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Africa needs entrepreneurs

With a majority of African nations diversifying from traditional sources of income, entrepreneurship is increasingly seen as a key to economic growth. So far, entrepreneurship has yielded huge returns for entrepreneurs, and according to experts, there lies great untapped potential to drive the African continent into its next phase of development.

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A study released in June 2015 by Approved Index, a UK-based business networking group, ranked Africa as among the top of the entrepreneurship chart. The Entrepreneurship around the world report listed Uganda, Angola, Cameroon and Botswana among the top ten on the entrepreneurship list.

The group sees entrepreneurship as a “necessity” at a time of high unemployment, saying: “When unemployment is high and the economy is weaker, people are forced to start small businesses to provide for themselves and their families.”

Entrepreneurship is seen as one of the most sustainable job generation tools in Africa.

Roselyn Vusia, a human rights advocate, points out that Uganda’s youth unemployment – estimated to be 83 percent, according to the African Development Bank’s 2014 report – is one of the highest in Africa.

Unemployment around the continent is also worrying. A 2013 study by Brookings Institution, a Washington-based think tank, found that African youth (15 to 24 years) constitute about 37 percent of the working age population. The same age group, however, accounts for about 60 percent of jobless people in Africa.

Kwame Owino of the Institute of Economic Affairs, a think tank based in Nairobi, says: High youth population, poor policy choices and a lack of comprehensive employment plans in many African nations precipitate the high rates of unemployment.”

Skills development focus

Vusia comments on one proactive approach: “The government of Uganda has implemented an entrepreneurship strategy that is focused on skills development, resource provision and access to markets. This seems to be bearing fruit,” she says.

The importance of entrepreneurship was underscored at the July 2015 Global Entrepreneurship Summit (GES) held in the Kenyan capital Nairobi, attended by US President Barack Obama, entrepreneurs from more than 100 countries and a group of US investors, among others.

Speaking at the summit, Obama lauded entrepreneurship for its promise for Africa with participants at the GES agreeing with him that entrepreneurship is one of the key ingredients in the toolbox to address youth unemployment in Africa, the region with the youngest population in the world. “Entrepreneurship creates new jobs and new businesses, new ways to deliver basic services, new ways of seeing the world – it is the spark of prosperity,” Obama said.

According to Evans Wadongo, listed by Forbes Africa as one of the most promising young African entrepreneurs, many African governments have not been keen on developing policies that will avert unemployment among the youth in a big way.

“Governments are not doing enough. The private sector is trying, but most goods brought into the African market are from China. This denies the youth the much needed manufacturing jobs, which are more labour intensive,” he says.

Kenya’s cabinet secretary in the Ministry of Industrialisation and Enterprise Development, Adan Mohammed, however, defends the policies of most African governments, saying that their efforts have been spurring confidence in the continent and are enabling more young people to turn toward entrepreneurship.

“Success breeds success – as many entrepreneurs make headway, others get on board. Also, technology-based inventions are pulling entrepreneurs,” Mohammed says. “The mindset has changed and many young people now think as employers. Many African governments have ­created opportunities in terms of finance and access to markets.”

Commenting on the increase in foreign investment and economic growth in Africa, Ugandan Prime Minister Ruhakana Rugunda says his government’s efforts to promote entrepreneurial culture have produced “remarkable results”. For instance, the state-run Youth Venture Capital Fund trains and provides money to young people with good business ideas. The government also helps young entrepreneurs to market their products.

Most importantly, with youth ­comprising more than 75 percent of its population, Uganda has remodelled its education system to include entrepreneurship as one of the subjects of instruction in secondary schools and colleges.

Also, with the help of the private sector and development agencies, the government has established information, communication and technology innovation hubs, which help entrepreneurs to launch successful start-ups.

Enabling environment

In Kenya, Eric Kinoti, the group managing director at Safisana Home Services, a company that provides cleaning services, hopes the government will follow Uganda’s example by creating an enabling environment to support entrepreneurship that can create jobs for youth.

