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Health & Fitness

Can entrepreneurs aid the South African economy?

South Africa's long-term economic prospects may depend partly on cultivating successful entrepeneurs.

The economic outlook for resource-rich Southern Africa remains anemic, in spite of improved macroeconomic management across the region. Experts estimated that real gross domestic growth product (GDP) growth for the region was 4.2% and 4.6% in 2013 and 2014, respectively. However, exploding cellphone usage and an expanding workforce (by the middle of the century, Africa will have 25% of the globe’s workforce) are two of the seven drivers that could potentially transform all African economies.

In light of the recent passing of Nelson Mandela, it seems appropriate to consider some of these drivers and other factors with respect to the post-apartheid economy (actual rate of real GDP growth ~3%). South Africa’s long-term prospects will depend partly on reducing the current unemployment rate (up to 35% when including people who have given up looking for work), turning around the HIV/AIDS epidemic which has reduced the productive workforce, improving infrastructure, closing the gap in income inequality, and enhancing the ease of doing business. According to the World Bank, South Africa ranked 3rd this year out of 47 sub-Saharan economies (Mauritius and Rwanda were 1st and 2nd respectively) in terms of the ease of doing business. Rwanda and Mauritius were first and second in terms of the ease of starting a business, while South Africa only achieved 7th place on the same list.

Although South Africa has laid the foundation for economic expansion through improving institutions, enhancing the pace and quality of growth will depend on effective teamwork with businesses – an implicit point in the New Growth Path plan. In addition, expanding the digital footprint across the country will be a prerequisite for adapting to a changing global economy, a process already being advanced by large cellphone operators such as MTN Group. Lowering the cost of reliable bandwidth access may also accelerate the growth of e-commerce businesses and inspire motivated inventors among the growing number of South African Internet users to communicate their ideas and products.

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This, in turn, may facilitate the increased use of smartphones – a necessary tool for African entrepreneurs in a continent with few computers and very little electricity. To this end, companies such as Samsung Electronics expects to supply half of the smartphones sold in Africa this year, mainly to the continent’s tech-savvy youth. Young African entrepreneurs have been recognized as an important source of new jobs and have received local and international accolades. Thirty two year-old Ashish Thakkar received a 2013 award as the world’s best young entrepreneur. He highlighted the focused approach needed to run his pan-African conglomerate, the Mara group (which employs more than 7,000 people), in a recent talk at the Gordon Business institute in South Africa. Innovation and focus are also watchwords for 29 year-old Ashley Uys, listed by Forbes magazine as one of Africa’s best young entrepreneurs under 30 years old. His company, Medical Diagnostech, develops and markets affordable test kits for selected infectious diseases, including HIV/AIDS, to South Africa’s rural poor. Twenty two year-old Neftaly Malatjie’s Diepsloot Youth Projects has created employment opportunities for 16 young people. Similarly, 21 year-old Kolawole Olajide, has expanded educational opportunities for struggling youth with Funda, an online program that puts together educational resources for students and teachers in South Africa.

Together with other stakeholders, successful entrepreneurs are poised to leapfrog developmental challenges in the appropriate environments and aid in job creation and the revitalization of the economy.

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