Thriving world economies have strong entrepreneurship and innovation cultures supported by ecosystems that maximise the talent in their midst.
If South Africa is to compete not only in the continent but globally, it will have to have a robust entrepreneurship ecosystem.
The logic being as follows:
Thriving entrepreneurs = more jobs = more taxes for the state = thriving economy.
You want to reduce unemployment, innovate.
You want to reduce corruption, innovate.
You want development, innovate.
Is innovation the panacea to solving all our problems?
May be not the panacea but among the top 3 things that we need to get right if we are to solve our problems.
Here is a simple practical example:
For a long time the USA struggled to build roads, create jobs and increase it’s per capita income. USA was in the same position as most struggling African economies
So how did they get it right?
Henry Ford, innovated a way to build cheap affordable cars for the masses.
As a result of accessible affordable cars, more cars were in demand which meant more jobs were created to meet supply.
More jobs means more people are able to earn a salary and afford the very same cars they are producing.
More cars means more roads are needed.
More cars on the road means more petrol stations had to be built.
More petrol stations means more mines to mine the oil to make the petrol.
More cars, more roads, more petrol stations means trade is possible between cities and countries.
One invention had a significant ripple effect to the economy of the USA.
You can imagine what impact innovations of the Wright Brothers, Thomas Edison, Nikola Tesla had on that same economy.
We need more innovators and entrepreneurs in the economy to create new industries that will create more jobs, and stimulate the economy.
Thriving economies in the world are a function of healthy and thriving entrepreneurship ecosystems.
But what makes a thriving entrepreneurship ecosystem and what does South Africa need to do to build it.
What makes successful ecosystems is the lifestyle and culture of that community, the quality of life in that community on a day to day basis.
Is there infrastructure, help and support for entrepreneurs.
Is the education system conducive to developing required skills to build things [working prototypes].
Is there law and order to protect innovations and enforce contracts.
The lifestyle and culture
The culture in the community should encourage entrepreneurship.
In South Africa, for good and bad reasons, politicians make more front-page news and TV news headlines than entrepreneurs. I’m sure this is so globally.
An entrepreneurship culture is one that encourages entrepreneurship as a career choice, not as a last resort when you have failed at mainstream “safe” careers.
Are entrepreneurs celebrates, the same way as doctors, lawyers and actors, and soccer players?
Are people encouraged to take risks and are not ridiculed and shunned when they fail?
Are there restaurants, coffee shops, incubators, hang-out spots, Hackathons, TEDx’s events, meet-ups, pitching competitions, networking gigs, mentorship programmes and other activities that keep startups entertained and tinkering.
Does the local culture shun or celebrates failure?
Do funders look for entrepreneurs who have made mistakes or those who are risk averse?
Does failing result in you being a villain or someone to talk to and learn from?
Strong ecosystems encourage tinkering, and building of things. “Show me what you have built” trumps “Let me tell you about my idea.”
Stable Electricity Supply
Things should work in the country which means we should have stable power supply.
With power-cuts a normal occurrence in the past few years in the country, this has negatively impacted startups.
As an entrepreneur, the last thing you want is to have power-interruptions that makes it difficult to deliver to customers on time.
To cope with the impact power outages most businesses have backup power generators that adds to the running cost of the business.
Working high speed internet connection.
South Africa has high data costs and this increases the cost structure of the business.
In today’s digital world, if your business is not digitised, it has no future.
Expensive data costs affects online transactions, increases your costs and squeezes your profit margins.
Data costs remain high in South Africa compared to other African countries.
South Africa ranks 35th in Africa, out of 50 ranked countries, with an average 1GB prepaid mobile data charge of $7.84.
Egypt is the cheapest with a $1.13 charge for the same package.
The purchase of 1GB costs $1.19 in Namibia, $2.02 in Mozambique, $2.49 in Kenya, $2.62 in Ghana, $2.68 in Uganda, $2.79 in Nigeria, $3.55 in Zambia and $5.07 in Lesotho.
Ease of Doing Business
Registering a company should be seamless and quick.
South Africa dropped to 84th out of 190 economies in the report, slipping two places. SA held its rank in 2018 from the previous year, but it has plummeted over the past decade. In 2008, SA stood at 32nd on the list, its best ranking.
Now, it is at its lowest ranking yet.
The report says South Africa implemented one single reform in 2019 and only four in the past five years. This is despite President Cyril Ramaphosa encouraging his Cabinet colleagues to pull out all the stops to improve the country’s ranking in global business competitiveness measures.
So what’s next?
The above-mentioned aspects are crucial for a strong entrepreneurship ecosystem in a country.
But does this mean if these aspects are not available, a country will not develop?
No, not really.
Henry Ford and his peers were able to innovate in the absence of most of the mentioned aspects.
What it took was a strong culture to innovate despite the “ideal” environment.
When Henry Ford was tinkering with the Model-T, it was at the same time Thomas Edison was tinkering with the light bulb, more or less at the same time the Wright Brothers were tinkering with the flying-machine, more or less the same time other innovators were tinkering with their innovations.
If necessity is the mother of invention, then play is its father.
Creating a culture of tinkering, playing with ideas, connecting the dots, building prototypes with limited resources is important.
Entrepreneurship should be play because it is when you play with it, that will you start to enjoy it and be more creative and innovative.
As Dr. Stuart Brown said:
“The opposite of play is not work, the opposite of play is depression.”
In this case, play is not some mindless happy thing we do to keep ourselves entertained, but it is something that not only brings joys, but it is something purposeful done towards reaching a desired goal.
If work is play then who knows, may be the issues of stable electricity, affordable data costs and infrastructure, ease of doing business may be solved by innovations developed by startups.
Culture eats strategy for breakfast, lunch and supper.
No matter what the best ecosystem offers, if culture is risk averse, where people aspire for job security over innovating, progress will be at a snail pace.