Africa’s entrepreneurship ecosystem is a dynamic and rapidly evolving landscape with the potential for economic growth and innovation. The continent is home to about 1.4 billion people, representing 16 per cent of the world’s population. The countries in Africa are diverse not only in culture and language but also in economic output. With a growing youth population, Africa is thriving in the digital economy. Exploring the various components of the entrepreneurship ecosystem in Africa include government policies, regulatory frameworks, and emerging opportunities. This components highlight the diverse and vibrant entrepreneurial environment that drives change and progress across different sectors of the African economy.
The entrepreneurship ecosystem in Africa refers to the interconnected network of entrepreneurs, investors, support organisations, and government entities that create an environment conducive to starting and growing businesses on the continent. Africa’s entrepreneurship landscape has evolved significantly over the years, with a shift towards supporting innovation, technology, and sustainable development. The continent has seen a rise in homegrown startups and initiatives, driving economic growth and social impact.
However, various components of a thriving entrepreneurship ecosystem in Africa, including access to funding and investment, a supportive regulatory environment, access to talent and skills development, and government support and policies for entrepreneurship, are still under scrutiny, with no common front in sight among African countries. In other words, African nations are a divided house with no strategic direction or goals, unlike their European counterpart. The partnership between Europe and Africa includes cooperation in various areas such as trade, investment, development aid, security, and migration.
While the United States seeks to re-establish itself as a major partner of choice, China is gradually, with concerted effort, establishing itself in Africa. Amid the competition between the US and China, African leaders, in their disunity, are picking the seemingly right partners that benefit them, only in the short term, and are deeply disuniting the already divided continent. What benefits does a divided house bring to its citizenry in the African continent? This remains an unanswered question. Responsible leaders ought to look inward for the socio-economic development of their countries rather than aligning with the Western or Eastern leaders who seek to pursue their own, well-articulated strategic goals, all at the expense of a continent like Africa.
Returning to the key components of a successful entrepreneurial ecosystem, access to funding and investment sources, including venture capital, angel investors, and various funding mechanisms, is specifically designed to support early-stage startups in Africa. Some notable African companies leading in this area are M-Kopa, a provider of off-grid solar financing in East Africa, and Chipper Cash, a service for cross-border mobile money transfers across the continent. M-Kopa initially focused on a lending business model that utilised digital micropayments and IoT connectivity to enhance the accessibility of financing for solar services and household products. On the other hand, Chipper Cash offers a cross-border mobile money transfer service across multiple African countries, including Ghana, Uganda, Kenya, Tanzania, Rwanda, and South Africa, with its headquarters located in San Francisco, California, United States.
From a regulatory standpoint, creating a supportive environment that facilitates business operations by safeguarding intellectual property rights and encouraging innovation is crucial for the success of entrepreneurs. Clear and transparent regulations provide the stability needed for businesses to grow. Examples of countries with supportive regulatory environments in Africa include Rwanda, which has been recognised for improving the ease of doing business, establishing the Rwanda Development Board, and eliminating several bureaucratic hurdles. Mauritius, for example, has a well-developed regulatory framework that supports entrepreneurship and innovation, focuses on intellectual property protection and a favourable tax regime. Kenya is another African country that has improved its regulatory environment, particularly in the technology and innovation sectors, with initiatives like the Kenyan Innovation Bill and establishing specialised economic zones.
Governments across Africa have introduced various initiatives to support entrepreneurship, including funding programmes, tax incentives, and regulatory reforms aimed at simplifying business processes. Initiatives consist of policies and corresponding programmes that provide the guidelines that boost the required conducive enabling environment, spurring innovations, attracting investments, and creating jobs, thereby contributing to economic growth and social development across the African continent.
These initiatives aim to create an enabling environment for startups to flourish. Examples of such initiatives are the Startup Act in Tunisia and The Presidential Enabling Business Environment Council (PEBEC) in Nigeria. Key elements of Tunisia’s Startup Act include state salaries for up to three founders per company during the first year of operations, generous tax breaks, and a one-year leave period for public and private sector employees to start a company with the right to return to their old jobs.
In Nigeria, The Presidential Enabling Business Environment Council (PEBEC), a specialised agency, was initiated in 2016 to remove bureaucratic constraints on doing business and attract local and foreign investments. The question is, ‘How many of these initiatives were known by the relevant stakeholders?’ How accessible are these initiatives? Is there any database portal that stakeholders can access for relevant information? What communication strategies did the different African nations use to disseminate these initiatives to the relevant stakeholders? How does government implement and monitor the success of such initiatives?
For instance, the PEBEC initiatives introduced a policy and a programme to assist small and medium-sized enterprises, in partnership with all levels of government and the private sector. Unfortunately, the research could not confirm that the initiatives (policy and programme) were effectively communicated to the relevant stakeholders and has not allayed the fear that the Nigerian government initiatives were more window dressing that paints a good picture of government seriousness towards businesses when the opposite is the reality.
Again, the implementation of this seemingly concealed policy becomes dead on arrival and does not last beyond Buhari’s regime. While the policies developed by other countries remain open to the relevant stakeholders and become stable over a while with deliberate attempts to always review, when and where necessary, the policies by the Nigerian government are always tackled through a reactionary approach, concealed from the stakeholders, and become stale before implementation. I hope Tinubu’s government will address this abnormality and reverse the trends.
