South Africa has the second largest economy in Africa. Yet, due to a variety of structural, historical, and political factors, the economy is susceptible to fluctuations. Persistent challenges to economic growth in turn affect the ability to start and grow businesses. The OECD identifies high unemployment rates, high interest rates, and rising oil prices as a few of these challenges. In addition, South Africa remains one of the most unequal countries in the world. In an effort to reduce inequality and eliminate poverty by 2030, South Africa produced the National Development Plan 2030, which provides a long-term vision for the country to achieve economic growth.
Within this larger economic context, a concentrated examination of one region within South Africa can provide greater insight into a specific geographic area, close information gaps, and help foster a local environment in which entrepreneurs can thrive. This snapshot commenced in February 2018 with support from the Department for International Development (DFID). It provides an in-depth look at programmatic support available to entrepreneurs in South Africa’s economic hub, the Gauteng province.
In this snapshot of the Gauteng province, the Aspen Network of Development Entrepreneurs (ANDE) identified 255 organizations with programs supporting entrepreneurs. These organizations collectively operate 215 programs that provide non-financial support, 90 programs that provide financial support and seven programs that provide other support services to entrepreneurs in Gauteng.
This snapshot also builds on previous efforts to identify support for entrepreneurs in South Africa. ANDE’s South Africa Chapter created its first snapshot in 2015 and released an update in 2017.
Programs in Gauteng are clustered in Johannesburg, with over 87% of programs with offices and/or staff located in the metropolitan area. Within the Johannesburg metropolitan area, 63% of programs have a physical presence in the wealthy Sandton suburb. Only 13% of programs operate in the lower income townships of Soweto, and less than 10% work in the Roodepoort and Southern townships.
55% of these programs are sector agnostic and mainly focus on employment generation, due to South Africa’s high unemployment rate. In addition, most programs state that they focus on supporting women and youth. In terms of investment models, only 15% of respondents included impact investing strategies in their business models, and equity was the preferred investment instrument overall.