One of the ways that South Africa is developing its startup economy is through helping women, minorities, youth, and people with disabilities start their own businesses.
The year 1994 was a big one for South Africa: It marked the death of the apartheid. It was the first year all races were allowed to vote in the country, and it was the year the late Nelson Mandela was unanimously elected as president.
This brought renewed life to a country that was long divided by suppression, political tension, and racism. As part of the turn of events, it promoted an opportunity for budding entrepreneurs, in particular black people and women, to launch their own businesses.
Today, South Africa is the only country in the world where women match men in the number of new businesses that are being established.
But the work is not over yet, with the country still tackling issues around inequality and high unemployment rates.
In a further push to take what has been a progressively growing South African economy for the last decade to the next level, the South African government established the Department of Small Business Development two years ago.
Speaking at the recent Dell Women Entrepreneur Networking 2016 event in Cape Town, South Africa, minister for the Department of Small Business Development, Lindiwe Zulu, said the department is particularly committed to helping women, youth, and people with disabilities establish their own businesses.
“Those are the people who still remain in the periphery when it comes to economic growth,” Zulu said.
In addition to committing 30% of total procurement services for small to medium enterprises (SMEs), the government is also focused on ensuring they are paid, listing departments that do not pay within a 30-day period on a so-called “name and shame” list.
“They don’t have the bigger pockets like private sector businesses have where they can shift the money around. So, when you don’t pay them within 15 or 30 days, it means they are unable to pay their workers, and they are unable to go and find the services they need,” Zulu said.
From a regulatory point of view, Zulu admitted more cohesion is needed between the different levels of government including federal, local, and provincial, which she points out are currently all still operating separately.
“The challenge we have in South Africa is that there seems to be three governments, but there’s only one government,” she said.
As a starting point, the African Union is preparing to launch the electronic passport in July that will allow Africans to move freely across the continent—a move Zulu believes will help “take South Africa back to the international community.”
“The majority of black South Africans have always been shut in; they are even afraid of just stepping into the neighbouring country,” Zulu said. “I would like to see the ministers of small business inside coming together and opening up so South Africans can see the opportunities are beyond just South Africa.”
Founder of Mara Group and Mara Foundation, Ashish J. Thakkar agreed, saying the AU passport will give African entrepreneurs the freedom to travel across the continent.
“It is easier for you to be an American or British citizen to travel across Africa than a fellow African and that is just ridiculous,” Thakkar said.
Other challenges Thakkar believes need to be addressed in order to reduce roadblocks for young and female entrepreneurs in South Africa include the necessity to build a startup scene that can provide mentorship and informal education to those starting out. This includes developing public policy around reducing red tape to help foster the growth of startups and, in particular, increase access to capital through the development of a venture capital ecosystem.
“What we need for [access to capital] is two elements: A debt angle which is getting banks to lend to businesses is really, really crucial; and the second element is trying to create and inspire more venture capital and investors. That entire ecosystem needs to grow as well, particularly in South Africa, Kenya, and Nigeria where we’re seeing those pockets pop up, but we’ve still got a lot more work to do,” Thakkar said.