Ecosystem Snapshot

Gauteng

Stakeholder Insights

Challenges

  1. Over 60% of programs have offices and/or staff in the more affluent suburbs of Gauteng. Less than 13% of programs have a physical presence in the more impoverished and low income rural and informal settlements
  2. There is a shortage of funds that make investments into other funds which invest in the growth of SGBs. This contributes to a shortage of seed- and early-stage funding for SGBs and hinders support for entrepreneurs at the ideation stage.
  3. Anecdotal evidence suggests that there is a shortage of skilled or experienced candidates applying for jobs at entrepreneur support organizations. Current program practitioners in the sector often lack the necessary professional skills to help aspiring entrepreneurs not only develop their businesses, but also overcome personal challenges that may affect their entrepreneurial success.
  4. The ability of ecosystem players to make informed decisions and fill the most critical gaps is limited by the shortage of robust local ecosystem research and siloed approaches.
  5. A lack of agreed upon, commonly used definitions and language in the ecosystem causes confusion for intermediaries and entrepreneurs.
  6. SGBs in the supply chains of government entities and corporations often wait well over 30 days for invoice payments. This negatively affects the businesses’ cashflow and limits their ability to access opportunities for growth (Anderson, 2018).

Opportunities

  1. The government is committed to the entrepreneurship agenda. Support programs include Gauteng’s Growth and Development Strategy (GDS), Gauteng Township Economy Revitalisation Strategy, the National Development Plan (NDP) and the Youth Employment Service (YES) program. The Department of Small Business Development also has a number of support programmes.
  2. An active yet fragmented Gauteng entrepreneurial ecosystem lends itself to a better coordinated provincial strategy with targeted roles, effective partnerships, and collaboration.
  3. The majority of corporations in South Africa are headquartered in Gauteng and are equally committed to small business development through the SA SME Fund – a fund of funds to support the growth of high-potential businesses that will positively impact economic growth.
  4. Venture Capital Companies (VCC’s) in Gauteng are on the rise, which is influenced by Section 12J, a tax incentive for VCC’s introduced by the government. This is encouraging to early stage businesses needing to unlock financial support.
  5. Few investors identify as impact investors in Gauteng. Enterprise development, corporate social investment and philanthropy offer opportunities to de-risk early stage investments. Impact enterprises can take the pressure off the public sector by providing goods and services.
  6. Examples of public private partnerships have shown the potential that innovative finance mechanisms, such as guarantees for entrepreneurs who lack capital and capacity, can offer to unlock support for early stage entrepreneurs.
  7. Gauteng is the most developed province in South Africa but suffers from disparities of support between wealthier and poorer suburbs. There is a gap in the market for ecosystem players that are interested in investing in infrastructure improvements in underserved areas, such as shared workspaces, internet access, and incubation hubs.

Recommendations

Collaboration

Actors in the Gauteng entrepreneurial ecosystem need to be more aligned with one another and with larger national economic objectives. Greater collaboration will reduce fragmentation and the number of players operating in silos, thereby creating a more effective network.

Pipeline

There is an increased need for platforms that successfully match entrepreneurs to relevant support, opportunities, and investments. This would expose entrepreneurs to development programs that are best-suited to their needs and minimize the likelihood of entrepreneurs hopping from one entrepreneurship development program to the next.

Research and information sharing

There is an increased need for more data, entrepreneurship education, and research in the ecosystem on what works and what does not. To achieve this, entrepreneurship development practitioners need to conduct measurement and evaluation practices in their daily tasks. This will provide the ecosystem with robust information and a better understanding of each other and lay the groundwork for a shared research agenda.

Access to funding for early stage entrepreneurs

More early stage risk capital should be made available to aspiring entrepreneurs in the ideation and early stages to develop their business ideas into commercially viable products. This will encourage more innovative and opportunity driven entrepreneurship. It would also ensure a more inclusive environment for entrepreneurs from more vulnerable populations in South Africa, including women and youth.  

Breaking market barriers for vulnerable entrepreneurs

Most support programs have their offices in the plush suburbs of Gauteng. This increases barriers to market access for entrepreneurs in rural and township areas. Increasing programs’ physical presence in rural and township areas will help more vulnerable and aspiring entrepreneurs access support more easily.

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