There are still opportunities for South Africans to start businesses despite the recession, says  Siphethe Dumeko, chief financial officer at start-up lender Business Partners.

South Africa's economy shrank by 2,2% in the first quarter, and 0,7% in the second quarter of 2018, landing the country in a recession.

Dumeko said that entrepreneurs starting companies will, however, face an uphill battle.

“Procuring capital to start a new venture is predicted to become increasingly difficult, as the majority of funding institutions are expected to adopt an increasingly risk-averse stance,” Dumeko said.

Still, Dumeko believes three sectors could prove recession-proof for entrepreneurs. 

Security

“In spite of the continued underperformance of the country’s economy in recent years, private security has become an R45 billion industry with a growth rate of 15 percent per annum,” Dumeko said. He said this is because, during a time of economic recession and uncertainty, individuals tend to be more risk-averse.

Death-care services

Dumeko said, as morbid as it might sound, that businesses offering services related to death, including funerals, cremation, burial, and memorials, are usually some of the most recession-proof operations. “Deathcare services usually have a steady stream of business, regardless of the economic climate,” he said. South Africa’s funeral industry is estimated to be valued between R7.5 billion and R10 billion.

Education

Despite economic pressures, the underperforming public education sector has fuelled demand for alternatives, Dumeko said. It is also reported, he said, that South Africa is experiencing skills shortages in almost all of its sectors, emphasising the need service providers that offer more effective, affordable and accessible adult education. “Businesses that offer accredited online training platforms have especially seen increasing interest in South Africa, as well as on the rest of the African continent.”

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