Red-tape is dampening SA’s entrepreneurial spirit

13 December 2017 | Web Article Number: ME20178116

SMME Development & Support
Red-tape is dampening SA’s entrepreneurial spirit

South Africa boasts some of the best-known entrepreneurs. However onerous compliance processes and rigid legislation tend to dampen the entrepreneurial spirit needed to get people employed and the economy growing.

That’s the warning from Dr Jopie de Beer, CEO of the JvR Africa Group, who cited statistics which show that between 70% and 80% of all entrepreneurial businesses fail in the first five years.

She said there may be many reasons why entrepreneurial businesses fail including the flat economy, difficulties in obtaining funding, lack of mentoring and support, excessive red tape, turbulence in the exchange rate, and slow payments from government and the private sector for products or services provided.

It may also be that assumptions about entrepreneurs are “off the mark”. Some believe that having a good idea and adequate funding will guarantee entrepreneurial success.

According to De Beer, this assumption does not reflect reality. Entrepreneurial businesses require knowledge and understanding of finances, business plans, marketing and networking initiatives, good products, innovative ideas, client management processes, technological savvy, compliance with legal requirements and more.

“Entrepreneurship is probably the most stressful career option one could choose. Many people, if they have a choice between a stable, seemingly secure income, or the extreme hard work and risk that comes with establishing an entrepreneurial business, will go for the secure job,” De Beer says.

“I can only hope that the massive issue of growing unemployment and the social evils associated with that, the personal issues in terms of self-regard and self-pride and the enormous negative implications of not being able to earn an income will bring insight and willingness to make South Africa an entrepreneur-friendly country.”

She urged government to be more flexible on issues of governance and red tape to help entrepreneurial businesses to survive those initial five years. Entrepreneurs need an environment where there is economic growth, political stability and the necessary infrastructure (such as affordable internet access) to thrive.

It is essential for governments to nurture entrepreneurial activity as this is a source of employment and of generating income through taxes, De Beer said.

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