“Many financial institutions in Kenya expect young people to provide collateral, yet only a few investors are ready to invest in young people’s ideas,” notes Kinoti, who mentors other young entrepreneurs and is listed among Forbes Top 30 under 30 in Africa.

Lack of access to working capital has hampered entrepreneurship in Kenya. Even though the government has created the Youth Enterprise Development Fund and Uwezo Fund to support youth entrepreneurship, budgetary constraints limit their impact.

“Entrepreneurship, if well managed, can create more jobs on the continent and increase the middle class, which is essential in sustaining economic growth. There is need to integrate entrepreneurship training in formal education in Africa to prepare the youth for the future,” Wadongo says.

In Cameroon, Olivia Mukami, the president and founder of Harambe-Cameroon, a social entrepreneurship organisation, insists that Africa needs to prioritise youth unemployment: “African countries are sitting on a powder keg and if they don’t change, it is going to explode.”

Mukami says that in addition to contributing to job creation, entrepreneurship can also help the continent solve some of the social problems that undermine progress. “I am encouraged that the government of Cameroon has prioritised entrepreneurship as a key pillar of Cameroon Vision 2035.”

Andrew Wujung, a lecturer of Economics at University of Bamenda in Cameroon, attributes the country’s entrepreneurship effort to its unique poverty reduction strategy. Unlike other countries in Africa, Cameroon’s poverty alleviation strategy is linked to entrepreneurship. Moreover, the government is organising robust skill acquisition and training programmes for entrepreneurs and making credit facility easily accessible to people with innovative technological and business ideas.

For entrepreneurship to strongly impact Africa’s economy, governments must tackle some of the greatest challenges that impede its progress, including lack of funds, relevant mentorship and poor government policies. In addition, African governments should consider giving the private sector incentives through tax relief to create more jobs. Laws and regulations should favour entrepreneurs.

Mohammed says Africa is on the right path. But to reap the fruits of entrepreneurship, effective strategies and policies are required to create more employment opportunities within small and medium enterprises.
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How can South Africa drive youth innovation and entrepreneurship?

Nearly a third of South Africa’s population is under the age of 14. As things stand, their future is uncertain. The economy is stagnant, the political landscape is shifting, and unemployment is at a record high.

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It’s possible to turn all that around, but doing so means equipping young people with skills beyond those found in the schooling system creating an environment which doesn’t just see entrepreneurship and innovation as viable options, but as necessities.

There was the consensus of a panel on driving innovation among South Africa’s young people at a Road to the Global Entrepreneurship Summit held at Cape Town’s Workshop 17 on Monday.

The panelists should know what they’re talking about too. CodeX‘s Elizabeth Gould, RLabs‘ Marlon Parker, nnfinity‘s Nwabisa Mayema, Code4CT‘s Emma Jane Dicks, and FixForward‘s Josh Cox have all dedicated themselves to using technology to fuel entrepreneurship and innovation in the country.

Doing what schools can’t

According to a number of the panelists, a large part of the reason they exist is because they’ve identified skills that are valuable to young people, but which aren’t taught in schools.

On one level, those are technological skills — Code4CT, RLabs, and CodeX all have major coding and development components within their programmes — but there are also a whole host of other skills that need to be taught before young people are able to either enter the job market or start their own businesses.

That’s especially true when the young people involved come from impoverished backgrounds with few role models for success.

“We need to think about the complexities in our communities,” says Parker. “It’s one thing to give someone a skill, it’s another thing entirely to help someone find their passion.”

While a very small number of people might be able to find that passion on their own, the reality is that without personal development and leadership skills even people who have serious digital skills will slip through the cracks.

“We couldn’t just give them the digital skill and hope everything will be okay,” Parker says.

RLabs’ Grow Leadership Academy. Founded in 2008, the academy has trained …. and has operations in 22 countries around the globe.

The fact that it’s managed to achieve that growth and have 95% of the academy’s staff made up of alumni shows how valuable that kind of all-round education is.

