Each year, I travel to as many countries as possible during Global Entrepreneurship Week — speaking at events to emphasize the importance of the democratization of entrepreneurship and in building one global ecosystem. This year, I began my tour in Johannesburg, South Africa, which will host our annual Global Entrepreneurship Congress for the first time on the Africa continent in March 2017.
As one of the top IT bright spots on the continent, Facebook opened its first Africa office in South Africa in 2015. But more than an expansion destination for innovative businesses, South Africa is also the point of departure for the journey of several entrepreneurs. It is the home of Elon Musk, and many other digitally-savvy innovators. In fact, the Global Entrepreneurship Index (GEI) released today shows that South Africa’s greatest strengths rest on two main pillars: high growth startups and competition.
In February 2016, the African Tech Startups Funding Report 2015 announced that despite the country’s recent slump in overall foreign direct investment, South Africa-based companies attracted the largest amount of startup funding ($54.5 million). The country was the most favored startup investment destination (36%), followed by Nigeria (24%) and Kenya (14.4%).
Forbes contributor Andre Bourque argues the country’s history has a lot to do with the fact that new business concepts here tend to be closely linked to devising solutions to everyday problems. Innovation and technology have helped heal a nation once torn apart by apartheid. Think of South African entrepreneurs Kgatlhanye and Ngwane, both 23, who co-founded Repurpose school bags. Repurpose collects and recycles plastic waste into school bags that feature a solar panel in the flap which is charged when the students walk to and from school.
As I have done on every visit to South Africa, I also visited the townships. On an earlier trip I had visited a school in Alexandra listening to girls trying their hand at making new things that people might buy. Since I was there, one young woman has opened the first spa in the township. I was impressed when I asked her for a problem she found and how she solved it. She wanted to attract more customers from outside the township but learned they hesitated because of where to leave their cars while at the spa. She observed young men with not enough to do on her street so she started selling car washes to customers. The young men washed the cars, the customers got two errands done at once and a peace of mind that someone was looking after their car — and she got revenue. Now apply that problem solving to a bigger environment.
In order to leverage entrepreneurship as a social and economic growth tool, groups like Silicon Cape and the Allan Gray Orbis Foundation in Cape Town and dozens of initiatives in Johannesburg are developing a pipeline of more seasoned startup leaders, by facilitating training and vetting of innovative concepts. In 2017 we will open a new GEN operation, led by a local board, to address the weaknesses holding the ecosystem back: startup skills and risk capital.
Perhaps the biggest surprise on my visit was the level of government understanding to high growth entrepreneurship dynamics. I was fortunate enough to spend some time with Deputy President Cyril Ramaphosa after we shared a podium together at the opening launch of GEW South Africa. Having been an entrepreneur before taking office funding and starting entrepreneurship training efforts like Shanduka Black Umbrellas perhaps I should not have been surprised.
In Mr. Ramaphosa’s own words delivered at the launch event:
“From here, we must agree that entrepreneurship will occupy the centre of our national discourse. To defeat poverty, unemployment and inequality, entrepreneurship must be part of the daily conversations in our homes, around the dinner table, in community halls and classrooms, and on radio stations. This is a country and a continent alive with possibility. We are looking to the entrepreneurs of Africa to unleash the potential of our people and realise that potential.”
Beyond a wonderful sense of humor, like me he saw fewer excuses for young Africans to now become entrepreneurs and seemed committed to doing what it takes to make their path easier.
For example, there seems to be an openness to balancing regulation and innovation. Despite the country’s new commercial drone legislation the Johannesburg-based Rocketmine company which provides “aerial data solutions” in mining, agriculture, water and forestry got a license and has already reached the $1-million-in-revenue milestone only a year.
The cause of entrepreneurship as an economic engine has mobilized public sector institutions at all levels, from the Ministry of Small Business Development, to the Gauteng Provincial Government, and City of Johannesburg. Nonetheless, the roadblocks are still many. Despite basic reforms verified by the World Bank as contributing to making it easier to do business, setting up a Private Limited Liability Company in South Africa still requires 43 days, compared to eight days in OECD high income countries.
In my radio and TV interviews, I mentioned that South Africans described the upcoming GEC as their 2010 FIFA World Cup for entrepreneurship. Much work is underway in preparing a better understanding of the state of entrepreneurship in South Africa for the world ranging from new ecosystem mapping and other research to fresh initiatives by a new Mayor, himself an entrepreneur. Led by SEA Africa and its steering committees and sponsored by the likes of ABSA, a member of Barclays, the Ministry of Small Business Development, Gauteng Provincial Government, the City of Johannesburg, Transnet, the Industrial Development Corporation (IDC), Microsoft, Hollard, the SAB Foundation and Johnson & Johnson’s Africa Innovation Challenge, the GEC will bring the global limelight back to the country in time for delegates from around the world to report on their own perceptions of the progress South Africa has made in its uphill road to becoming a destination for entrepreneurs.
I hope everyone has registered for the Global Entrepreneurship Congress. You will not regret the time you took to join us in South Africa next year.