1008628772__20260513__0 The study concluded that while South Africans continue to demonstrate innovation, resilience and a willingness to take entrepreneurial risks, these qualities are undermined by an ecosystem that has failed to keep pace with comparable emerging economies.
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South Africa has the entrepreneurial talent and ambition needed to grow new businesses, but a weak support ecosystem continues to prevent many ventures from becoming sustainable enterprises that create jobs.
This is according to the 2026 Global Entrepreneurship Monitor (GEM) National Expert Special Report on South Africa released on Thursday.
The report found that South Africa scored just 3.9 out of 10 on the National Entrepreneurship Context Index (NECI), placing it among the seven lowest-ranked entrepreneurial ecosystems globally and well below the global average of 4.7.
Compiled through a partnership between Stellenbosch Business School, the University of Johannesburg, North West University and the Small Enterprise Development & Finance Agency (SEDFA), the report assessed the country's entrepreneurship environment across 13 enabling framework conditions, including access to finance, government support, regulation, infrastructure, education and cultural attitudes.
The study concluded that while South Africans continue to demonstrate innovation, resilience and a willingness to take entrepreneurial risks, these qualities are undermined by an ecosystem that has failed to keep pace with comparable emerging economies.
Research fellow at Stellenbosch Business School and co-author of the report, Angus Bowmaker-Falconer, said South Africa's challenge was not a shortage of policy or funding, but the inability to implement existing measures effectively.
"The problems of a substantial gap between good policies and on-the-ground reality are well-diagnosed. What is needed now is not new policies or additional funding, but the political will and institutional discipline to translate the policies and financial resources we already have into action," Bowmaker-Falconer said.
The report benchmarked 56 countries that collectively account for 78% of global gross domestic product and 63% of the world's population.
South Africa's NECI score has remained largely unchanged over the past five years and trails several peer emerging economies. Indonesia scored 5.8, India 6.1, China 5.4 and Brazil 4.0, while the United Arab Emirates topped the rankings with a score of 7.1.
According to the report, countries outperforming South Africa have benefited from coordinated government interventions, streamlined regulations and stronger institutional support for entrepreneurs.
Bowmaker-Falconer said these successes were the result of deliberate policy choices rather than higher levels of wealth or education.
"Countries scoring above 5.5 are not wealthier, more educated, or more entrepreneurially minded than South Africans. The performance of countries like India, Indonesia and the UAE is the result of deliberate, coordinated policy choices in digital infrastructure, streamlined company registration and compliance regimes, proactive government support programmes, and cultural support for entrepreneurship, which have led to better enabling conditions," he said.
Despite the low ranking, the report argues that South Africa's entrepreneurial ecosystem retains significant strengths.
Acting SARChI Chair in Entrepreneurship Education at the University of Johannesburg and co-author of the report, Professor Natanya Meyer, said the country possessed a sophisticated financial sector, expanding incubator networks, established universities, a solid research base, growing digital adoption and a young population eager to build businesses.
"The data shows a system with real strengths: a sophisticated banking and financial sector, a growing incubator network, established universities, a strong research base, growing digital adoption, and a youthful population with the drive and ingenuity to build businesses under difficult conditions," Meyer said.
She added that although government support was often fragmented and difficult to navigate, entrepreneurs who understood how to access available programmes were better positioned to succeed.
"The entrepreneurs who succeed are not those who avoid the bureaucracy, but those who master it," she said.
However, Meyer noted that many entrepreneurs remain unaware of the support available, while others struggle with fragmented delivery across multiple agencies.
The report recommends launching targeted awareness campaigns, particularly for young entrepreneurs, alongside a single digital platform providing information on eligibility requirements, application processes and timelines for government support programmes.
The report highlights the critical role of micro, small and medium enterprises (MSMEs) in South Africa's economy. These businesses contribute about 40% of gross domestic product and account for approximately 60% of employment. However, many fail within their first five years.
Against the backdrop of South Africa's unemployment rate of 32.7% under the narrow definition and economic growth averaging below 1% over the past decade, the report argues that entrepreneurship should become a national priority.
"Entrepreneurship is a primary mechanism through which South Africa can absorb unemployment, address structural inequality, and generate the growth that policy alone cannot create. The ecosystem that enables it must be treated as the national priority it is," Bowmaker-Falconer said.
Among the report's immediate recommendations are reducing bureaucratic complexity, coordinating government agencies, easing procurement barriers and expanding digital access for MSMEs through subsidised artificial intelligence, accounting and productivity software, particularly in township and peri-urban communities.
Over the medium term, the report recommends introducing entrepreneurship as a formal school subject, expanding teacher training, improving affordable broadband infrastructure and strengthening competition in concentrated industries to create opportunities for smaller firms.
Longer-term reforms focus on changing societal attitudes toward entrepreneurship. South Africa scored only 4.0 out of 10 for social and cultural norms supporting entrepreneurship, compared with the global average of 5.2.
Meyer said lasting economic change would require entrepreneurship to be viewed as a respected career path, where innovation and calculated risk-taking are encouraged and business failure is treated as a learning opportunity rather than a permanent stigma.
BUSINESS REPORT