Investing in women

Using that kind of holistic approach to innovation and entrepreneurial development is, if anything, even more critical when it comes to epowering young women.

As Ventureburn’s 2015 Startup Survey showed, women still make up a much smaller fraction of the country’s technology entrepreneurs than men. It’s a situation which is changing slowly, but there needs to be a wholesale mind-shift if it’s going to get to where it needs to be.

Right now, says, Dicks, “women are self de-selecting out of tech roles.” In a reflection of what is a global phenomenon, many young women have spent so long being told that technology and entrepreneurship aren’t viable career paths for them that they don’t even consider it.

Code4CT aims to change that not only by teaching young women to code, but also by providing with female mentors willing to share their own entrepreneurial journeys.

“The lack of tangible role models plays a huge role in preventing young women from moving into the tech space,” says Dicks.

Failure and success

For many of those entrepreneurs, failure will have been an important part of the journey. But as the panel noted, there’s a low tolerance for failure in South Africa.

Big rewards in the entrepreneurial space require big risks, but if entrepreneurs are consumed with a crippling sense of failure, they’ll never find those rewards.

We need, in other words, to equip young people to be brave, not perfect.

The right conditions

But if that’s going to happen, we also need the right structures in place, both within government and the family.

If South Africa is to create a large pool of entrepreneurs, then the government needs to set up legislation which makes it as easy and cheap as possible to start a business.

Unfortunately that’s just not the case right now. “Setting up a business in South Africa is very difficult and very expensive,” says Gould.

Reducing that cost, could also prove a major boost to black entrepreneurs from less wealthy backgrounds. Those who make it through university face massive familial and societal pressures, make entrepreneurship much less enticing.

That experience is borne out by Mayema, who faced a fair amount of resistance when she told her family that she wanted to start a business straight out of university. As it the case with many young people, especially from the country’s impoverished rural areas, she was expected to use her university education to get a well-paid job in a respectable business with, in her words, “a nice car and business cards”.

It’s perfectly understandable: every parent wants the best for their children. And if they can make your life a little more comfortable at the same time, so much the better.

It’s a major stumbling block that needs to be overcome, but once it is, the opportunities are beyond measure.

The time is right

Despite all those challenges, the panelists all seem to think that there are massive opportunities to be found in growing young entrepreneurs. Technology is more affordable than ever, especially in the hardware space, where Parker believes opportunities abound.

As the social entrepreneur notes, there’s an already existing culture of hardware hacking in the townships. “People buy devices and ‘hack’ them to meet their needs”. The trick, he says, is to get them to see that other people have those needs too.

“Timing is everything,” says Parker. I think the world is now ready for hardware from the continent”

The rise of the gig economy could also prove useful in helping foster entrepreneurship in the country.

With the right platform, people can work the hours they want so they at least have some form of income while they build their business.

And that’s where something like Cox’s Fix Forward comes in. The platform provides vetted tradespeople with access to markets they wouldn’t otherwise have, thus saving them the hassle of trying to hustle for business, but also gives them entrepreneurial training, so that they can continue there growth.

So while the future doesn’t always look great for young people right now, with the right changes in place, that could change very quickly.
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Entrepreneurship support is pivotal to Africa’s economic growth

WITH most African countries diversifying from traditional sources of income, entrepreneurship is increasingly seen as a key to economic growth. So far, it has yielded huge returns for entrepreneurs, and experts say there is great untapped potential to drive the African continent into its next phase of development.

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A June 2015 study by UK-based Approved Index ranked African countries among those at the top of the entrepreneurship charts.

The Entrepreneurship around the World report listed Uganda, Angola, Cameroon, and Botswana among the top 10 countries.

The group regards entrepreneurship as a “necessity”, saying in its report: “When unemployment is high and the economy is weaker, people are forced to start small businesses to provide for themselves and their families.”

Today, entrepreneurship is seen as one of the most sustainable job-generation tools in Africa.

