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Urgent support needed for South Africa’s underserved entrepreneurs: capital, mentorship, and skills training essential

Sage Foundation's new research unveils major obstacles for marginalized entrepreneurs in South Africa, UK and USA.

Johannesburg, 14 August 2023 - Research published by Sage Foundation reveals that underserved entrepreneurs face three key challenges to starting and growing a business: lack of financial capital, lack of mentorship, and limited opportunities for training.

Sage Foundation, which acts on Sage's mission to knock down barriers for underserved communities, researched the obstacles to successful entrepreneurship across seven key groups in South Africa, the United Kingdom and the United States. The key groups are women; Black, Asian and Minority Ethnic (BAME) people; young people; people living with disabilities; LGBTQIA+ people; migrants; and refugees.

The data aims to understand the experiences of founders within these communities, who have historically faced inequities in accessing credit, capital, and other resources needed to thrive. Against the backdrop of multiple global crises affecting small- and mid-sized businesses (SMBs) – including supply chain issues, fluctuating consumer spending, a cost-of-living crisis and a labour shortage - the insights from this study are critical to understanding how to level the playing field for all entrepreneurs.

Specifically, the research found that under-represented founders in South Africa are met with the following three top barriers amidst other challenges:

  • People living with a disability face discrimination, lack of access to start-up capital, and lack of entrepreneurial education and skills. South Africa has about 15% of the population living with disabilities, and 8 out of these ten people are unemployed.
  • The LGBTQIA+ community primarily lack access to mentorship and professional networks, and this barrier is due to negative public opinions on homosexuality. This leads to the inability to access services for fear of blackmail and violence. This discrimination also affects entrepreneurs' access to financial support from family and friends, which is one of the preferred forms of accessing capital.
  • Migrant entrepreneurs are challenged with a lack of ethnic networks, strong competition in a crowded market and a lack of access to credit. Although research into this sector is still limited, most migrant entrepreneurs are from Zimbabwe, Mozambique, and Lesotho, while there is a minority of informal entrepreneurs from India.

In addition to the top three challenges, women and young people also encounter significant barriers, particularly in the informal entrepreneurship sector, where limited access to small loans, mentorship, and professional networks restricts their growth and contribution to reducing the high unemployment rate. Similarly, BAME/People of Colour entrepreneurs face obstacles stemming from historical inequalities, including limited financial resources, lack of access to capital, entrepreneurship education, and social networks, as well as low self-confidence and fear of failure.

Cadence Willis, Vice President of Sage Foundation, said: “The barriers in the report are obstacles to both inclusive business and economic growth. The silver lining is that the solutions are interconnected - as an example, linking entrepreneurs with mentors also increases their access to funding. Businesses and government must unite to empower underserved entrepreneurs through digital training, mentorship, and financial resources.”

"SA's underserved entrepreneurs face an uphill battle with limited financial capital, lack of access to the market, a lack of mentorship, and scarce training opportunities. Organisations like Sage have an important role to play in this challenging landscape. By providing tailored support, resources, and empowering tools, Sage can catalyse these entrepreneurs to rise above barriers, unleash their true potential, and create a more inclusive and prosperous future for themselves and their communities," concludes Faith Ramusetheli, Transformation Director at Sage Africa and Middle East.

Since 2015, Sage Foundation has been providing fundraising and mentorship support to several partners, like Kiva and Ashoka, that share its goal of addressing inequities for disadvantaged entrepreneurs worldwide. This new research gives the Foundation a roadmap of where its resources may best be used in the future to help create a level playing field for all SMB owners, regardless of their background.

The report is based on aggregated insights from over 40 publications by academics, social scientists, think tanks and non-profit organisations. For further reading on the report, please click here, and to learn more about Sage Foundation, please visit Sage Foundation - Charity Support | Sage South Africa.


About Sage Foundation

Sage Foundation has been knocking down barriers in our communities since 2015. By mobilising our colleagues, partners, and customers through impactful programmes, Sage Foundation is helping underrepresented entrepreneurs to grow their businesses while equipping the entrepreneurs of tomorrow with the skills they need to succeed.


About Sage Group

Sage exists to knock down barriers so everyone can thrive, starting with the millions of small- and mid-sized businesses served by us, our partners and accountants. Customers trust our finance, HR and payroll software to make work and money flow. By digitising business processes and relationships with customers, suppliers, employees, banks and governments, our digital network connects SMBs, removing friction and delivering insights. Knocking down barriers also means we use our time, technology, and experience to tackle digital inequality, economic inequality and the climate crisis. Learn more at www.sage.com.

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