Zoltan Acs, founder of the GEDI Institute, on the Entrepreneurial Ecosystem of South Africa: A Strategy for Global Leadership. Presentation delivered by at the Global Entrepreneurship Congress in Johannesburg, South Africa (March 2017).

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THE ENTREPRENEURIAL
ECOSYSTEM OF SOUTH AFRICA:
A STRATEGY FOR GLOBAL
LEADERSHIP 2017
Zoltan Acs
The Global Entrepreneurship and Development Institute

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South Africa is an entrepreneurial leader in sub-Saharan Africa. The
country has made significant progress to overcome structural factors
and produce some of the most innovative and successful enterprises
on the continent. The country provides the institutional support
necessary for high-growth businesses to emerge and thrive, while
government policies work to close historical gaps. With the addition of
targeted, coordinated policies to address remaining bottlenecks, the
country is poised to achieve greater growth through entrepreneurship.
Summary

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• Research organization that advances knowledge on links between
entrepreneurship, economic development and prosperity
• Founded by world-leading entrepreneurship scholars from the LSE, George
Mason University, University of Pécs and Imperial College London
• Main contribution is the Global Entrepreneurship Index
• Covered by The Economist, The Wall Street Journal, Financial Times and
Forbes
• Methodology has also been endorsed by the European Commission and
has been used to inform the allocation of EU Structural and Cohesion
Funds
The Global Entrepreneurship and
Development Institute

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Two views of entrepreneurship: GEI and TEA
TEA: Negatively correlated with development GEI: Positively correlated with development

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South Africa in the African context:
South Africa benefits from a multitude of entrepreneurial support programs, as
well as infrastructure that is better than most other African countries. South Africa
is a clear leader in the regional context, and is second only to Botswana in its
overall GEI score.
12.5
13.1
13.8
15.0
16.7
19.3
20.7
20.6
21.3
23.0
32.3
35.5
35.9
11.4
11.9
12.6
13.3
15.3
16.2
18.6
19.2
19.8
21.1
29.0
29.8
32.9
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0
Burkina Faso
Malawi
Uganda
Angola
Cameroon
Ethiopia
Senegal
Nigeria
Zambia
Ghana
Namibia
South Africa
Botswana

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South African performance by pillar
PILLARS INSTITUTIONALVARIABLES INDIVIDUALVARIABLES
Entrepreneurial
Attitudes
Opportunity Perception 0.42 Freedom and Property 0.53 Opportunity Recognition 0.60
Start-up skills 0.07 Education 0.21 Skill Perception 0.49
Risk Acceptance 0.43 Business Risk 0.44 Risk Perception 0.78
Networking 0.31 Agglomeration 0.51 Know Entrepreneurs 0.49
Cultural Support 0.38 Corruption 0.49 Career Status 0.72
Entrepreneurial Attitudes 28.8
Entrepreneurial
Abilities
Opportunity Startup 0.34 Tax and government 0.52 Opportunity Motivation 0.53
TechnologyAbsorption 0.21 TechAbsorption 0.71 Technology Level 0.39
Human Capital 0.25 Labor Market 0.66 Educational Level 0.30
Competition 0.63 Competitiveness and Regulation 0.65 Competitors 0.85
Entrepreneurial Abilities 31.2
Entrepreneurial
Aspirations
Product Innovation 0.54 TechnologyTransfer 0.56 New Product 0.73
Process Innovation 0.50 Science 0.55 NewTech 0.95
High Growth 0.55 Finance and strategy 0.57 Gazelle 0.74
Internationalization 0.49 Economic complexity 0.54 Export 0.70
Risk Capital 0.18 Depth of Capital Market 0.86 Informal Investment 0.30
Entrepreneurial Aspirations 38.0
GEI 32.6 Institutional 0.56 Individual 0.61

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Time trend in South Africa
33.6
37.3
35.1
33.0 32.8 33.6
34.9 33.9
32.6
20
25
30
35
40
45
2006 2008 2009 2010 2011 2012 2013 2014 2015
ATT ABT ASP GEI

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Peer comparison: Botswana and the West African countries
0.00
0.20
0.40
0.60
0.80
1.00
1. Opportunity Perception
2. Startup Skills
3. Risk Acceptance
4. Networking
5. Cultural Support
6. Opportunity Startup
7. Technology Absorption
8.Human Capital
9. Competition
10. Product Innovation
11. Process Innovation
12. High Growth
13. Internationalization
14. Risk Capital
South Africa Botswana West Africa

