South Africa is grappling with a significant challenge: unemployment. Recent statistics show that the unemployment rate in the country is on the rise and reaching alarming levels. The unemployment rate in South Africa is one of the highest in the world – at the start of 2023, 32.9% of South Africans were unemployed. Even more frightening is that research shows that between 2012 and 2022, unemployment almost doubled.
As graduates and young professionals enter the job market, they are faced with this daunting reality of limited job opportunities. However, with this challenge comes opportunity - entrepreneurship.
The role of entrepreneurship in the economy
Entrepreneurship is more than just starting a business; it is a mindset and a way of thinking that involves identifying opportunities and taking calculated risks to turn ideas into reality. In the context of South Africa, entrepreneurship plays a crucial role in driving economic growth and fostering innovation.
Entrepreneurship contributes significantly to economic growth by introducing new products and services, increasing competition and driving efficiency. When individuals take the initiative to start their own businesses, it creates a ripple effect throughout the economy, leading to the development of new industries and the expansion of existing ones.
In the modern South African society, entrepreneurship is essential for addressing the unemployment crisis. It empowers individuals to become self-reliant, contributing to a more resilient and diverse economy. Added to that, it fosters a culture of innovation and creativity, crucial for staying competitive in the global market.
How entrepreneurship can combat unemployment in South Africa
One of the greatest benefits of entrepreneurship is its capacity to stimulate job creation. When people start businesses, they not only create employment opportunities for themselves but also for others. Small and medium-sized enterprises (SMEs) can be particularly effective, as they tend to contribute significantly to the job market.
Entrepreneurship doesn't just create direct employment, it also has indirect benefits on other job markets. For example, as new businesses emerge, they often require goods and services from other businesses, creating a chain reaction. This, in turn, generates more job opportunities in various sectors, creating a more connected and dynamic job market.
Government policies and entrepreneurship
For entrepreneurship to grow and unemployment to go down, government help is critical. In South Africa, we have a range of policies to support entrepreneurs, including financial incentives, mentorship programmes, and streamlining the process of business registration. The purpose of policies such as the Small Enterprise Development Agency (SEDA) and the National Small Business Act are to make things easier for entrepreneurs by providing financial support, training, and mentorship to help overcome barriers and keep their businesses growing.
What makes a successful entrepreneur
Successful entrepreneurs share certain characteristics, including resilience, creativity, and a willingness to take risks. In South Africa, we have many successful entrepreneurs to serve as role models. Two excellent examples:
- Ludwick Marishane, from rural Limpopo, invented a gel “DryBath”, that can clean the body without water when he was just 17. He became such a success that in 2013, at age 23, TIME Magazine named him one of the “Top 30 under 30 people that are changing the world”.
- Phiwe Mngadi today owns beauty salons in Soweto and Sandton. She grew up in Soweto with her mother, a tea lady, and her father, a clerk. While at school she started a small business doing nails and makeup for her friends. She has expanded her “Plush Art Nail Studio” business to include beauty training which she does across Africa.
Strategies for aspiring entrepreneurs
For those considering entrepreneurship as a way of combatting unemployment, it is essential to gather information – through studying a relevant degree, for example – as well as getting some practical experience. This can include market research, creating a solid business plan, and finding a mentor. Look for mentorship programmes that connect experienced entrepreneurs with newcomers.
Collaborating with other entrepreneurs and using online platforms can help increase visibility and introduce more people to your business. Attend networking events, join online forums, and participate in industry groups. Learning from the experiences of others provides insights and solutions to common challenges.
To be a successful entrepreneur, you should focus on business ideas that have the potential to create jobs. This could mean finding areas where there's a need, especially in sectors where demand is high, and creating products or services to fill those gaps.
Overcoming challenges
Entrepreneurship is a world filled with possibilities, but it's important to be aware of the challenges that might come your way. Here’s how to tackle some potential hurdles:
- Access to finance: Getting money to start your business can be tough. Do research on the financial support available and take advantage of programmes designed to make access to finance easier. One solution may be to take a look at government programmes that provide financial support for entrepreneurs. Banks may also offer loans or grants, and so do financing institutions like Business Partners.
- Market competition: Standing out in a crowded market can be challenging. The answer is to focus on what makes your business unique. Find something special that sets you apart from others.
- Legal barriers: Dealing with rules and regulations can be confusing. Look to industry networks and government programmes for help and guidance. Stay informed about any changes in regulations that might affect your business. This proactive approach can help you adapt to changes smoothly.
Not everyone is cut out to be an entrepreneur but those that are, and who want to grow their skills, should consider pursuing qualifications in business and entrepreneurship. See here for more guidance on how best to get started on this exciting path.
About The IIE’s Varsity College
The Independent Institute of Education (The IIE) of which Varsity College is a brand, is South Africa’s largest registered and accredited private provider of higher education. At Varsity College we understand that no two students are the same or learn the same. That’s why we make sure a student’s education is shaped around them; how they like to learn, what they are passionate about, what makes them tick, and what makes them thrive. Our Education by Design approach allows students to grow into their best, and creates a space where they can live, learn and play – their way.