South entrepreneurs in the country. that are motivated to grow and prosper Africa (EESA), this analysis begins with an within the South African environment in-depth examination of the ecosystem Entrepreneurship is a key driver of and through engagement with the global data for South Africa. Next, we examine economic growth. South Africa is in a economy. To facilitate this goal, South new survey data from key ecosystem unique position in sub-Saharan Africa, Africa needs a national entrepreneurship actors from both the private and public with stronger supporting institutions policy framework based on the strengths sectors to identify insights from within than much of the rest of the continent and weaknesses and causal factors that the ecosystem on what issues are present and a resulting strong entrepreneurial define the entrepreneurship ecosystem. in the ecosystem, and the causes and ecosystem foundation. Since the 1990s, This report will offer that framework. effects of ecosystem bottlenecks. These the South African government has insights are synthesised in tandem with been actively engaged in incorporating Entrepreneurship ecosystems are supplementary data to produce detailed more of the South African population complex: they comprise numerous feedback on the health of 14 different into the formal economy, whether into different stakeholders and are shaped by ecosystem components. Based on the wage employment or entrepreneurship. laws, regulations and formal and informal results of this analysis, we present a To further strengthen the potential of institutions. A national entrepreneurship prioritised strategy for action that assists entrepreneurship and innovation, South ecosystem policy needs to look at the investors, stakeholders, and policy