South African No Longer the Continent Role Model

If you asked most people to pick the most successful economic nation then they’d probably come up with South Africa. Certainly compared with many of the very unstable African nations then South Africa seems streets ahead but all is not rosey there too. 

For instance starting a business in South Africa is also a struggle of high costs, rents and bureaucracy.  Even setting up a small shop can be extremely expensive, this combined with high fuel costs and taxes stifles entrepreneurship which used to be so vibrant in this country.  South Africa has always been one of the richest African nations – mainly due to it’s relatively stable governments and huge mineral resources.  But these resources are subject to doubt with markets nervous that they could be nationalised at some point in the future.

 

 

The unemployment rate in South Africa is around 25% and not expected to fall any time soon.  There is a big problem with social mobility and welfare for the poor.

With all it’s material advantages this African country should be doing much better.  It is often compared to Australia, another country with great mineral supplies and a large country with populations focussed on a few specific areas.   In fact I was speaking to a young businessman in Sydney the other day who had just emigrated from Cape Town.  He had been sad to leave but had found the country full of possibilities but not a great place to be an entrepreneur.  Joliez told me that the start up costs were just too high for an internet based business such as his.  There was also a problem with internet infrastructure although this wasn’t directly the fault of the South African government.  Apparently Joliez has targeted his internet business on Asia and Australasia but had found it difficult to do transations online from Africa.  He had to invest in a series of proxy and VPN services to allow him access to specific websites, advertising and banking online.  For example he couldn’t access his Australian savings account online without using and an Aussie based proxy – http://www.theninjaproxy.org/tv/finding-an-australian-proxy/ server to hide his location.

In the end it just seemed much easier to build a business in another country.  Obviously not everyone is like Joliez and able to relocate but it is certain that many African entrepreneurs are being stifled by high costs and get minimal help from the government.