Entrepreneurship in Africa is in the spotlight these days. Obama’s participation at the Global Entrepreneurship Summit (GES) in Nairobi last weekend brought it to the forefront. I could feel the buzz when I travelled to Nairobi last month. The city was getting ready for the Presidential visit.
The GES provides an opportunity for emerging entrepreneurs to connect with leaders from business, international organizations, and governments looking to support them. It was the first time the meeting took place in sub-Saharan Africa (SSA).
Some highlights from the meeting according to several reports as well as my own comments on the issues:
- The scarcity of employment opportunities faced by the booming young population in SSA is driving entrepreneurial self-employment – After a few weeks in SSA, two things were apparent to me: Africa is young, and the people are full of entrepreneurial energy.
- A lack of resources is an important obstacle to entrepreneurship in SSA – The cost of capital is prohibitive: 25% is not unheard of as the interest rate in countries such as Nigeria or Kenya. Add to this the need to provide a record to the financial institutions. Microfinance institutions can play an important role – but in some cases their interest rates are not lower than those of traditional banks.
- Partnerships are critical to entrepreneurial success in SSA – Actually, personal networks matter a lot in Africa. More so than in other locations: given the scarcity of public information, a trusted source that provides sensitive information is critical. In this context, networking associations such as Africa 2.0 play a very important role.
- Fostering entrepreneurship can prompt the development of new products and services, create jobs for workers, and anchor communities and families worldwide – not that this is new, but it’s good to remind ourselves of this. At a time when many entrepreneurs in the Western world are driven by a desire to hit the market, sell their business, and become rich, it is healthy to remember that business is something more than shareholder value creation. Job creation is critical if we want our societies to prosper, and it’s an important driver for many SSA entrepreneurs.
Any experience with entrepreneurial activities in SSA that you would like to share?
I’m glad there’s a potential on entrepreneurship on SSA. I could see that SSA can be a magnet for investment sooner or later.
Actually, it’s already gaining traction in some countries. For instance, in Kenya there are many private equity opportunities. And there are innovation hubs being developed there and in other countries. More to come!