For Africa, Entrepreneurship is the Way
CEO, Community and Individual Development Association
The future of Africa and the next generation of entrepreneurs are among the many global issues being addressed this year at the World Economic Forum, to be held January 23-27. In advance of the convening and to aid the discussion ahead, the Skoll World Forum partnered with the Financial Times' This is Africa magazine and designed a debate at the strategic intersection of Africa and entrepreneurship. We asked some of the continent's leading entrepreneurs and innovators to highlight some of the key lessons they learned working across and for Africa.
Founder, York Zucchi Partners
Editor of This Is Africa, Financial Times Ltd.
President, mPedigree Network
Founder and Director, One Acre Fund
CEO, Community and Individual Development Association
Something extraordinary is happening in Africa. In the wake of enhanced political stability and reduced war in many countries, it is clear that a vibrant spirit of entrepreneurship is kicking in with vigor. Between 2001 and 2010, six of the world’s ten fastest-growing economies were in Africa and the International Monetary Fund predicted that between 2011 and 2015, African countries will hold 7 of the top 10 spots. Many people think this growth is fueled purely by a commodity boom – shipping raw materials to the east and elsewhere. Interestingly enough, this accounts for only one third of the growth; the rest can be put down to genuine value creation, fueled by the spirit of entrepreneurship very much alive on the continent. Many also argue that its easy to cite high growth figures off a low base. Nevertheless, the growth levels being seen were certainly out of the ranges of prediction of many social and economic commentators even a decade ago.
However, all is not rosy on African soil. Several of the world’s poorest countries exist on the continent, and hundreds of millions of people ache under the yoke of poverty every day. If one considers the plethora of issues to solve: poverty and malnutrition, health crises, corruption, crime levels in certain countries, and so on, one can throw up one’s hands. At the same time, African populations are growing rapidly. It is expected that by 2040, the total African population will be the largest in the world, surpassing both China and India, further exacerbating these problems. Jobs are not keeping pace with population growth rates and issues of unemployment acutely affect the growing ‘youth bulge’ across the continent, which has implications for political stability across the continent, as has recently been witnessed by many of the northern Arab States.
The real solution for Africa is being driven every day by African people themselves – human creativity and hard work, the spirit of entrepreneurship and the creation of small businesses in their millions – leading to job creation, enhanced socio-economic stability, and the consequent benefits of greater purchasing power, which buys quality education and healthcare. In this way, millions have come from poverty into the middle class. Further, with the growing consumer classes, population growth rates–if harnessed correctly–will prove to be a major demographic dividend.
Harnessing this dividend requires the development of two key drivers simultaneously: the demand side and the supply side. The demand side requires nurturing the fire to build a thriving business sector, that is in turn hungry for talent. Stimulating the supply side requires the stocking of a quality skills base that can provide this talent to meet the growing demand for goods and services. For this particular article, I will focus on the demand side.
It is essential to recognize that the backbone of every African economy is in fact small business, usually organizations with less than 50 employees. They are not large domestic businesses, multi-nationals, or ‘overstaffed’ governments. In South Africa, in the formal sector alone, nearly 70% of all people employed in the country are employed full-time in small businesses. If the informal sector is added, this would take the figure to 85%-90% of all employment. In other words, small businesses are the backbone of the economy and the employer of millions. Therefore, it is in the removal of obstacles facing these small businesses, and in the creation of an enabling environment, that in fact the future of unemployment will be determined.
Creating this conducive environment for business is where government needs to step in, or ‘step out’ when it comes to the removal of red tape, and to the creation of a conducive policies. It is also essential to create a social compact for Government and Business to work together.
South Africa provides a unique example of how such a platform for engagement has been created where social partners can engage on issues of mutual concern. This forum is known as the Human Resource Development Council for South Africa, and is led by the Deputy President of the country. It consists of senior decision makers from all sectors of society. The Council is focused on resolving the problems facing education and skills development in the country, and has identified the fact that youth unemployment levels, particularly amongst black African youth, at over 50% are unacceptably high. As a result, amongst other interventions, it has agreed that urgent action must be taken to strengthen entrepreneurial activity in the country to build the ‘demand side’. The Council has appointed a Technical Task Team to develop a set of recommendations in this regard, which I am fortunate to chair.
Our team is currently investigating a variety of ways to strengthen small business, including the delivery of entrepreneurship curriculum in schools, Further Education and Training Colleges and Universities, as well as interventions to support the small business sector directly.
I will dwell on one innovative approach, which through a collaboration of partners we have enlisted, has begun implementation with excellent results to date: a ‘National Virtual Incubator’ (‘NVI’). The NVI is a national intervention being built as a genuine public-private partnership.
We have identified that the best way to reach and support the millions of small businesses across the country is through mobile technology and the mass media. In South Africa there are more than 60 million mobile phones amongst the 52 million population, and across Africa there are now well over 600-million mobile phone users. Our National Virtual Incubator is focused on providing most of the support services that our country’s physical business incubators provide, but directly to the entrepreneur’s pocket. Currently, 33 physical business incubators have in total supported only a few thousand businesses over the past decade, whereas the ‘NVI’ we believe will be able to support millions of small businesses. By using mobile technology to provide services such as access to free business education and training, support for any business to build its own free website, access to finance and financial advice, online coaching and mentoring, free master-classes, and a host of other support tools under development, small businesses–wherever they are–can access quality services in real time. We are developing partnerships with a growing number of public and private sector organizations like Google, Vodacom, Internet Solutions, Pearson’s Books, Regenesys, University of Cape Town, and others in order to facilitate the development and delivery of these world-class services.
The strategy is starting to pay off: already nearly 50,000 small businesses have created free websites using the ‘wozaonline’ tool created by Google, which is having a measurable impact on their revenues and employment levels. Additionally, over 100,000 people accessed the Regenesys Business School website during the first 3 weeks when we opened access to all the learning materials for free (textbooks, videos, manuals, notes) for an accredited and registered MBA, Bachelors Degree in Business, and other degrees. We are hopeful that we will assist at least 1 million small businesses to employ at least one million youth across the country over the next five years. The National Virtual Incubator, amongst many other solutions being developed, will help stimulate the already growing entrepreneurial levels in the country, and we hope to share our learning’s across the continent.
Ultimately, it will not be through government, foreign aid or bi-lateral agreements that a nation gets on its feet, but as we say in Zulu – vuk u’zenzele – get up and do it for yourself. Africa has the resources, the land, the people, and hence the possibility to get it right. Entrepreneurship, along with the pre-requisite education and skills levels needed, is going to be the glue that holds it all together.