The perceptions of entrepreneurs in South Africa are more negative than their counterparts elsewhere in Africa, says a survey by Pierre Omidyar’s Omidyar Network Africa.
Complex legislation and limited availability of appropriate skills and talent remain major drawbacks for the country in growing innovative new businesses.
Only 13% of the respondents — the survey was conducted across 1,100 respondents from Africa that are involved in entrepreneurial ventures — found that schools in South Africa were devoting enough time to teaching entrepreneurship. Only a small increase to 21% occurred for university and college education.
Omidyar Network Africa MD Malik Fal said on Thursday that South African entrepreneurs clearly did not think there was enough entrepreneurial content on the continent. "The feedback was worse than other African countries."
Less than 25% of participants thought there was not enough support for smaller businesses and enterprises — they said support, which could range from accounting to finance and legal, did not deliver value for money.
And only 10% believed that there were a sufficient number of incubators — which are businesses that allow ideas to hatch into successful enterprises.
Omidyar Network Africa is a philanthropic investment firm dedicated to harnessing the power of markets to create opportunities for people to improve their lives.
The network invests in and helps scale innovative organisations to catalyse economic and social change.
EBay founder Pierre Omidyar and his wife established Omidyar Network based on their conviction that "every person has the power to make a difference".
"Our work enables people to discover that power, improve their own lives and make lasting contributions to their communities," says Mr Omidyar.
The formation of the network was inspired by his experience at eBay, which he founded in 1995 based on his beliefs in the potential of individuals and the power of markets. EBay allows people to connect with others over shared interests and provided them incentives, like public feedback, to engage constructively with trading partners, thereby owning their marketplace reputation and ultimate success.
But now South Africa stands to benefit from Mr Omidyar’s thinking, as a major expansion is planned.
According to Mr Fal, an Africa office is being commissioned next week and it will be based in Sandton. The organisation, though, has been involved in Africa since 2004 and has already invested $40m into 30 companies.
"We want to accelerate investment into Africa," says Mr Fal.
Mr Omidyar gets involved directly with the bigger investments of more than $2m, so a greater direct role is likely from him in Africa.
A conference for capitalists wanting to invest in start-up companies — angel investors — is also planned for the next few weeks.
The man who established Google’s presence in South Africa, Stafford Masie, says "innovators make companies". He told the Innovation Summit last week that "we don’t work enough on stuff that matters in South Africa. You must make things that don’t exist."
One of the major supporters of innovation in South Africa is the Industrial Development Corporation — it hosted the Innovation Summit. It is a venture capital unit that has invested in excess of R600m in 32 new technology focused start-ups.
The Department of Trade and Industry has started a support programme for industrial innovation, with funding of between R60m and R80m a year. But more is clearly needed. A new innovation index is due to be launched this year that will set the tone as the best company innovations will be rewarded. It is run by Accenture and supported by Business Day.
A company that also supports the move to an index is Intervate.
Gia Thom, of Intervate, says technology is critical for business and this is where major opportunities lie.
According to Ms Thom, costs are not an inhibiting factor primarily because of return on investment. "By automating manual processes and dramatically improving productivity and accuracy, the software ensures that a team is able to process more information, in less time, with fewer mistakes requiring correction downstream."
In an accounts payable department that processes invoices, an organisation can expect a 90% extraction rate, a 50% reduction in queries and a productivity improvement of 200%-1,000%.
As the software can learn over time, the more volumes processed the more is automated.
One organisation redeployed 10% of its team but was still able to handle a 47% increase in invoice volume.
Another reduced the time taken to approve an invoice by 83%.