A 2013 study by Brookings Institution, a Washington DC-based think-tank, found that African youth (15-24 years) constitute about 37% of the working-age population.

At the Global Entrepreneurship Summit held in Nairobi in 2015, and attended by US President Barack Obama, entrepreneurs from more than 100 countries and a group of US investors discussed the role entrepreneurs could play to tackle youth unemployment in Africa.

According to Evans Wadongo, listed by Forbes Africa as one of the most promising young African entrepreneurs, many African governments have not been keen on developing policies to deal with youth unemployment.

“Governments are not doing enough. The private sector is trying, but most goods brought into the African market are from China. This denies the youth much-needed manufacturing jobs, which are more labour intensive,” he says.

Kenya’s cabinet secretary in the Ministry of Industrialisation and Enterprise Development, Adan Mohammed, however, defends the policies of most African governments, saying that their efforts have been spurring confidence in the continent, and are enabling more young people to turn towards entrepreneurship.

“Success breeds success — as many entrepreneurs make headway, others get on board. Also, technology-based inventions are pulling entrepreneurs,” he says.

Ugandan Prime Minister Ruhakana Rugunda says his government’s efforts to promote entrepreneurial culture have produced “remarkable results”. For instance, the state-run Youth Venture Capital Fund trains and provides money to young people with good business ideas. Most importantly, with youth comprising more than 75% of its population, and 83% of its unemployed, Uganda has remodelled its education system to include entrepreneurship as one of the subjects in secondary schools and colleges.

With the help of the private sector and development agencies, the Ugandan government has established information, communication, and technology innovation hubs that help entrepreneurs to launch start-ups.

Lack of access to working capital has hampered entrepreneurship in Kenya. Even though the government has created the Youth Enterprise Development Fund and Uwezo Fund to support youth entrepreneurship, budgetary constraints limit their effects.

Andrew Wujung, an economics lecturer at the University of Bamenda in Cameroon, attributes the country’s entrepreneurship effort to its unique poverty-reduction strategy. Unlike other countries in Africa, Cameroon’s poverty-alleviation strategy is linked to entrepreneurship.

The government is organising robust skills-acquisition and training programmes for entrepreneurs, and making credit facilities easily accessible to people with innovative technological and business ideas.

For entrepreneurship to boost Africa’s economy, governments must tackle some of the greatest challenges that impede its progress, including lack of funds, mentorship, and poor government policies.

African governments should consider giving the private sector incentives to create more jobs through tax relief. Laws and regulations should favour entrepreneurs, and effective strategies and policies are required to create more employment within small and medium enterprises.

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How to use product life cycle analysis to your advantage. (David Baggs)

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Small businesses becoming a top SA career choice

SINCE 1994 small business activity in SA has grown in line with the country’s GDP, which almost tripled from $143.8bn in 1996 to $404.3bn in 2011.

For small businesses, the gains have been all the more impressive given that, before democracy, myriad of restrictions, laws and by-laws prevented black entrepreneurs from entering the business world.

The Global Entrepreneurship Monitor 2014 SA report says while in 2001 19.7% of the adult population saw opportunities to start a business in SA, this figure has since increased to 37% in 2014.

Christo Botes, spokesperson for the 2015 Sanlam and Business Partners entrepreneur of the year competition, says more entrepreneurs are entering the market compared to 10 years ago.

“The entrepreneurial spirit is on the rise due to positive shifts in societal attitudes. This has resulted in an increasing number of South African adults viewing it as a career choice.” Business Engine MD Muriel Chinoda believes there has been a “total shift” in attitudes towards entrepreneurship. With the scarcity of formal jobs and persistently low global economic growth, more people are looking to establish their own businesses rather than pursue a formal career.

“There are a number of people who, after being in formal employment and acquiring some much needed experience, realise that owning and running their own businesses is a better choice. So the realisation is there and I think there is much greater acceptance of entrepreneurship as a lifestyle choice,” she says.

