South Africa has no shortage of entrepreneurs, but their ability to turn promising ideas into sustainable, job-creating businesses is let down by a weak support ecosystem that ranks 7th lowest globally.
The 2026 Global Entrepreneurship Monitor (GEM) National Expert Special Report on South Africa, released today [30 July 2026], reveals that South Africa’s enabling environment for entrepreneurship scores a low 3.9/10, trailing the global average of 4.7.
The score, referred to as the National Entrepreneurship Context Index (NECI), covers enablers such as access to finance and markets, government support, regulatory requirements, public infrastructure, education and other key factors.
Developed in partnership by Stellenbosch Business School, the University of Johannesburg, North West University and the Small Enterprise Development & Finance Agency (SEDFA), the study found that although South Africans demonstrate the innovation, courage and ambition to take on the risks of entrepreneurship, their ability to turn ideas into viable, sustainable businesses is hampered by an ecosystem that under-performs relative to its potential.
Angus Bowmaker-Falconer, research fellow at Stellenbosch Business School and co-author of the report, says: “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.”
The report benchmarks 56 countries, which together account for 78% of global gross domestic product (GDP) and 63% of the world population.
South Africa’s NECI score of 3.9, which has changed little over the past five years, falls below those of “peer emerging economies” such as Indonesia (5.8), as well as its BRICS partners, India (6.1), Brazil (4.0) and China (5.4).
The highest-scoring country is the United Arab Emirates (UAE), with a score of 7.1/10.
The score is derived from a National Expert Survey of industry leaders and investors, entrepreneurship development practitioners, funding advisors and providers, research and development specialists, economists, policymakers, researchers and educators who interact with the local entrepreneurial ecosystem daily as part of their work.
Bowmaker-Falconer said the performance of other emerging economies, with similar income levels and at similar stages of economic development, was “no accident”.
“Countries scoring above 5.5 are not wealthier, more educated, or more entrepreneurially minded than South Africans. The performance of countries like India, Indonesia and the UAE is the result of deliberate, coordinated policy choices in digital infrastructure, streamlined company registration and compliance regimes, proactive government support programmes, and cultural support for entrepreneurship, which have led to better enabling conditions,” he said.
Despite the challenges, co-author Prof Natanya Meyer, acting SARChI Chair in Entrepreneurship Education at the University of Johannesburg, said that SA’s entrepreneurial ecosystem “is not broken beyond repair”.
“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.
“While the government support environment is complex, fragmented, and often opaque, it is still navigable. Significant support is available to those who know where to look, how to qualify, and how to build relationships with government institutions that turn into real business advantage.
“The entrepreneurs who succeed are not those who avoid the bureaucracy, but those who master it,” Prof Meyer said.
However, she said many entrepreneurs do not know what support is available and, as a result, do not access it. For those who do know about support services, many encounter fragmented delivery.
“Countries that outperform South Africa in this area have invested in programme architecture: clear entry points, coordinated agencies, and communication that reaches entrepreneurs where they are,” said Prof Meyer.
The report recommends the immediate launch of targeted awareness campaigns, particularly aimed at the youth, and the provision of a single digital platform for information on the eligibility criteria, application processes, and decision timelines of various government programmes.
Given the contribution of micro, small and medium enterprises (MSMEs) to economic growth and GDP, and their role in alleviating poverty and advancing equality, entrepreneurship cannot be seen as “South Africa’s backup plan”, Bowmaker-Falconer said.
“MSMEs contribute about 40% of South Africa’s GDP and account for about 60% of employment, but most are not sustainable, failing within their first five years. At the same time, South Africa is grappling with one of the world’s highest unemployment rates, at 32.7% (narrow definition), and GDP growth tracking below 1% on average over the past decade.
“Entrepreneurship is a primary mechanism through which South Africa can absorb unemployment, address structural inequality, and generate the growth that policy alone cannot create. The ecosystem that enables it must be treated as the national priority it is,” he said.
Bowmaker-Falconer explained that South Africa’s 3.9 NECI score reflected the average state and quality of a country’s entrepreneurial ecosystem across 13 “enabling framework conditions” (EFCs).
These are interlinked and include factors such as availability and ease of access to funding for startups and small businesses, the quality and relevance of government support for new ventures, levels of red tape and compliance burdens that affect the ease of doing business, ease of entry to the market, and the ability to commercialise research and innovation.
Other enabling conditions measured include the availability and affordability of the country’s physical infrastructure (e.g., electricity, logistics) and business services for MSMEs, as well as whether the country has a culture that encourages entrepreneurship and whether the education system equips students with entrepreneurial skills.
“Weakness in any single condition compounds weakness in the others, regardless of how entrepreneurially minded the population is. Thus, effective policy must address the system as a whole rather than its parts in isolation. Understanding which conditions are weakest, how conditions interact, and how the country’s overall profile compares with peer economies enables targeted, evidence-based interventions,” Bowmaker-Falconer said.
