MSMEs to the Rescue

According to a new World Bank study on South Africa’s economy, if the entrepreneurship ecosystem is strengthened, the increasing number of startups in the country could become an engine of job growth. The report, the latest edition of the World Bank’s SA Economic Update, looks into the impact of the COVID pandemic on SA’s labour market and how supporting young entrepreneurs could address unemployment. The World Bank report says only 10% of jobs in SA are in self-employment, which is low compared to about 30% in most upper-middle-income economies, (such as Turkey, Mexico, and Brazil). If SA were to match the self-employment rate of other upper-middle-income economies, it could potentially half its unemployment rate. A vibrant start-up sector could help close the self-employment gap, but for the country’s entrepreneurship ecosystem to reach its potential, it recommends relaxing legal constraints and rules that prevent business development and also encourages scaling up programmes that provide entrepreneurial training and startup grants to address other barriers to entry.

SA has a flourishing startup ecosystem. 81 tech startups in the country raised a total of $142,523,000 last year, according to Disrupt Africa, which tracks African startups. Its digital sector, in general, is big – with Cape Town alone having more than 450 tech firms and more than 40,000 employees in the space.  But, as EFSA has pointed out to the government, much will depend on better education and training. EFSA made this point recently at the UNISA conference on Marketing and proposed to the FSCA committee on ecommerce that a letter be sent to the new Finance Minister. One issue made at the UNISA event is that the boards that decide content for teaching at both secondary and tertiary education in SA take far too long to revise school/university curriculae.