Building capacity to help Africa trade better

Youth Entrepreneurship in Africa: A beacon of hope for the continent


Youth Entrepreneurship in Africa: A beacon of hope for the continent

Youth Entrepreneurship in Africa: A beacon of hope for the continent

Leaders are those who connect the dots. Equally, youth entrepreneurship in Africa will be driven by the young minds who have the ability to connect the dots. With so many challenges stemming from issues of ineffective governance, lack of infrastructure (both soft and hard) and most importantly lack of funding instruments for entrepreneurship, being a young entrepreneur in Africa requires a great deal of perseverance, networking and passion. Scholars suggest that the African youth bulge is an opportunity for the continent to be the big growth area. But what we must realise is that the economic environment in many African countries is not well developed and lacks a thriving support ecosystem to support youth startups.

While most of the socio-economic support efforts have somehow been decimated by the Covid-19 pandemic, how can Africa harness the mushrooming of youth startups and use them as levers to rebuild a sustainable SME sector?

  • Enabling Entrepreneurship Policies: A Youth Entrepreneurship Policy is a must for every African country. This shows deliberate effort from governments to drive entrepreneurship and to assist future job creators at the very outset of their initiatives. Few countries in Africa have deliberate policies targeted at stimulating youth entrepreneurship.

  • Ease of doing business targets focus not only on attracting large foreign Investments but also on creating an environment conducive to starting a business. Most youth entrepreneurs don’t make it beyond registering a small business because the process is cumbersome and costly. As an unintended consequence, most youth startups operate in the black market and this hinders their sustainability because without a proper registered company, it becomes difficult to benefit from policy interventions such as incentives and other support programmes.

  • Entrepreneurship Hubs: Infrastructure, both soft and hard, is key to the growth of startups. Most youth entrepreneurs are driving innovative solutions which require incubation for at least 36 months before they are ready for the market. During this prototyping stage, they can’t afford to pay for infrastructure such as warehousing or office spaces and this is why startup hubs as part of government support is crucial to the growth to youth entrepreneurship in Africa. Many African countries are already doing this. They are adopting this model of building startup hubs which combine both incubation and acceleration programmes which include mentorship. Countries leading the way in this area include: South Africa, Kenya, Rwanda, Nigeria, Egypt and Ghana. Namibia too has recently launched a startup hub programme under the Ministry of Industrialization and Trade.

  • Networking: a business is built on networks. Identifying key stakeholders within the same ecosystem is one of the acceleration methods to grow sustainable startups. Young entrepreneurs often do not have the luxury of sitting at high tables where decisions are made. Network programmes are a very good way to expose their innovative businesses to stakeholders and large corporations for various support initiatives. As an entrepreneur, I belong to a ‘Women in Africa’ network which shares opportunities for funding, events, businesses and much more. Since I have joined, I benefitted from 3 programmes that I discovered from the network. Networks are important to expansion, learning from each other and fostering a culture of sharing information.

  • Market Access: The future of intra-Africa trade belongs to the African youth entrepreneurs. I remember attending the African Trade Forum event at the African Union in 2017. Some of the interventions from young people emphasized that the Intra-Africa trade should be driven by pan-African companies run by young people. One of the critical areas for youth entrepreneurship when it comes to the African Continental Free Trade Area (AfCFTA) is movement of business persons and the approval of the African passport. Once the borders are open and the tariffs have been lowered or removed, entrepreneurs should be able to move freely to do business on the continent. Equally important is the Trade in Service agenda which includes regulations related to payment gateways for goods and services on the continent. We all know that goods need services to move – goods and services trade are closely intertwined. All these fundamental issues still seem very far from reality, despite the fact that trade under the AfCFTA was to have started on1 July. At this stage a new date for the start of trade under the AfCFTA has been announced. The private sector as a whole, not only youth entrepreneurs need this information to make plans to take advantage of this regime.

  • Skills training: To boost intra-Africa trade, African governments need to invest heavily in skills training. Africa needs to close the widening gap of food imports – youth entrepreneurship could with the requisite skills, finance and support, adopt new climate –friendly cultivation and processing methods to address this critical issue. African agriculture has to transition from traditional ways of farming to farm mechanization, coupled with technological solutions. The Food and Agriculture Organisation (FAO) estimated in 2013 that food lost in Africa could feed 300 million people. The opportunity is to deliberately target enterprises in the agro-food and support them with technical skills in order to prepare them for export markets facilitated by the AfCFTA. In many countries, the majority of the youth in agro-sector are from rural communities and it only makes sense that deliberate efforts are prioritsed to support their growth.

  • Funding: African governments are finding themselves in a tight position after the outbreak of the Corona virus which has threatened the fiscal space for most countries, which were already struggling before Covid-19. While many countries face mass retrenchments and business closures in various sectors due to the economic slowdown caused by lockdown measures, it is also the time to fund many initiatives particularly from young entrepreneurs. Reviving the SME sector and supporting startups, requires funding in the form of grants as opposed to business loans. Not many youth entrepreneurs are able to access bank loans to fund their startups and expand their business, yet it is the youth businesses which could assist to reduce unemployment across the continent. Innovative trade finance solutions, to assist young entrepreneurs to take advantage of export opportunities, could be included in the offerings by the Afreximbank, Africa’s largest export-import bank, which is committed to support the AfCFTA.

Interestingly enough, while African governments struggle to commit ‘grant’ funding for its many aspiring bright young entrepreneurs, the western world has shifted from traditional ‘aid’ initiatives to new approaches which include funding innovative startups for young people. The French government for example, in 2018, launched an initiative called ‘Digital Africa‘ with 65 million Euros dedicated to innovative startups for Africa’s rising entrepreneurs. The funds are implemented through grants, mentorship, B2B networking tools and business incubations. A recent challenge targeting 1000 African entrepreneurs was launched under the France-Africa Summit 2020. If one assesses the sectors of the 1000 winners, the readiness of young entrepreneurs to develop their own enterprises is clear. Such initiatives could be the much-needed lever for the continent to address the high youth unemployment rate and diversify their export baskets.

About the Author(s)

Maria Immanuel

Maria Immanuel is young professional from Namibia. She currently works as the Professional Assistant to the Presidential Advisors in the Office of the President. On her spare times, she’s an entrepreneur, a mentor and musician. She is passionate about education and hosts Entrepreneurship Masterclass to young aspiring entrepreneurs to teach them basic skills on starting a business and understanding the economy. She holds a degree in Agricultural Economics at the University of Namibia and Master’s Degree in International Trade Law and Policy at the Graduate Business School of the University of Cape Town in collaboration with tralac. She writes in her own capacity and her views do not represent those of her employer.

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