Since 2009, the Aspen Network of Development Entrepreneurs (ANDE) has been monitoring the
status of the small and growing business (SGB) sector worldwide through its bi-annual State of the
Sector reports.
South Africa stands out as one of the most vibrant markets for small business expansion. The
entrepreneurial landscape in South Africa necessitates innovative strategies to enhance financial
resources, facilitate market access, streamline administrative processes, and bolster the capabilities
of small enterprises and startups.
The assessment of the SGB sector in South Africa in 2023 involves an analysis of the financial support
available to businesses, the capacity-building programs implemented, and the changing policy
landscape affecting entrepreneurship. It covers essential insights on business development services,
development finance institutions, support organizations for entrepreneurs, and impact assessment
and management.
The report emphasizes the need for greater inclusivity and the adoption of digital tools and
technologies to enhance the performance of small businesses, particularly in marginalized
communities.
Key discoveries include:
- The funding landscape is dominated by local players, and many are looking beyond Cape Town and Johannesburg. Over 75% of finance providers that offer investment and grants to South African entrepreneurs are based in the country. While most finance providers do not specify focus regions or provinces, secondary sources and ANDE funding data show increasing entrepreneurial activities and investment interests across different towns and provinces in South Africa, including Pretoria, Stellenbosch, and the Eastern and Western Capes.
- Advancements in technology are opening new pathways for competitiveness. Innovations such as Yoco are expanding the use of mobile payments among small businesses, and social media is beginning to expand market access for entrepreneurs previously cut off from larger social networks. Meanwhile, Microsoft South Africa and Youth Employment Service are partnering to educate 300,000 South African youth in Artificial Intelligence (AI) skills to increase the employability of the next generation in key technologies.
- Support for youth, township, and women entrepreneurs continues to grow. South Africa continues to increase its commitment to entrepreneurs from disadvantaged backgrounds. ANDE identified more than 150 organisations supporting entrepreneurship in the townships in South Africa. Meanwhile, in Cape Town, WomHub, a coworking space founded by and for women innovators in STEM, launched in 2023, and local accelerator FNB Youth Start-up Accelerator increased its applicants from 4,000 in 2022 to more than 10,700 in 2023.
One of the key areas of focus is the challenges faced by women business owners in securing investment, with evidence showing a significant financing gap for female entrepreneurs in developing economies. The report also highlights the gender disparities in accelerator programs, where women participants tend to grow their investment at a slower rate compared to men, exacerbating the gender financing gap.
ANDE has published several new studies in the past few years that have examined and contributed to a more comprehensive understanding of both the challenges and potential solutions to gender inequalities in the acceleration process.
As a 2020 study by the IFC and Village Capital concluded, “Effective interventions will need to be more holistic, reaching beyond addressing start-up behaviours and focusing on influencing the behaviour of investors… to more effectively address the gender gap, accelerators have a role to play in helping mitigate investors’ bias and risk perception.”
In summary, the report provides a comprehensive overview of the entrepreneurial ecosystem in South Africa, with a specific focus on the challenges and potential solutions related to gender inequalities in entrepreneurship and the support provided to entrepreneurs.
