**4. Low innovation in new business ventures in South Africa**

The Global Entrepreneur Monitor [6] reports that sub-Saharan Africa has the lowest number of entrepreneurs on the continent. Further, compared with other sub-Saharan African countries, South Africa has the lowest number of entrepreneurs and a lower Total Entrepreneurial Activity even though its discontinuance rate – that is, the frequency at which those who attempt opt out of the entrepreneur process – is modest. Few of these entrepreneurs turn out to be successful in their business ventures. Of interest to this research is the proportion of South African youths with entrepreneurial capability standing at 25 per cent compared with an average of 60 per cent for sub-Saharan countries.

One root cause of low innovation and hence entrepreneurship is early-stage entrepreneurial activity. **Table 1** shows the motivation index and other relative parameters for early-stage entrepreneurial activity in economies participating in the Global Entrepreneurial Monitor. First of all, early-stage entrepreneurial activity in South Africa (7 per cent) is way below the African average (26 per cent). Another parameter below the African average is the improvement-driven opportunity at 35.5 per cent for South Africa compared to about 47 per cent for the continent average. This implies 35.5 per cent of South Africans in the Total Entrepreneur Activity are motivated by improvement-driven opportunities and not because they could not find work, as well as seeking to be independent or to increase their income rather than maintaining their current income.

As implied in [17], another root cause of low innovation and hence entrepreneurship is that South Africans would rather emulate 'tried-and-tested' ideas instead of creating something new. Obviously, emulating means you are competing with the best, and therefore, the business is set up to fail. Emulating or adopting ideas is not uncommon. In Spain, the proportion of firms generating new inventions is only 7 per cent, compared with 54 per cent emulating, though a notable proportion (39 per cent) does both [18].

Underlining all this, according to Booyens [5], is a lack of policy support. There are notable talented innovators in South Africa, but legislation and interventions to nurture and support them are misaligned if not just ineffective. For example, according to [19], the current labour legislation hinders innovation as well as small and medium entrepreneurship because of its human resources processes. Then there is the collision course between various interventions and legislature. The National Development


*Source: The Global Entrepreneur Monitor (2013). Note: Total Early-Stage Entrepreneurial Activity (TEA) refers to the total population that is about to start a business or those who have been running businesses for not more than 3 years.*

#### **Table 1.**

*Motivation for early-stage entrepreneurial activity in the global entrepreneurial monitor economies in 2012, by region and country.*

Plan seeks to increase job opportunities by 2030, and yet SMEs shed 1.3 million jobs in 2013. Underlying this undesirable status quo are unsupportive labour laws, a weak national innovation system, a weak entrepreneurial culture, and an inability to compete with large companies that Booyens [5] raised earlier on.
