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Following last week’s Presidential Job Summit, the GSB’s newly appointed Associate Professor Mikael Samuelsson highlights that improving the quality and extent of education in South Africa is paramount to unlocking growth and creating jobs.
South Africa is a good place to do business. There are many opportunities to develop the economy sustainably – specifically through social innovation and entrepreneurship.
It is a super nice environment for business. But there are a number of paradoxes that are preventing the economy from developing in a sustainable way.
Although established private firms play their part and are in general well-run and doing their bit to improve things in the country, many are being pressured to cut down on employees due to both internal and external factors. So, job creation will not come from established firms. State-owned companies, traditionally a big employer, are also under pressure to cut employment due to continuous losses and lack of innovation.
The country needs therefore to look to the small to medium-sized businesses (SMMEs) to create jobs, but to achieve this it has to dial up its efforts to support this sector.
While a recent World Bank ease of doing business index, ranks South Africa 82 out of roughly 190 economies and the Doing Business in South Africa 2018 report shows cities in the country are making progress in improving the business environment for SMMEs, much more needs to be done to create a stable environment in which companies can operate, grow and compete without detrimental surprises.
But even more urgently, the country must boost its national education efforts.
Knowledge and capacity building are the key to sustainable development.
Of course government needs to work to improve the entrepreneurship ecosystem, if it wants to really get this economy going. But without an excellent education system that allows each child to reach their full potential by focusing on problem-solving rather than rote memorisation of facts and formulas, there won’t be enough people to take advantage of the conditions.
A poor education greatly undermines success in any economic eco-system. According to the Global Entrepreneurship Monitor, a longitudinal study of entrepreneurship that takes an annual snapshot of the state of entrepreneurship in participating countries around the world, there is a positive correlation between the level of education that an entrepreneur receives and their likelihood of starting and running a business.
More than that, the better educated an entrepreneur; the more likely they are to start high growth innovation businesses that also create jobs. And good education goes further than just creating entrepreneurs.
The same goes for research, better research, better innovation, better use of resources.
It is also not enough for a country to produce only excellent entrepreneurs, we need excellent scientists that can develop technology and innovation as the foundation for the future.
Fixing education, which is widely agreed to be in a declining state in South Africa, is therefore paramount. It is far cheaper to fix the education system than to deal with unemployment and all its related social issues. And, it will also contribute massively to the economy by improving entrepreneurial efforts.
There is a growing consensus that entrepreneurship is a mechanism for economic growth.
Pilar Salgado Otónel, programme manager of the Sub-national Doing Business Unit at the World Bank said in a City Press report that a better regulatory environment would allow businesses and entrepreneurship to flourish. However, only certain types of entrepreneurship really matter when it comes to growing an economy.
Necessity entrepreneurship, survivalist entrepreneurship, has little to no impact on economic development. Small to medium-sized businesses can form the backbone of an economy. They do in many countries, but if you want economic growth you also need high growth potential entrepreneurship. These are fast-growing new firms.
And to run fast-growing new firms takes a lot.
It is much harder than people think. It requires a massive amount of hard work, knowledge, capacity and a network of support that just isn’t available to everybody. And it takes a specific kind of educated mind to even spot the high growth potential opportunities.
An education system that can focus on creating generations of problem-solvers with an “I can do capacity” rather than jobseekers is really worth investing in.
Think of it as a football team. If you really want to compete with the best you need to have a little bit of talent, a big chunk of hard work, state-of-the-art knowledge and capacity, a system that supports and enhances both the individual and the team – and a culture of winning based on your own capacity and knowledge.
• Mikael Samuelsson is associate professor at the UCT Graduate School of Business,
Samuelsson is both an academic and a practitioner of entrepreneurship. He has founded two business incubators/accelerators in his native Sweden and has helped establish a network of business accelerators in Namibia, Botswana, Kenya and Uganda. He has extensive experience in technology transfer and tech start-ups, as a founder, chief executive and investor, and over the past 15 years he has studied more than 1000 new ventures from birth and as they mature. His research is used widely in both education and in government programmes for entrepreneurs. This gives him a unique insight into the challenges and opportunities facing entrepreneurs.
