With a strengthened entrepreneurship ecosystem, the increasing number of startups in the country could become an engine of job growth, according to a report by the World Bank. The report, the latest edition of the World Bank’s South Africa Economic Update, looks into the impact of the Covid-19 pandemic on the labor market of one of Africa’s biggest economies and how supporting young entrepreneurs could address unemployment. The World Bank report says only 10% of jobs in South Africa are in self-employment, a low figure compared to about 30% in most upper-middle-income economies, including Turkey, Mexico, and Brazil. If South Africa were to match the self-employment rate of other upper-middle-income economies, it adds, it could potentially half its unemployment rate. A vibrant start-up sector could help close the self-employment gap, but for the country’s entrepreneurship ecosystem to reach its potential, it recommends relaxing legal constraints and rules that prevent the development of this area and scaling up programs that provide entrepreneurial training and startup grants to address other barriers to entry. South Africa has a flourishing startup ecosystem. Eighty-one tech startups in the country raised a total of $142,523,000 last year, according to Disrupt Africa, a website that tracks African startups. Its digital sector in general is big too as Cape Town alone has more than 450 tech firms and more than 40,000 employees in the space.
SOURCE: QUARTZ AFRICA