Entrepreneurship is critical to Africa’s transformation - AfDB

30Jun 2021
The Guardian Reporter
Dar es Salaam
The Guardian
Entrepreneurship is critical to Africa’s transformation - AfDB

A June 2021 African Development Bank White Paper, Entrepreneurship and Free Trade: Africa’s Catalysts for a New Era of Economic Prosperity, states that entrepreneurship must be at the heart of efforts to transform Africa’s economic prospects.

The paper posits the Covid-19 crisis has triggered shifts that open up prospects for enhancingresilience and economic growth. As African economies begin rebounding from the crisis, thecontinent stands at an inflection point.

The report also notes a number of trends that could bringabout more inclusive economic growth are beginning to take hold—including digitalization andthe emergence of business opportunities linked to greening economies.

The right interventions could open the door for the continent’s young and dynamic entrepreneursand help build linkages with the large firms that are the key drivers of supply chains to createjobs and revenues to help scale up businesses.According to Dr. Khaled Sherif, AfDB’s  Vice-President for Regional Development, Integrationand Business Delivery,  “the White Paper aims to reframe the narrative around Africa’s privatesector and, going forward, guide initiatives promoting entrepreneurship on the continent tocapitalize on new opportunities.”

The release of the paper follows the May 2021 launch of the Alliance for Entrepreneurship inAfrica, in which the African Development Bank will play an important role. The Alliance willmobilize financial and technical resources from partners to develop Africa’s private sector, witha focus on micro, small and medium enterprises.

The Alliance also aligns with the Bank’s concept of coordinating more effective financial andnon-financial support to young entrepreneurs through African youth entrepreneurship investmentbanks. 

The paper argues that the intelligence, creativity, knowledge and technological skills ofyoung entrepreneurs will be central to harnessing the Fourth Industrial Revolution in and forAfrica for the first time to meet the continent’s development objectives of a sustainable and moreequal future.

On the supply side of investment in entrepreneurial activity across Africa, the paper notes thatAfrica’s nearly 650 tech hubs include “accelerators, incubators, university-linked start-upsupport labs, maker parks, and even co-working sites. “Egypt, Nigeria, Kenya and South Africaaccount for more than a third of these, but most countries and regions have tech hubs in one formor another.” While this represents great progress, a more robust ecosystem and network mustevolve to reach smaller, less developed economies.

On the demand side, the paper advises that both entrepreneurs and investors may need to scaleback expectations in terms of financing and revenue. “By adjusting expectations, there is a betterchance of increasing the roll-out of ecosystem development and for more start-ups to be able toaccess financing through stages that would have been inconceivable before 2015.”  Change will be transformative, but will not occur overnight.

Innovation and digital apps alone will not leadAfricans to wealth and stability; and systems, digital connectivity and infrastructure, togetherwith improved human capital and access to services, will be critical for success andsustainability.Ecosystems to support African entrepreneurs—particularly small and medium firms—must betailored to the African context.

To achieve this, the paper recommends that stakeholders workwith entrepreneurs along the entire growth path, rather than through a fragmented approach.Trade can be another catalyst for entrepreneurship, particularly given that the AfricanContinental Free Trade Area (AfCFTA) became operational in early 2021.Entrepreneurs will make the AfCFTA work by forging new value chains and exploitingopportunities to scale up via increased trade in regional markets. While the final terms of theagreement will be negotiated over the coming decade, the paper offers recommendations toadvance intra-African trade and private sector involvement. 

These include accelerated supportfor innovation hubs; partnerships with business associations to support trade-enablinginformation platforms; and automated one-stop border processing. They all underscore theimportance of integration, connectivity, information dissemination, and scale.

Frederik Teufel, Advisor to the Vice-President and task manager of the White Paper, argues that”entrepreneurship has been a driver of economic growth throughout the world and Africa shouldbe no different. There is already a highly entrepreneurial culture in place. With the right policiesand conditions, the private sector can act as an engine for inclusive prosperity across thecontinent.

Source:AfDB

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