Entrepreneurial Energy

One strong impression I’ve gained during my trips to sub-Saharan Africa (SSA) is that the people are full of entrepreneurial energy. Even taxi drivers are constantly thinking about what kind of business to start. Colleagues who visit the continent regularly share this impression. Just watch Christian Staedler from Warwick University in a recent talk on entrepreneurship in Africa. He makes the point that industrialization is characterized by a period of rapid urbanization, and entrepreneurial spirit and enthusiasm – both of which are present in SSA.

Nigerian franchise restaurant chain: an example of entrepreneurial energy
Nigerian franchise restaurant chain: an example of entrepreneurial energy

Recently, I came across a report released this year by the Global Entrepreneurship Monitor on Africa’s young entrepreneurs. It focuses on 9 countries: Angola, Botswana, Ghana, Malawi, Namibia, Nigeria, South Africa, Uganda and Zambia. According to the report, targeting the following areas will help unleash the potential of sub-Saharan Africa’s young entrepreneurs:

  • Education and training: 80% of entrepreneurs with high-growth businesses have secondary or tertiary education, while 65% of those with low-growth businesses have a primary school education. It’s not only a matter of providing access to education; the education system needs to match the skills demanded by the industry.
  • Business capital and financial support: the primary funding sources are own savings, and family and friends. A lack of collateral and of formal business records makes it difficult to access funding from formal financial institutions. In fact, these play an important role in financing businesses for young entrepreneurs in Angola, Botswana, South Africa and Namibia only.
  • Information and communication technologies: Many young entrepreneurs run their businesses from home or on the street. The use of an online platform could expand their market reach. However, the cost of internet access can be prohibitive. Use of the latest technologies by youth-owned businesses is highest in South Africa and Angola (41% and 39% respectively).
The scarcity of employment opportunities that young people face is an important driver of entrepreneurship in SSA. Large African companies are the product of this entrepreneurial spirit. However, many of the new businesses created aim at self-employment. If both policy makers and the private sector work on the above factors, these businesses may grow, create additional jobs, and contribute to the alleviation of poverty.

What other factors promote business creation in SSA?

3 thoughts on “Entrepreneurial Energy

  1. The problem is that entrepreneurial energy is totally destroyed by politicians who systematically ransom profitable companies which makes it totally impossible to develop businesses in SSA on the short, medium or long term unless they are “protected”.

    1. Very right, Marc-Henry. That’s one of the main reasons why Africa is moving slowly — despite high growth rates in some countries. A transformation of those in charge of institutions is a requisite for the tranformation of the continent.

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