South Africa’s entrepreneurship ecosystem trails global peers despite ambitious startups
South Africans are no strangers to building businesses under pressure. From township enterprises to fast-growing tech startups, entrepreneurship has become both an opportunity and, for many, a necessity.
Yet despite that resilience, a new international study suggests the country’s business support environment is still making it harder than it should be for entrepreneurs to succeed, Cape {town}Etc reports.
Released on Thursday, the 2026 Global Entrepreneurship Monitor (GEM) National Expert Special Report on South Africa found that the country’s entrepreneurial ecosystem scored just 3.9 out of 10 on the National Entrepreneurship Context Index (NECI), placing it well below the global average of 4.7.
The report, compiled through a partnership involving Stellenbosch Business School, the University of Johannesburg, North West University and the Small Enterprise Development & Finance Agency (SEDFA), measures factors ranging from access to finance and markets to government support, education, infrastructure and regulation.
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South Africa ranked among the lowest-performing countries in the study, trailing several fellow emerging economies including India, Indonesia, Brazil and China.
For entrepreneurs in cities such as Cape Town, where startup hubs, co-working spaces and innovation programmes continue to expand, the report echoes challenges that many founders have spoken about for years.
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Access to funding, navigating compliance requirements and understanding available government support remain recurring hurdles despite an increasingly vibrant entrepreneurial community.
Research fellow at Stellenbosch Business School and report co-author Angus Bowmaker-Falconer believes South Africa already has many of the building blocks required to improve.
‘The problems of a substantial gap between good policies and on-the-ground reality are well-diagnosed. What is needed now is not new policies or additional funding, but the political will and institutional discipline to translate the policies and financial resources we already have into action.’
Rather than calling for sweeping new policies, the report recommends improving coordination between government agencies, reducing administrative complexity and making support programmes easier to access through a single digital platform. Awareness campaigns aimed at young entrepreneurs also feature among the immediate priorities.
Despite the low overall score, the report argues that South Africa’s entrepreneurial ecosystem is far from beyond repair.
Acting SARChI Chair in Entrepreneurship Education at the University of Johannesburg and co-author Prof Natanya Meyer said the country still benefits from several competitive advantages.
‘The data shows a system with real strengths: a sophisticated banking and financial sector, a growing incubator network, established universities, a strong research base, growing digital adoption, and a youthful population with the drive and ingenuity to build businesses under difficult conditions.’
She added that entrepreneurs who understand how to navigate existing support structures are often better positioned to succeed.
‘The entrepreneurs who succeed are not those who avoid the bureaucracy, but those who master it.’
The report also highlights the importance of recognising that entrepreneurs operate in vastly different environments.
A one-size-fits-all approach, it argues, often overlooks the realities faced by township businesses, rural enterprises, informal traders and early-stage startups, all of which require tailored support rather than identical solutions.
Looking ahead, the researchers propose reforms over three timeframes: immediate measures to reduce red tape within the next 18 months, longer-term investments in institutional capacity over five years, and a sustained effort to build a stronger entrepreneurial culture over the next decade.
Among the recommendations are expanding broadband access to underserved communities, integrating entrepreneurship into school curricula and modernising government systems to better support small businesses.
With micro, small and medium enterprises contributing around 40% of South Africa’s GDP and supporting roughly 60% of employment, the report concludes that entrepreneurship should not be viewed as a fallback option but as one of the country’s most important drivers of inclusive economic growth. Unlocking that potential, the researchers argue, will depend not only on the determination of entrepreneurs themselves, but also on creating an ecosystem capable of helping their ideas become sustainable businesses.
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