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.
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 Âcreated 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 Âcomprising 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.
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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“Tourism in Africa is on the rise, but has not yet reached its full potential,” is the rallying cry from the African Development Bank’s Africa Tourism Monitor 2015 with a view to 2016 and beyond, as it alludes to a wealth of opportunities, continent-wide, to capitalise on rapidly growing international interest.
The third annual instalment of the study – in conjunction with New York University’s Africa House and the Africa Travel Association – was aptly titled ‘Unlocking Africa’s Tourism Potential’ upon its release at the start of the year, and through comprehensive insight into facts, figures, contributions, accounts, industry representatives and tour operators, the general consensus suggests there is so much more to come.
And this isn’t to say that the current figures make for grim reading either.
“One of the key findings of the report, as indicated in its introduction, is that the tourism sector in Africa is growing,” reported the African Development Bank upon the document’s release. “In 2014, a total of 65.3 million international tourists visited the continent, around 200,000 more than in 2013. Back in 1990, Africa welcomed just 17.4 million visitors from abroad. The sector has therefore quadrupled in size in less than 15 years.
“According to the World Tourism Organisation (UNWTO), Africa’s strong performance in 2014 (up four percent) makes it one of the world’s fastest-growing tourist destinations, second only to Southeast Asia.”
The multicultural, multifaceted nature of what Africa has to offer seems to be the reason behind the ever-rising interest among international tourists; diverse attractions from the pyramids in Egypt, to Table Mountain in South Africa, the Sahara, Victoria Falls, rainforests, safaris and plains combining to present a range unparalleled anywhere else on earth.
The only drawback remains the way in which the countries in question continue to market such lures, and how they can continue to build an infrastructure and industry capable of housing the scope of people who would hope to one day grace their shores.
Africa’s Top Three tourist destinations in 2014
“Two North African countries top the list of most-visited countries in Africa. Egypt experienced the strongest growth in the sector in 2014, with 454,000 more international arrivals than in 2013, an increase of five percent in just one year.
“Second on the list is Morocco, which once again recorded more than 10 million incoming international tourists in 2014, an increase of 236,000 when compared with the previous year.
“In third place is Côte d’Ivoire, in West Africa. The country is experiencing a strong economic recovery. Although it recorded “only” 91,000 more international arrivals in 2014 than in 2013, this figure represents a 24 percent rise in just 12 months. This double-digit growth provides yet further evidence of the country’s vast tourism potential.”
– African Development Bank’s Africa Tourism Monitor, 2015
Ultimately, the long-term benefits of meeting these demands speak for themselves. Already, the influx of tourists to the continent has had a dramatic effect on each country’s economies and in 2014 alone; Africa recorded US$43.6 billion in revenue from the sector.
In total, international tourism now accounts for 8.1 percent of Africa’s total GDP, and the benefits extend far beyond the initial fiscal statistics as well.
“More tourists also mean more jobs,” the African Development Bank emphasised. “Across the continent, there are around 20 million people working directly or indirectly for the tourism industry. This means that the sector accounts for 7.1 percent of all jobs in Africa.
“Jobs supported by the sector include guides, hotel staff, interpreters, aviation staff and small businesses.”
Beyond that, individual sectors are also thriving as a consequence of the rise, with industries such as hospitality experiencing particularly rapid growth in both developed and emerging nations; once again driving higher levels of employment and domestic business relationships as a result.
The Bank continued: “The hospitality sector is expanding into new countries such as Mauritania, which has, until now, remained largely on the fringes. According to the report, it is sub-Saharan Africa, rather than North Africa, that is benefiting most from the expansion of hotel chains and the corresponding increase in the number of available rooms.
“Nigeria, the continent’s most populous country, comes top of the rankings in this respect, followed by Egypt and Morocco. However, the biggest hotel development project in sub-Saharan Africa can be found in Equatorial Guinea, in the Grand Hotel Oyala Kempinski, which, when complete, will feature 451 rooms.”
Again, the onus now is to not only ride the wave of the trend, but to proactively leverage it to its full extent, and numerous initiatives are beginning to manifest around the continent to this end; both to harness the increased number of tourists already visiting the continent, and to attract even more in the future.
The African Development Bank noted: “The report is particularly complimentary about recent simplifications to the visa system and regional cooperation mechanisms, including the introduction of the e-visa and the single visa scheme, enabling tourists to visit all Southern African Development Community (SADC) member states using just one visa.
“Other examples include the “KAZA” (Kavango Zambezi) common tourist visa developed by Zambia and Zimbabwe, and the single visa covering three countries – Kenya, Uganda and Rwanda – launched by the East African Community (EAC) in February, 2014.”
These simple – but effective – schemes are already expected to boost tourism revenue and job creation by as much as 25 percent in the coming years, replicating a successful model adopted across Europe, North America, South America and Australasia over the decades.
It is just the beginning though, with more and more calls coming for an improvement in the infrastructure awaiting tourists once on the continent, as opposed to solely improving the logistical proposition for people choosing Africa as a destination in the first place.
“Transport infrastructure and services is one of the key constraints limiting growth of the tourism sector,” the Bank offered as an example. “As the report indicates, ‘Journeys in the African continent are not always seamless’. In fact, it is more difficult – and more expensive – to travel across Africa than to get there from Europe, America or the Middle East.
“The report also points to other barriers to tourism sector development in Africa, including a lack of dedicated incentive policies, the need for closer regional cooperation, weaknesses in infrastructure and security problems.”
As such, The New Partnership for Africa’s Development (NEPAD) launched its Tourism Action Plan way back in 2004 to help develop a more sustainable approach to tourism, but the effectiveness and extent of the initiative is still yet to be realised despite the potential 155,000 jobs it would create, and the US$1.3 billion extra GDP it would generate.
“Security issues have posed a particular problem for the sector since 2013, especially in North Africa, Mali and coastal regions of Kenya,” the Bank added in regards to some of the key drawbacks. “The report indicates that, of the 80 countries for which travel warnings were issued by the US State Department, 30 were located in Africa.
“Moreover, although the 2013-2014 Ebola virus outbreak only affected West Africa, it created a climate of fear that spread to many other countries on the continent; even those far from the source of the outbreak.”
Negative impacts on some of the continent’s natural lures, including the increased number of animals on the brink of extinction and damaging connotations associated with poaching and illegal trading of species are further areas which Africa needs to address in order to turn around the continent’s global perception entirely; and these epitomise a general status which highlights that the recent positive growth in tourist numbers is barely scratching the surface of what can be achieved in the future.
The African Development Bank concluded: “Although international tourism is on the rise in Africa, the continent currently accounts for just 5.8 percent of the world’s incoming tourists and 3.5 percent of global revenue in the sector.
“As such, the sector still has vast untapped potential; potential that, if exploited, could kick-start rapid economic growth.”
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