Impact SA

Here’s why South Africa needs its own Startup Act

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A co-created and tailor-made South African Startup Act would be a powerful tool for empowering entrepreneurs and addressing key developmental issues, although case studies from other African countries show that it will require prolonged and widespread engagement with various stakeholders.

This was the conclusion reached at the end of a webinar discussion on the relevance of a South African Startup Act held recently by the newly formed Digital Collective Africa, a non-profit group of investors, ecosystem enablers, institutions, and entrepreneurs from across the continent geared towards supporting early-stage startups.

The first specific startup law globally was passed in Italy in 2012, and Tunisia and Senegal are the first two African countries to have enacted them. A host of countries, including Mali, Ghana, Kenya, Ivory Coast, the Democratic Republic of Congo (DRC) and Rwanda, are expected to implement their own this year, with Jon Stever, co-founder and managing director of Impact Hub Kigali and catalyst at i4Policy, telling Disrupt Africa in the past that at least 10 African ecosystems are working on putting such laws together.

Speaking during the webinar, Dr Sumarie Roodt, chairperson for the Silicon Cape Initiative, a founding body of the Collective, said there was clear evidence that Startup Acts create enabling environments for entrepreneurs if all of the relevant ecosystem-related conditions are present. 

“This includes the presence of scalable and high-growth potential small businesses, willing investors, and nurturing policy. However, the act should not be considered as the only piece of legislation for business development, but rather a part of a large series of interventions aimed at entrepreneurs,” she said.

Hosted by radio personality Kieno Kammies, the event also featured Keet van Zyl, co-founder of Knife Capital, which has actually drafted a South African Startup Act, SiMODISA vice-chair Matsi Modise, Aerobotics chief operating officer (COO) Timothy Willis, and Stever.

Stever said the benefits of a Startup Act are making them popular concepts amongst African economies.

“The Startup Acts in Tunisia and Senegal are a lightning rod channelling energy towards entrepreneurship, boosting collaboration in the ecosystem and attracting significant additional funding. The processes to develop the laws were heavily participatory and deliberative, ensuring the laws benefit not just entrepreneurs but the communities and industries around them too,” he said. 

“In the case of Senegal, for example, there are clear measures to boost startup success, such as procurement preference, intellectual property support, and funding, but the co-creation process also resulted in revolutionary tax reforms to support all small businesses.”

Van Zyl agreed, saying it was vitally important that this sort of policy was co-developed through the participation of all stakeholders in the greater startup arena, including venture capitalists, incubators and institutions, but most importantly entrepreneurs.

“By taking this approach, we will be able to properly identify and create the right support structures for the different types of entrepreneurs whose needs will vary depending on their respective size, age, and scalability. For this reason, we need founders and representatives from within the startup space to lead the movement towards a Startup Act,” he said.


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