With an entrepreneurial population spanning the formal and informal economy, urban, rural and township settings, both start-ups and established businesses, and entrepreneurs differentiated by gender, age, origin, and access to digital tools, Prof Meyer warned against one-size-fits-all solutions.
“Each context generates different needs, different barriers, and different definitions of success. An ecosystem designed around the assumptions of a formally registered, urban, tech-enabled entrepreneur leaves the majority of South Africans under-served. Diversity calls for support that is calibrated to context, stage, and circumstance rather than providing uniform support and hoping it lands somewhere,” Prof Meyer said.
In addition, she said, South Africa’s business systems, such as business registration, taxation, compliance with employment laws, municipal licensing, and sector regulations, tended to be designed for large, established entities yet are often applied uniformly to small, emerging ones.
“Every additional compliance step is a cost, a delay, and a decision point at which a marginal entrepreneur may choose informality or exit over persistence.”
Prof Meyer said that, rather than re-writing policy, South Africa needed a “roadmap to energise and support the entrepreneurial ecosystem that our economy urgently needs”.
The study makes recommendations on improving policy implementation, fragmented entrepreneurial support and red-tape burdens, with immediate actions to “remove the friction” mainly focused on improving coordination among multiple government agencies, streamlining application and compliance processes and improving the use of digital and online platforms to coordinate applications, improve access to information on support programmes, and modernise lending criteria.
The recommendations are organised around three time-horizons: (1) removing manageable barriers in the immediate term over 18 months, (2) building institutional capacity and infrastructure over the next five years, and (3) shifting cultural attitudes to entrepreneurship over the long term.
All three timeframes are to be pursued simultaneously, as they address parts of an inter-linked ecosystem that needs to work together.
Key recommendations
Immediate: Removing the friction
Immediate interventions over the next 18 months focus on easily managed and controllable regulatory and access reforms.
“Reducing bureaucratic complexity, coordinating fragmented government systems, and removing procurement barriers do not require decades of cultural change; they require political will and administrative reform and can move the dial within a single budget cycle,” Prof Meyer said.
Prof Meyer said the report recommended that digital adoption by MSMEs be enabled through subsidised access and bulk licensing agreements for artificial intelligence, productivity and accounting tools, “particularly targeting entrepreneurs in townships and peri-urban areas where the digital divide is most acute”.
18 months – 5 years: Build the infrastructure
“The most consequential investments in South Africa’s entrepreneurial ecosystem are not financial; they are institutional. This time-horizon focuses on building the structures, networks, and capabilities that allow reforms to compound into systemic improvement. It requires genuine coordination across government, the private sector, academia, and civil society,” Bowmaker-Falconer said.
Recommendations include formalising entrepreneurship as a school learning area, emphasising problem-solving and opportunity recognition over business plan templates, and providing the necessary training for school teachers and lecturers in the technical and vocational education and training (TVET) sector.
Additionally, the rollout of reliable, affordable high-speed broadband access to peri-urban and township areas should be prioritised as an investment in economic infrastructure.
Strengthening competition reform in highly concentrated sectors such as finance, retail, telecoms, agriculture, property, media, gaming, construction, transport and energy, will enable meaningful entry for new, smaller players and ensure dominant players face credible competition.
5-15 years: Shift the culture
South Africa’s 4.0/10 EFC score on social and cultural norms that support or discourage entrepreneurship, well below the global average of 5.2, reflects a society in which the personal initiative, risks and innovation involved in entrepreneurship are not fully appreciated or highly valued, Prof Meyer said.
“Cultural support for entrepreneurship shapes whether individuals see starting a business as a credible and respectable career path, whether successful entrepreneurs are celebrated as role models, whether failure is treated as a learning experience or a lasting stigma, and whether risk-taking and innovation are culturally tolerated or discouraged.
“Culture is the least visible and hardest to change of the enabling environment factors for entrepreneurship, but has the greatest long-term impact,” she said.
In addition to the key research findings, the report contains practical advice for entrepreneurs from the expert panel on accessing and managing finance, accessing markets, leveraging government support and navigating bureaucracy, and commercialising innovation, along with specific advice for youth and women entrepreneurs.
The full report is available online at https://gemconsortium.org/report/bridging-the-gap.
More about the GEM SA 2026 report:
The Global Entrepreneurship Monitor (GEM), established in 1999 as a joint UK-USA initiative and since expanded to include other country research partners, is considered the leading source of data-driven analysis and comparison of entrepreneurial activity and support systems worldwide.
The GEM South Africa 2026 report is based on a National Expert Survey of over 60 industry leaders and investors, entrepreneurship development practitioners, funding advisors and providers, research and development specialists, economists, policymakers, researchers and educators who interact with the local entrepreneurial ecosystem daily as part of their work.
REFERENCES
All data in this media release are sourced from the Global Entrepreneurship Monitor: South Africa National Expert Survey 2026. “Bridging the Gap: Realising South Africa’s Entrepreneurial Potential”. Published by Stellenbosch University with the Global Entrepreneurship Monitor – South Africa.
