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.
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.