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South African GEM Launch

16 May 2012 - 11:15

Dr Mike Herrington, Centre for Innovation & Entrepreneurship, announced at the GSB the surprising outcome of the Global Entrepreneurship study for 2011 - South Africa has maintained its TEA rating at the 2010 high (9.1 vs 8.9). It was anticipated that the 2010 soccer world cup bubble of entrepreneurship would have burst by 2011. The TEA rating is the "total early-stage entrepreneurial activity" measure and whilst this level has been maintained, there is no room for complacency - we are well below the median of 14%.

The GEM report is the largest global longitudinal study with 54 country reports this year, SA's 11th year of participation. A special focus is on the performance of the BRICS countries - Brazil is the best of the bunch, with SA not performing well, but ahead of Russia in last place. GEM focuses on start-up (0-3 mths) and new firms (3-42 mths) and classifies start-ups as "opportunity" or "necessity" (no other job available / 'survival') driven.

The GEM report is available from the Centre for Innovation & Entrepreneurship at the UCT Graduate School of Business. It is authored by Mike Herrington, Jacqui Kew, Miranda Simrie and Natasha Turton.

Some of the statistics gave pause for thought - 202 m are unemployed globally, South Africa has unemployment of 48.2% in youth, and yet we have the second lowest entrepreneurship amongst the youth of the BRICS.

Key factors associated with poor levels of entrepreneurship in SA are crime, corruption, poor education and poor health. As one of the audience members remarked during Q&A if one can sort out the education and health, you have a better chance of dealing with the other two. In terms of primary education, SA is ranked 131 out of 142 countries and in Maths & Science 138, whilst cost of crime and violence 136.

A positive is that in terms of ease of doing business SA is ranked as 35 with SADC collectively ranked 114. Our labour laws are seen as restrictive for SMMEs.