Plenary presentation related to creating a strong entrepreneurial ecosystem for Africa

1. Building a better working world in Africa
through entrepreneurship
EY Africa Tax Conference
18 September 2014

2. Page 2
Our Panel
James Deiotte
Tax leader
EY Africa
Moderator
Building a better working world in Africa through entrepreneurship
CJ Kujenga
Partner and Africa Leader: Strategic
Growth Markets
EY
Donna Oosthuyse
Director
Johannesburg Stock Exchange
Mogam Pillay
Chief Financial Officer: Africa
Old Mutual Life Assurance Company (SA)
Limited
Allon Raiz
Chief Excitement Officer (CEO) and founder
Raiz Corp
Professor Matthew Lester
Professor, Rhodes University
Member of the Davis Tax Committee
Chris Badenhorst
General Manager STA
Supplier Development
Ford Motor Company

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The Ernst & Young G20 Entrepreneurship Barometer
Young entrepreneur findings
Building a better working world in Africa through entrepreneurship
The G20 Entrepreneurship Barometer focuses on the entrepreneurship environment of G20 countries
through the lens of five fundamental enablers.

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Overall country rankings
The following represents the overall ranking of the G20 countries by quartile.*
► Quartile 1 represents the countries that are leading in fostering entrepreneurship.
► Each of the five pillars (access to funding, entrepreneurship culture, tax and regulation, education and
training and coordinated support) was weighted equally to provide an overall country ranking.
Building a better working world in Africa through entrepreneurship
* Note: countries are listed in alphabetical order per quartile.
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Australia EU Brazil Argentina
Canada France China India
South Korea Germany Mexico Indonesia
United Kingdom Japan Russia Italy
United States South Africa Saudi Arabia Turkey

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The role of entrepreneurs in driving growth and creating
jobs
► Entrepreneurial companies represent two-thirds of jobs in OECD countries
► Yet they receive just 6% of total investment
► Most recent Ernst & Young’s Entrepreneur of the Year™ winners:
► Posted revenue growth rates of 100% over last three years
► Increased employment by 40% in the past three years
► In South Africa alone we saw entrepreneurs create
► 15,000 jobs and growth well over SA GDP of under 2%
► Masters 20%;
► Exceptional 85%
► Emerging 240%
Building a better working world in Africa through entrepreneurship

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Entrepreneurial ecosystem
Access to funding
Education and training
Tax and regulation
Entrepreneurship culture
Coordinated support
► Pre-university education
► University education
► Entrepreneurial education
► Informal education and life-long learning► Fear of failure
► Attitude to risk
► Entrepreneurship as a career choice
► Celebration of self-made wealth
► Innovation and research culture
► Mentors
► Incubators
► Networks
► Taxation
► Business-friendly regulations
► Government incentives
► Seed and pre-seed funding
► Start-up
► Emerging growth
► Expansion
Entrepreneurial ecosystem
Building a better working world in Africa through entrepreneurship

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What young entrepreneurs are telling us
Building a better working world in Africa through entrepreneurship

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Exploring five imperatives to consider
1. Expand choice of funding alternatives
2. Increase mentoring and broader support
3. Reduce red tape and excessive taxation
4. Target and speed-up incentives
5. Change the culture to tolerate failure
Building a better working world in Africa through entrepreneurship

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Expand choice of funding alternatives
► Access to funding remains very or
somewhat difficult for 73% of
young entrepreneurs.
► One in two think improved access
to funding through new innovative
platforms will have the greatest
impact on accelerating
entrepreneurship.
► Existing sources of capital need to
increase.
Building a better working world in Africa through entrepreneurship

10. Page 10
Funding entrepreneurial businesses
Sources of funding entrepreneurial business
Building a better working world in Africa through entrepreneurship
Revenues
Development stage
Emerging
Pre-seed Seed Start-up
Rapid-growth Expansion or market leader
Angels
Entrepreneur, friends of family
Incubator or accelerator
Seed or early stage VC
Government grants (e.g., R&D), SME purchasing focus
Crowd funding
Government exports schemes, grants
Formal VC and growth capital
Corporate accelerator
Speciality bank loans and guarantees
Corporate VC
Private equity
Public stock market

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Reduce red tape and excessive taxation
Target and speed-up incentives
► 53% of young entrepreneurs believe an SME-friendly
business environment would provide a crucial boost to their
efforts.
► Younger entrepreneurs are more likely to struggle to get to
grips with systems designed for older, more established
businesses.
► Changes in regulatory, tax and innovation incentives are
viewed more favourably by young entrepreneurs, than by
their older counterparts.
► EY has identified more than 200 government-backed
initiatives designed to boost SMEs across the G20.
► 27% of young entrepreneurs report improvements in tax
incentives, while 38% report better innovation incentives,
as a result.
► Government support now needs to offer more tailored
solutions to specific entrepreneurial needs.
Building a better working world in Africa through entrepreneurship

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Increase mentoring and broader support
► 50% of entrepreneurs unable to secure the support they need and therefore
fail in business.
► 88% survival rate of those who have access to incubators, mentoring, start-up
programs, entrepreneurs’ clubs and associations survive.
► Younger entrepreneurs require a stronger support ecosystem to access the
knowledge, opportunities and resource they need.
Building a better working world in Africa through entrepreneurship

13. Page 13
Change the culture to tolerate failure
► A more supportive entrepreneurial culture
that embraces SMEs will have a positive
effect on future growth.
► 50% of young entrepreneurs think that
governments need to do more to promote
entrepreneurs as crucial job creators.
► 51% believe government support for
education, funding and profile-raising will
have a significant, positive impact on
perception.
Building a better working world in Africa through entrepreneurship

14. Page 14
Culture matters!
But it is not easy to change
Building a better working world in Africa through entrepreneurship
“You feel like spinning your wheels when you’re pushing students to the best and brightest, and telling
them, ‘You need to be competitive’, but when it is time to interview, they can’t get jobs – not because
they’re not technically sound, but because they don’t fit into the culture,” she told me.
“It’s 2014. I expected this when my mother was working at tech companies in the eighties and nineties
,but not now.”
Vauhini Vara
Artile “Pandora and the White Male” in The New Yorker (August 22, 2014)