Building Stronger Startup Ecosystem in South Africa

Building Stronger Startup Ecosystem in South Africa

Startups are supposed to expand quickly. Quick growth has become one of the criteria to assess the strength of a startup ecosystem. Startups are not really different from normal traditional businesses, they all try to provide solutions to socioeconomic problems. However, startups edge out traditional businesses based on the innovative processes adopted for service provision and product delivery. Startups possess the dynamism cherished by service users in solving problems.

Nonetheless, Africa’s startup ecosystem has been plagued with so much challenges. In a post from the Ouut last week, we recounted that 9 out of 10 African startups fail. In the post, lack of access to funding was highlighted as the principal issue responsible for startup failure in Africa. While this and several other issue may have been responsible for the failure of most African startups, there is no debate that building a strong startup ecosystem should be the concern of any African government.

The African startup ecosystem is currently very active in South Africa and it has been able to successfully pull both funding money and investment rounds. It can be safely said that South Africa is currently doing extremely well in comparison to other African countries. Currently, the country has the best economy in Africa and accounts for one of the Big 4 heavy weights in African tech ecosystem. Yet, South Africa has one of the highest startup closure rate in Africa at 58.73%. This comes as a paradox when you consider the country’s advanced macroeconomic reality.

The high failure rate of small businesses in South Africa suggests something fundamentally wrong. The key to this might rest in institutional strategies targeted at improving the chances of ensuring a sustainable business enterprise.

Startup Ecosystem Strength

The strength of an ecosystem resides in the capability of its organisms. South Africa’s impressive progress in the continent is founded on an economic inclusion agenda that focuses on creating jobs and opportunities through innovation and entrepreneurship. The amount of this support has the potential to make South Africa a significant contributor to global innovation, but it must first keep improving the lives of its residents by enhancing access to necessities like education, jobs, and ICT services.

The government’s objectives will be achieved if the emphasis is shifted from the quantity of entrepreneurship programs to their effectiveness, which will maximize impact.

The output indicators for innovation creation show that South Africa outperforms many of its peer emerging markets, but it still has a way to go to catch up to the top performers. These indicators measure the volume of innovation generated by the nation as a whole and the amount of innovative products and services generated by entrepreneurs. Infrastructural adjustment will likely see it compete with global heavyweights.

More so, numerous well-funded innovation hubs, co-working spaces, incubators (and preincubators), and accelerators serve as tangible representations of the Gauteng Province ecosystem. Given the significant government participation in the Gauteng ecosystem, the government pays more attention to this province’s ecology and examines it more closely. Regarding the environment of Cape Town, the same cannot be stated. Although it has a thriving startup ecosystem, the latter is compelled to rely on local investments because it receives relatively little funding from the government.

The South African government can develop a supportive structure that is aimed at all of South Africa’s ecosystems rather than concentrating on just one.