South Africa is one of the richest countries in Africa. They have a strong currency, a stable government and a growing economy. Their legal system is based on English Common law and they have had one the most stable governments in Africa. The income distribution is very poor. There are a few groups of people who have great wealth while most of the population lives in poverty. Their infrastructure is among the most modernized on the continent. South Africa has a multiparty political system, with 16 parties represented in parliament. The African National Congress is the majority party in the National Assembly and controls eight of the country’s nine provinces. Opposition parties are able to function and are vocal in the political affair of the country. South Africa has had one of the more stable political systems on the continent.
South Africa’s economy has been undergoing structural transformation since the arrival of democracy in 1994. Such transformations include the implementation of macro-economic policies aimed at promoting domestic competitiveness, growth and employment and increasing the economy’s outward orientation. Key economic reforms have given rise to a high level of macro-economic stability. Taxes have been reduced, tariffs lowered, the fiscal deficit brought under control, and exchange controls relaxed.
The South African market is still in its early stages and inflation is still quite high. There has also been a surge in fuel and food prices that currently resonates on a global basis. Additionally, entrepreneurs in South Africa still face unique challenges including: overcoming the legacies of apartheid, containing crime, fostering an acceptable business ethic, dealing with diversity, and facilitating reconciliation between ethnic groups.
On the other hand, the unemployment rate in South Africa has helped push a sort of entrepreneurial energy from within, with students being taught to build their own skill set, and to become entrepreneurs themselves. As a result, venture capital funding has started to become available in this market. Particularly in a market where entrepreneurs probably lack experience, angel investors can help a new business start up get off the ground by offering their expertise and know how as well as financial support. Entrepreneurial forces are moderate in South Africa. GEM (Global Entrepreneurship Monitor) ranked the country in the middle among the monitored group. A large proportion of entrepreneurship (31 percent) is said to be motivated by necessity. Access to financial resources is limited due to poverty, lack of business skills, and lack of overall resources. Legislation places disproportional administrative burden on small companies that discourages many from formalizing their businesses. Noteworthy is that the ratio of men and women entrepreneurs is average and that investment in start-up businesses is extraordinarily high. (One in 25 South Africans have invested in a start-up.)
For the older generation of South Africans, the freedom has failed to deliver on expectations. The gap between rich and poor has widened, unemployment has risen to around 40 percent and HIV/Aids affects about one in nine of the population. South Africa is still struggling with the legacy of white minority rule, which left millions of blacks with few skills and little education. South Africa’s inability to create jobs is one of the biggest disappointments of the post apartheid era, despite tough policies adopted by the government which revitalized the stagnating economy and eventually led to growth of 2.5% a year. At the same time university education, which costs on average 13,000 rand (£1,100; $1,900) a year is out of the reach of most black South Africans.
Education is more important than wealth in starting a business, and has helped people from poor or modest backgrounds to establish some of South Africa’s most successful companies. Ten of the finalists said they had grown up in poor households or started out with very little, and that this had instilled in them a personal drive and determination to succeed. All across South Africa – in every elementary and middle school – kids are crafting business plans, doing market research, balancing budgets, and hawking everything from hot dogs at 50 cents a pop to car washes for $7 each.
In a dramatic bid to tackle this country’s persistent unemployment rate of at least 35 percent, entrepreneurship has become a key part of the evolving post-apartheid curriculum. Students can’t count on getting good jobs when they graduate, so they’re being taught to create their own work – and help forge a kind of Apprentice Nation. Equipping schoolchildren with entrepreneurial skills emerged as the key means of combating South Africa’s unemployment problems.
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Turning upstarts into start-ups