SA's Entrepreneurial Ambition Thwarted by Weak Ecosystem, New GEM Report Shows

The latest GEM report departs from previous GEM studies that primarily evaluated individual startup rates and personal entrepreneurial intentions. Instead, the 2026 edition shifts its lens entirely to the overall structural performance and quality of the national ecosystem. The authors argue that South Africa’s core economic bottleneck is not a lack of aspiring founders, but rather an unsupportive environment that hinders business survival and scale-up.

The report, titled "Bridging the Gap: Realising South Africa's Entrepreneurial Potential," shows that South Africa's entrepreneurs possess drive and ingenuity, but a failing support framework continues to constrain business growth. The report was compiled by Stellenbosch Business School, the University of Johannesburg, North-West University, and SEDFA. 

Using the National Entrepreneurship Context Index (NECI), the report evaluates 13 core framework conditions. South Africa scored a low 3.9 out of 10, placing it 7th lowest out of 56 surveyed global economies and well below the global average of 4.7. The index lags behind middle-income peers like Indonesia (5.8) and India (6.1). 

• Financial & Administrative Barriers: High collateral demands leave up to 80% of MSMEs excluded from formal lending, resulting in loan rejection rates near 75%. Meanwhile, regulatory fragmentation and compliance burdens penalize small operators. 

• Infrastructure & Market Access: Power instability, freight bottlenecks, and unequal broadband distribution force early-stage ventures to absorb severe operational costs alongside dominant market incumbents. 

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Rather than drafting new policies, researchers emphasize executing existing frameworks, streamlining red tape, leveraging artificial intelligence, and building cross-sector coordination to unlock the sector's full economic contribution.