Article on Entrepreneurship and education-Allon Raiz
I will be taking a short break but will pick up again early in August. I thought I would leave you with this challenging read by my former boss and now, a trusted friend and mentor (Allon Raiz)
I asked permission from him this morning to share and he has graciously given the thumbs up. Hope you enjoy it. (Delighted to be in these two vital arenas-Education and Entrepreneurship)
South Africa doesn’t just need more entrepreneurs, it needs better entrepreneurs by Allon Raiz
South Africa’s unemployment crisis requires the creation of jobs – and rapidly. To this end, numerous entrepreneurship programmes have been implemented by both the public and private sectors, and these have led to some increase in the number of small businesses opening.
Despite this, according to the Global Entrepreneurship Monitor (GEM) 2011 Report, South Africa remains one of the more poorly-performing countries with regards to entrepreneurial activity. South Africa’s Total Early-Stage Entrepreneurial Activity (TEA – the portion of the population involved in the early stages of entrepreneurship) in 2011 was 9.1%, far below the average of comparable economies around the world, ranking 29th out of 54 countries. Significantly, 96% of these small businesses will fail within 10 years. In order for the economy to grow, South Africa not only needs more entrepreneurs – it needs better entrepreneurs.
Education and entrepreneurship in South Africa
The GEM 2011 Report defines entrepreneurship as “any attempt at new business or new venture creation, such as self-employment, a new business organisation, or the expansion of an existing business, by an individual, a team of individuals, or an established business”.
It is understood that failure is a component of entrepreneurship. Both entrances and exits of businesses are important to a dynamic entrepreneurial society. However, a fact of fundamental importance to a constrained economy such as South Africa’s, is that too many unsustainable businesses are a waste of resources. Start-up efforts need to be accompanied with the ability for these businesses to have their best chance to test and reach their potential.
In the National Expert Survey (NES) that formed part of the GEM 2011 Report, experts identified government policies, financial support, and education and training as the three most important factors constraining entrepreneurship in South Africa. A healthy and educated population is key to the competitiveness, growth and productivity of a country. A sound basic education system is therefore one of the key imperatives. On an individual level, education is a tool that will enable entrepreneurs to remove at least some of the barriers to funding. Young people must be educated and trained, particularly in the field of entrepreneurship.
Bridging the education gap is reliant on business
Entrepreneurship is critical to the development and well-being of society. Entrepreneurs create jobs. They drive and shape innovation and contribute indirectly to productivity. Entrepreneurship is thus a catalyst for economic growth. Entrepreneurs who introduce products or services that exhibit a range of innovativeness should be encouraged as they have the potential to significantly impact the employment growth and increase economic and social health.
The escalation of workshops is a positive sign of growth in entrepreneurial interests, from both business and the general population. Pitch & Polish specifically addresses the divide on entrepreneurial education to smaller communities in an experience-based environment. This is a forward-thinking and strategic approach to stimulate entrepreneurial activity.
The objective is to steer the country’s development towards innovation where businesses are more knowledge intensive. A key recommendation by the NES is for a carefully implemented national programme of incubators to be set up, in partnership with the private sector. In line with the GEM Report, they believe that establishing businesses within smaller communities will lead to job creation, poverty alleviation and economic growth.
The sacrifice of quality for quantity must be avoided
As noted in the GEM Report, entrepreneurship does not impact an economy simply through higher numbers of entrepreneurs. While the presence of early-stage entrepreneurs who infuse vitality and innovation into economies is of supreme importance, it is also important to acknowledge the crucial role played by established businesses in a country’s economic development.
The current economic, social and political challenges have escalated particularly when compared with other emerging economies. Within this context, creating programmes, government policies to increase the number of individuals that pursue entrepreneurship as a positive employment choice are vital. However, to avoid a leakage of resources, entrepreneurs must be schooled for success.
Business incubators play a pivotal role in stimulating entrepreneurship at this level. Channelling the transfer of knowledge between established big businesses and emerging small enterprises can be solved with programmes such as Pitch & Polish. The workshops facilitate the development of small businesses through the efforts of large corporations. This initiative is aimed at improving entrepreneurship and the development level of the economy.
Promoting an entrepreneurial culture
Peter Drucker explains that the role of entrepreneurs is to search for, respond to, and exploit change. The extent and nature of this change, and likewise innovation, can vary considerably.
Entrepreneurship in a society can be portrayed as a portfolio of different business phases and types. Individuals in the process of starting businesses become new entrepreneurs, and then established business owners. A variety of entrepreneurs at all phases will ensure this activity is continually renewed and sustained. Economies also need growth businesses to create new jobs. They need innovation to boost their societies’ comparative advantage. And because markets are increasingly global, they must have entrepreneurs capable of international competition. These entrepreneurial endeavours may emerge, not only in start-ups, but also in social enterprises, family businesses, corporate environments and other contexts. In addition, economies need many different types of entrepreneurs.
Nelson Mandela’s words aptly describe the path to growth, “Education is the most powerful weapon which you can use to change the world”.
(Allon Raiz is a member of the World Economic Forum Global Agenda Council on Fostering Entrepreneurship and CEO of Raizcorp.)
Growing an entrepreneurial community