Building African Businesses
12 March 2019
According to an article published in The Economist magazine this week titled The new scramble for Africa there is a surge of foreign nations (in both the public and private sectors) moving to Africa to “strengthen diplomatic, strategic and commercial ties.” The main reason for the rising interest is Africa’s “growing share of the global population (by 2025 the UN predicts that there will be more Africans than Chinese people)” The Economist reports. The article goes on to say that “engagement with the outside world has mostly been positive for Africans. Foreigners build ports, sell insurance and bring mobile-phone technology.”
We however, have a different view; Africans should not make the mistake of continuing to be net importers of services, food, refined oil products, technology, etc. In order to be self-sustaining, the growing African population should provide commercial opportunities for emerging African entrepreneurs. The median age of the African population is 18 years, whilst Asia, the Americas and Oceania have a median age in the 30s and Europe has the highest being 42. African youth remains the most vulnerable to unemployment; regional youth unemployment is approximately double that of adults (11.8% versus 6% according to the International Labour Organisation). In South Africa unemployment is as high as 54.7% amongst the sector of the population under 24 years of age. We believe that entrepreneurship and the establishment of African businesses is part of the solution to curbing this trend.
We are not advocating for an “Africa first” or “Africa only” model, however we believe that African entrepreneurs can develop products and services demanded by Africans based on their unique knowledge of the market. They can then supplement their production by “importing” a combination of skills, material and services produced more efficiently around the world, where necessary. Therefore African States would be best served creating business environments, which enable start-up success by employing these three key principles:
- Increasing talent pool– via training, skills development and the establishment of start-up accelerators to educate young founders.
- Providing the rightecosystem– building an entrepreneurial culture where small businesses are supported by the government and private companies via partnership or trade.
- Access to funds– easier access to business loans for start-ups, creating investor incentives for venture capitalists and government investment.
Enjoy this week’s edition of the newsletter, happy reading!