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Peer comparison: BRICS
0.00
0.20
0.40
0.60
0.80
1.00
1. Opportunity
Perception
2. Startup Skills
3. Risk Acceptance
4. Networking
5. Cultural Support
6. Opportunity
Startup
7. Technology
Absorption
8.Human Capital
9. Competition
10. Product
Innovation
11. Process
Innovation
12. High Growth
13.
Internationalization
14. Risk Capital
South Africa Brazil China Russia

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Country comparison
Country ATT ABT ASP GEI Institutional Individual
GDP per
capita
Botswana 46.8 32.2 23.8 34.2 0.46 0.66 14779
Brazil 30.4 20.5 12.1 21 0.51 0.44 14416
China 29.3 26.9 49.3 35.1 0.56 0.58 10822
Colombia 36.5 33.5 46.1 38.7 0.47 0.73 11621
Egypt 16 19.9 32.3 22.7 0.35 0.6 9807
Indonesia 29.7 18.8 15.1 21.2 0.48 0.53 9278
Mexico 34.8 24.8 21.4 27 0.5 0.5 15958
Namibia 32.7 27.5 29.2 29.8 0.41 0.71 8995
Nigeria 24.2 23.7 18.5 22.1 0.33 0.66 5207
Russia 23.9 29.1 21.3 24.8 0.47 0.47 22795
South Africa 28.4 32.7 39.4 33.5 0.55 0.63 11967
Thailand 28 30.1 26.3 28.1 0.52 0.55 13495
Tunisia 36.5 41.5 38.7 38.9 0.48 0.7 10232
United Kingdom 67.2 81 63.3 70.5 0.87 0.66 36806
United States 75.8 80.5 86.5 80.9 0.93 0.76 50756
Vietnam 16.9 24.9 24.8 22.2 0.37 0.57 5043

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South African performance by pillar – bottlenecks from GEI
PILLARS INSTITUTIONALVARIABLES INDIVIDUALVARIABLES
Entrepreneurial
Attitudes
Opportunity Perception 0.42 Freedom and Property 0.53 Opportunity Recognition 0.60
Start-up skills 0.07 Education 0.21 Skill Perception 0.49
Risk Acceptance 0.43 Business Risk 0.44 Risk Perception 0.78
Networking 0.31 Agglomeration 0.51 Know Entrepreneurs 0.49
Cultural Support 0.38 Corruption 0.49 Career Status 0.72
Entrepreneurial Attitudes 28.8
Entrepreneurial
Abilities
Opportunity Startup 0.34 Tax and government 0.52 Opportunity Motivation 0.53
TechnologyAbsorption 0.21 TechAbsorption 0.71 Technology Level 0.39
Human Capital 0.25 Labor Market 0.66 Educational Level 0.30
Competition 0.63 Competitiveness and Regulation 0.65 Competitors 0.85
Entrepreneurial Abilities 31.2
Entrepreneurial
Aspirations
Product Innovation 0.54 TechnologyTransfer 0.56 New Product 0.73
Process Innovation 0.50 Science 0.55 NewTech 0.95
High Growth 0.55 Finance and strategy 0.57 Gazelle 0.74
Internationalization 0.49 Economic complexity 0.54 Export 0.70
Risk Capital 0.18 Depth of Capital Market 0.86 Informal Investment 0.30
Entrepreneurial Aspirations 38.0
GEI 32.6 Institutional 0.56 Individual 0.61

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Bottlenecks from survey data

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Root causes of bottlenecks from survey data

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Impacts of bottlenecks from survey data

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South African - Ecosystem bottlenecks
Identified in survey Identified in GEI analysis
(number of respondents) (severity of bottleneck)

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Strategy to target bottlenecks
1. Startup skills
• Education is the number one priority
• Deregulation
• Unemployment/re-employment training
• Informal to formal
• Wage subsidies to reduce systemic bias
2. Banking and finance
• Mobile banking
• Crowd funding
• Higher touch SME loan management
• Credit scores to reduce systemic bias

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Strategy to target bottlenecks (continued)
3. Technology absorption
• Increase penetration of digital technologies
• Increase digital inclusion
• Encourage digital entrepreneurs
• Empower digital users
• Build digital platforms

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Thank you
Zoltan Acs
Founder and President
The Global Entrepreneurship and Development Institute
Zoltan@thegedi.org
www.thegedi.org