The rise of black start-ups and social entrepreneurship in South Africa

1 September 2016 by Thabang Tsotsotso

With tough economic times and unemployment rising in an ever-changing world that is becoming more democratised, it is no surprise that there is a rise in black start-ups and social entrepreneurship. The reality for most black entrepreneurs is that they venture into entrepreneurship not out of career luxury, but rather out of the need to survive economically. Their long-term objective is not to create wealth, but merely to keep the business afloat, while living off the profits.

On the other hand, there are a few fortunate entrepreneurs who are focused on growth and being revolutionary, who are driven by the competitive nature of the business and the ability to create long-term value – they use the business as a platform to change the world.

One might wonder, so who are these black start-ups and social entrepreneurs?

The majority of start-up founders in South Africa are between the ages of 25-35, with most of them coming from corporate backgrounds. From a Ventureburn start-up survey there are 66% white founders, 17% black, and the remaining 17% are made up of other races. In terms of ownership by gender, 68% are male, 6% are female, and the remaining 27% are male/female partnerships.

The start-up culture in South Africa is seen as a new form of social status, whereas the major global trend right now is all about entrepreneurship and start-ups.

What caused the trend to get to this point is that the world is growing in pessimism, according to the World Economic Forum, and there is a general perception that the economy is not moving forward. It also seems that opportunities along the traditional corporate route are becoming increasingly scarce.

Due to this view, young people are starting to show a lack of interest in going the corporate route, because they see it as limiting their potential. This perception creates a strong incentive for them to start something on their own, or become part of an organisation that is trying to benefit society.

Black start-ups

The home of start-up companies is currently in the Western Cape, also referred to as the ‘Silicon Cape’, which is the biggest, followed by the Gauteng region. The major start-up industries are computer and software services, as well as the media, education, retail and distribution sectors.

Over the past few years there has been an upsurge in black entrepreneurs, of which the majority come from the Silicon Cape, and the number of black students interested in entrepreneurship has been growing in the region. Unfortunately, it is a fact of society that the potential entrepreneurs generally need a strong proficiency in English and are not able to present their credentials in their own home languages.

However, there have recently been a number of successful black start-ups, such as the South African-based Sendr, which is a courier service. Its on-demand service means that parcels can be delivered within an hour – in short, they are the equivalent of ‘Uber’ for parcels. Another example of a black-owned start-up is Mowallet, which is an app that allows customers in townships and rural areas to redeem vouchers from big FMCG brands. Mowallet, being the 2015 winners of the #HackJozi challenge, developed an app that serves as a digital marketing solution for township businesses (spaza shop owners) to connect and communicate better with their customers. The creators of the app are Desmond Mongwe, Thato Selau and Carol Dutton.

Desmond Mongwe is a Pretoria-based tech entrepreneur with 14 years’ working experience in the ICT industry, working as a Java developer. His interest lies in making sure that he adds value by using technology to improve people’s lives.

In short, Mowallet is a white label app that allows a company to place its own branding in the app. What makes the Mowallet unique is that it caters for any type of phones through the use of a USSD platform that gives business owners a better chance to communicate with their target market, thereby enabling the business owner to promote social products, vouchers, deals and food parcels.

Social entrepreneurship

For those who might not have a clear understanding of what social entrepreneurship means: social entrepreneurship serves to connect income with impact in communities, by creating sustainable business models that benefit the community as a whole, while still making a profit.

One great example of social entrepreneurship is an organisation called Local Green Economy Initiative (Lgei), which is an incubator for green skills, careers and start-ups in the water, food and energy space. Their mission is to build and scale innovative businesses that will shape tomorrow’s water, food and energy resource management systems. This is done by creating an environment for entrepreneurs to succeed in a fast-paced economy.

Conclusion

As mentioned in the beginning, with tough economic times, unemployment rising and an ever-changing world that is becoming more democratised, it is no surprise that there will be a rise in entrepreneurship. This, however, should not scare big brands away, it should be seen as an opportunity for them to collaborate with these smaller black start-ups and social entrepreneurs, to their mutual benefit and ultimately successful outcomes. 

Source: www.mortimerharvey.com