Economic cloud has silver lining, says PwC's Maija de Rijk-Uys
“Local is not so lekker at the moment." Maija de Rijk-Uys, who is responsible for the setup and roll-out of the PwC Accelerator Programme in SA, began her presentation at the Knife Capital Exit Conference at the Sandton Convention Centre on 21 August on a sour note. "There is negative investor sentiment, labour unrest, a dearth of skills, low economic growth, regulation and government interference and no cultural flair for entrepreneurism. Our established business rate, at just 2,9%, is 4th lowest in the world,” she lamented.
However, she insisted that there were reasons for corporates and entrepreneurs to be optimistic about the future, saying that funding, enterprise development initiatives, as well as networking and mentorship programmes were all available to emerging businesses and showed support for the ecosystem. "Every cloud has a silver lining. SA has a highly sophisticated financial services system and the largest economy in Africa, bar Nigeria. You can't compare the country to developed markets, but among it is a leader among the emerging nations."
De Rijk-Uys said the growth of SMEs was vital to GDP and in turn, towards alleviating poverty, economic growth, innovation and disruption and creating a cycle of positivity. She identified four megatrends that were having a profound impact on markets:
- Technological breakthroughs make online sharing economy platforms possible and reduce transaction costs, allowing for connections to occur between owners and those who are looking for services and products.
- Climate change and resource scarcity increase the opportunity cost of "owning" versus "accessing" products and services. Consumers are also becoming more environmentally conscious of the impact of their purchasing decisions.
- Rapid urbanisation creates the critical mass that many sharing economy platforms need in order to become viable business propositions.
- Demographic and social change. Consumers are becoming more comfortable in sourcing trust from online peer review mechanisms. Social status is shifting from material possessions to experiences.
De Rijk-Uys ended her presentation by revealing some insights gleaned from PwC surveys of emerging businesses and exits. Some 42% of exits between 2011 and 2014 in Africa occurred in SA, with 26% in West Africa and 14% in East Africa. More than 60% of these were non-traditional business. Studies found that market access remains the biggest challenge for start-ups. More than 51% of emerging businesses were looking to the global market for growth, while 48% of exits in SA were full sales and 63% took place outside the country.