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THE tough economic times are creating opportunities for small businesses which are nimble and on their game, Ms Chinoda adds. “There is no time for time-consuming bureaucracy and the waste that is characteristic of big businesses. So for the entrepreneur who finds a niche, produces a great product or delivers a great service, the opportunities are plenty.”

Nedbank economist Busi Radebe says despite the perception that access to finance remains a problem, she believes that the banks are open to lending to small and medium-sized enterprises.

The latest quarterly results of the Nedbank Small Business index recorded an improvement in the ease of obtaining finance from 4.1 to 4.9 — a record high since the index began.

“It is important to note that the bank’s appetite to lend is driven by customer demand and is governed by adherence to legislation such as the National Credit Act, which seeks to avoid reckless lending to consumers,” Ms Radebe says.

The government maintains that small businesses and co-operatives are critical to defeating the triple challenge of poverty, unemployment and inequality.

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THE Department of Small Business Development’s Cornelius Monama says small businesses and co-operatives are expected to be central to SA’s job-creation efforts, in line with international trends.

“The National Development Plan states that about 90% of jobs will be created through small and expanding companies by 2030.”

It is from the realisation of the importance of small and medium-sized enterprises that President Jacob Zuma established the Department of Small Business Development, Mr Monama says.

“Through this intervention, the government will be able to unlock economic opportunities and thus achieve inclusive economic growth and sustainable employment, particularly for women, youth and people with people with disabilities,” he adds.

Source: Business Day Live


 

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71.5% of Africans see entrepreneurship as good career choice

More than 70 per cent of Africans see entrepreneurship as a good career choice, with opportunity a far bigger driver for people starting their own businesses than necessity.

The figures are contained in the Global Entrepreneurship Monitor 2014 Global Report, for which Global Entrepreneurship Monitor (GEM) surveyed more than 206,000 individuals were surveyed across 73 economies, including Angola, Botswana, Burkina Faso, South Africa, Cameroon and Uganda.

It found 71.5 per cent of those surveyed in Africa generally considered entrepreneurship a good career choice, with the figure highest in Angola at 75.1 per cent. 77.6 per cent of Africans considered entrepreneurs to be of high status, with Angola again leading the way with 77.6 per cent. This was higher than elsewhere in the world, with only 56.9 per cent of Europeans, for example, believing starting a business was a good career move.

“Social values are an important part of the context in which individuals behave entrepreneurially or not. Starting a venture is seen as a good career choice mostly in African economies, while individuals in the European Union show the lowest level in this regard,” GEM said.

“Entrepreneurs in African and North American economies share the value of high status to successful entrepreneurs, which indicates that there is an entrepreneurial culture in those economies. This is additionally supported by high media attention for entrepreneurship.”

The report also found entrepreneurship in Africa is generally driven by opportunity rather than necessity. 71 per cent of Africans surveyed said their starting a business was opportunity-driven, as opposed to 26.3 per cent that said it was necessity-driven.

“Entrepreneurship is acknowledged as a driver of sustainable economic growth as entrepreneurs create new businesses, drive and shape innovation, speed up structural changes in the economy, and introduce new competition – thereby contributing to productivity,” the report said.

“Entrepreneurship can drive job creation and contribute to economic growth that is inclusive and reduces poverty. With young people being disproportionately affected by unemployment, policymakers and governments throughout Africa are ensuring that inhabitants have access to sustainable livelihoods.”

Governmental policies and internal market dynamics in Africa are better evaluated than in North America, while the dominant reason for discontinuation of the venture is lack of profitability. It also found African businesses tended not to be very internationalised, with almost 70 per cent of early-stage entrepreneurs not having a customer outside their respective countries. The exception is South Africa, where 26 per cent of early-stage entrepreneurs have more than 25 per cent of their customers abroad.

There were, however, some words of warning for South Africa in terms of the amount of entrepreneurship taking place in the country.

