Only 4% of SA startups say they’ve received business support from government

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Statistics from earlier this year reveal that 80% of startups in South Africa fail within their first three years. Yet only 4% of startup owners say they’ve received business support from government, which is meant to be one of the biggest and most crucial drivers of entrepreneurship success in any economy.

This was revealed in a new study conducted with local startup owners by accounting and payroll software company, Sage, as part of a global study with 1000 entrepreneurs.

According to the research, 96% of respondents said they’ve had no assistance, financial or otherwise, from the national government since they established their business.

This statement mirrors findings from the African Entrepreneurship Survey 2015 conducted with entrepreneurs from five African countries, including South Africa, which revealed that most entrepreneurs listed government support among their top needs that are currently not addressed.

So, how can government up their game and offer the necessary support? Entrepreneurs suggested the following recommendations for the state, which tackle the top barriers that hinder small business success in the country:

  1. Control energy and utility costs
  2. Reduce red tape
  3. Simplify labour regulation
  4. Reduce business rates and taxes
  5. Bring stability to foreign exchange rates

“SMEs are the engine of our economy. Their leaders are heroes, willing to make a great personal sacrifice and take significant risks in the name of growth and job creation. As a country we owe them a debt of gratitude,” said Ivan Epstein, CEO of Sage Africa, Australia, Middle East and Asia.

Respondents were also found to be particularly hard-working, with 54% saying they did not take a holiday last year and 70% working beyond the standard 40 hour week to grow their businesses.

Other findings include:

  • 32% said that they expect to hire more than five employees in the next two years
  • 10% said they’ll hire as many as 20 employees in two years
  • 80% make personal donations to charities and non-profit organisations and
  • 32% encourage their employees to volunteer

“Compared to statistics from other countries, South African entrepreneurs are making strong contributions towards job creation and supporting volunteer work among their employees,” the study said.

[Image – CC BY 2.0]