In essence, the success of the initiatives depends on the impact on stakeholders who are privileged to know about the initiatives existence and is fortunate to have access with no bottlenecks as inherent in most African countries ‘business practices’. The leaders of African nations are generally capable of launching commendable programmes, but unfortunately, they hardly pursue such initiatives to a logical and successful conclusion.
Enabling the entrepreneurship ecosystem requires the expertise of the various relevant stakeholders. Therefore, access to a skilled workforce and continuous skills development programmes are vital for the success of entrepreneurs in Africa. Building a talent with the necessary skills for the modern business landscape is crucial for driving innovation and growth. African educational institutions and training programmes must work to develop the required skills and talent for entrepreneurs.
A view case is Andela, a software engineering, training and development company based in Africa, founded in 2014 and with operations in several African countries, including Nigeria, Kenya, and Uganda. Andela’s mission is to develop world-class software engineers in Africa and connect them with global technology companies. The company offers an intensive training programme that includes technical and soft skills development and then matches the trained engineers with client companies for full-time employment.
Likewise, Moringa School, a coding education institution based in Nairobi, Kenya, was founded in 2014 to provide high-quality, affordable coding education to Kenyan youth. Moringa School offers full-time and part-time coding bootcamp programmes and self-paced online courses. The programmes cover topics such as web development, mobile development, and data science, and aim to prepare students for careers in the tech industry. Institutions developing new skill sets suitable for new job categories in different industries and sectors of the economy are more than desirable for the Fourth Industrial Revolution (4IR), which can supports different entrepreneurial-based ventures.
Entrepreneurs in Africa often encounter challenges, however, Africa offers exciting opportunities in sectors such as renewable energy, agriculture, fintech, and e-commerce. It is like a treasure hunt that requires digging in the right spot to strike gold. The role of technology in advancing and shaping entrepreneurial-based businesses cannot be overstated. Technology is gradually revolutionising entrepreneurship in Africa.
While innovations like fintech, mobile banking with fintech-developed features, AI, and blockchain are reshaping industries and creating new business opportunities, Africa is yet to grasp the use of AI and blockchain which could give entrepreneurship a turbo boost into the future. Fintech companies in Africa are making a great move to ease payment or create a digital lending platform that provides instant loans to individuals and small businesses rather than through traditional banking systems.
With about 1.4 billion people, Africa offers a large potential market for fintechs, though acquiring customers can be challenging because of deficit infrastructures and low customer purchasing power, among others. Relevant government agencies that identified the emergence or trends of new jobs in the tech arena should proactively identify the needed structural infrastructures and policies that support a favourable and conducive business environment.
To further deepen the spirit of entrepreneurship, establishing Innovation hubs and incubators across the continent can offer entrepreneurs support, mentorship and resources to grow their startups. In South Africa, there are private and public government agencies of different sorts that deal with existing businesses. Some agencies are responsible for the implementation of the small business plan of the national government which includes subjecting new or existing businesses to the process of incubation. Other agencies provide support via the establishment of innovation hubs that provide some incubation programmes in agro-processing and pharmaceuticals, smart industries, and the green economy.
The innovation hubs operate a range of enterprise development, skills development and innovation-enabling programmes, and these include MEST Africa in Ghana and BongoHive in Zambia. While MEST is a programme in Africa that provides training for technology entrepreneurs, funding for their projects, and a network of hubs that support and nurture technology startups across the continent, BongoHive, in Zambia, works with brilliant minds to create practical solutions that transform the world by offering a range of startup and innovation programmes all focused on making Zambia Africa’s next hotbed of innovation.
In this, all existing innovation hubs in Africa need a deliberate push by the individual government to develop, introduce and implement an effective regulatory system to help in the sustenance of the various established innovation hubs. By nurturing and supporting entrepreneurs through access to funding and a conducive ecosystem, Africa is poised to become a hub of innovation and entrepreneurship on the global stage.
United African countries should have a common front, defining a strategic direction and goals for Africa’s entrepreneurship ecosystem. African countries need to enhance their governance ecosystems to foster a vibrant entrepreneurship culture. This involves enhancing institutional quality and sound governance, capitalising on their potential human and resource capital.
Though Africa’s countries are in strikingly different situations, but functioning entrepreneurship ecosystems can encourage specific types of entrepreneurs and also creating more African champions and regional champions in African member states. In other words, as the momentum of entrepreneurship in Africa grew, needed support and resources should be made available to aspiring business owners. This must be a clarion call to African leaders to wake up, unite and have a common front on how to create a favourable entrepreneurial ecosystem for entrepreneurs to thrive. Incubators, accelerators, and investment funds popping up across the continent, should provide guidance and funding that help the entrepreneurs thrive.
The spirit of collaboration and community was palpable, as individuals shared knowledge, networks, and opportunities. The entrepreneurial spirit is alive and well in Africa, driving positive change and economic growth across the region.
With a supportive ecosystem in Africa, entrepreneurs can overcome challenges, learn from failures and ultimately achieve their goals. The impact on these businesses extended beyond just financial success, as they also contributed to job creation, social development, and technological advancement. The future seemed promising for African entrepreneurship, with numerous chances for expansion and influence if African nations can unite to boost a successful entrepreneurship ecosystem.