“With the advent of democracy in 1994, entrepreneurship, SMME development and job creation became a priority in South Africa as many of its people, particularly African blacks, were precluded from the skilled job market and from starting their own businesses other than in restricted areas,” the report said.

“South Africa’s early-stage entrepreneurial activity is very low (six per cent-10 per cent), especially when compared to other developing countries such as those in South America. Further studies showed that education plays a major role in entrepreneurial activity in that the more educated the person, the more likely that person is to start a business and that the business continues to be sustainable. This finding emphasised the need for training in South Africa, particularly amongst the youth where unemployment continues to increase year-on-year.”

Source: Disrupt Africa


 

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Why social entrepreneurship in SA?

As the financial pressure for those working for non-profit organisations continues, the debate for and against social entrepreneurship is intensifying in South Africa.

Social entrepreneurship is hard to define, with different interpretations in different countries. In South Africa, it is emerging as a blend of for- and not-for-profit approaches, which balances the value and trust of social organisations with the efficiencies and profit motive of business. Within this is a conflict that challenges our cultural interpretation of charity – to make money out of social services is interpreted as inherently wrong and counter-intuitive to the mission-focus of civil society.

It is this dissonance that makes social entrepreneurship so powerful in SA, as it forces us to look at what we assume is right and challenge the ‘norm’. Multiple reports talk of a crisis in civil society1, and question the sustainability of the current system of funding, which is largely dependent on grants. Compounding this is a fractured relationship with a government that subsidises rather than funds non-profits to deliver essential services, in fields such as child protection, education and health.

The concept of social entrepreneurship addresses some of the constraints that civil society organisations in SA experience. It introduces a profit motive to the running of an organisation, which fundamentally shifts the way non-profit leaders approach their work. It is not much different to the non-profit structure in that profit must be re-invested back into the organisation, but it opens up different avenues of funding.

Because social enterprises in SA are often registered as both for- and not-for-profit companies, they can access both grant and commercial funding. This opens a spectrum of opportunities from accessing equity and debt funding, to developing an income stream that brings in predictable, unrestricted income to organisations.

Interestingly, the consequence of this approach is not a shift away from the mission of the organisation, but instead a focus on it. Non-profit organisations that succeed in adapting to social entrepreneurship introduce income into their organisations that aligns with their work. Great examples in SA are the Oasis Association in South Africa, which generates income through its recycling activities – but the rationale to the service is safe, structured employment for people with intellectual disability.

Greg Maqoma set up a for-profit company to fund the development of young dancers, which is the primary focus of the Vuyani Dance Theatre. The graduate of the GIBS Social Entrepreneurship Programme has successfully managed to transform this grant-dependent arts organisation into a highly successful dance company, which has won numerous international awards. Another example is the focus of Spark Schools, to improve the calibre of teachers by focusing on teacher training, a mission which is funded through the low-fee schools Spark operates.

The consequence for organisations starting out with a social entrepreneurial bent is that they think differently about how they deliver their services. Weaved into their models are opportunities to generate income that underpin the service. Examples here include Iyeza Express, which delivers chronic medication to patients in Khayelitsha, using bicycles and charging an affordable R10. Claire Reed responded to the difficulties in growing vegetables by developing a fertilised seed strip, which she sells in nurseries and schools, which funds the vegetable gardens she builds in schools.

It may seem counter-intuitive, but profit encourages a focus on impact, as without quality service delivery, the organisation doesn’t have customers, and consequently, no income. This has links to accountability and transparency, creating a circle that builds trust, credibility and profit.

Social entrepreneurship in SA is not the magic solution that will eradicate the constraints that non-profit organisations experience. But it offers potential to shift our civil society into a different way of doing things. It creates a focus on long-term sustainability, on quality service, efficiency and accountability. It blends the lessons from business with the diversity and complexity of social values, and in the mix are great opportunities for change.

In the words of Bernard Shaw: “Progress is impossible without change, and those who cannot change their minds, cannot change anything.”

Source: Mail & Guardian


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