With entrepreneurship identified as one of the most important inputs in the economic development of any country, it is becoming clearer that support for start-ups, small businesses and innovation-driven enterprises is the answer to the vexing economic questions facing Africa today, writes Obinna Chima
Despite the challenges facing a lot of economies in Africa as a result of the slump in commodity prices, the continent still remains among the fastest growing in the world. Its rising growth profile is among other things, being driven by its rapidly expanding consumer markets as well as its private sector.
However, Africa’s share of world trade is just around three per cent with a very small fraction of global foreign direct investment flows. Also, the gross domestic product (GDP) of the entire continent is just about that of Chicago, a city in the United States of America.
In addition, a report by Oxfam estimated that 70 per cent of the world’s population lives in countries where economic inequality is greater than it was 30 years ago. For instance, the report showed that in South Africa, inequality is presently greater than it was at the end of the apartheid era. Given the current levels of income inequality in African countries, it is estimated that the continent’s poverty rate would not fall below the three per cent of the population – the World Bank’s definition of ending poverty, until 2075. The report also found out that inequality within countries was rising rapidly all over the world, with many nations’ richest people earning more, both in absolute terms and relative to the rest of the population.
Furthermore, it stated that in Nigeria and some other countries, the richest people’s share of national income is large and growing, while the share of more than 1.1 billion people – 16 per cent of the world’s population – is shrinking.
Inequality hinders growth, corrupts politics, stifles opportunity and fuels instability while deepening discrimination, especially against women. The potential benefit of redistributing the wealth of the very richest, by even a tiny amount, tells a compelling story.
Oxfam International’s Executive Director, Winnie Byanyima warned that rising inequality could set the fight against poverty back by decades.
In addition, because of the challenges of setting up businesses and also to market their ideas, a lot of African youths are frustrated.
Therefore, in order to tackle these challenges and place the continent on the path of through economic growth and development, business leaders in the continent have decided to forge an alliance that would drive job creation through support for entrepreneurs. That was the focus at the just concluded World Economic Forum (WEF) on Africa titled: “Connecting Africa’s Resources through Digital Transformation,” that took place in Kigali, Rwanda.
They also if African economies fail to achieve inclusive economic growth, they could miss the path to true development and run the risk of increased instability.
Tackling Job Crisis
To the President of the African Development Bank (AfDB), Mr. Akinwumi Adesina, Africa currently has a job crisis. He said two-thirds of the continent’s youths are without jobs, which he stressed put then in vulnerable position. This, the former Minister of Agriculture in Nigeria said could heighten social tension in the continent.
“Therefore, the AfDB is announcing in this meeting a new initiative that is focused on creating 25 million jobs for Africa’s youths over the next 10 years. Most of that would be in the area of skills and entrepreneurial development, so as to support the businesses of young Africans.
“My expectation is that at the end of this WEF on Africa session, we would be able to understand the enabling conditions that Africa must fulfil to participate effectively in the fourth industrial revolution and also unleash the skills revolution in the 21st century.
“I think the issue we are talking about is the fourth industrial revolution, which is very important for Africa. But we must recognise that the fourth industrial revolution is here, yet Africa has not participated in the second industrial revolution, which is just simply about providing access to electricity,” he explained.
According to Adesina, whether it is the first, second, third or fourth industrial revolution, everything revolves around access to power, saying that was why the AfDB launched a major effort called the new deal on energy in Africa, to light up and power Africa with 10 years.
“With that, we would be able to increase the access of SMEs to electricity, to be able to improve Africa’s industrial capacity and competitiveness in the global market.” Adesina who was a Co-chair at the forum said.
Also, the Chairman of Heirs Holdings, Mr. Tony Elumelu, warned that if measures are not taken to tackle unemployment in the continent, Africa’s demographic boom might turn out to be a demographic doom.
Elumelu, who was also a co-chair at the forum added: “I see myself as an Africapitalist in everything that I do and all these discussions are about economic empowerment of our youths.
“I am concerned as many of our participants that we need to be careful in Africa and make sure that our demographic boom does not become demographic doom and the way to do this is to make sure that we economically empower our youths.
“We have a lot of them, but if we don’t do this, it can become a major trouble for us and I am happy that we are talking about job creation in a manner that is functional in the 21st century, access to electricity, which would help us to achieve the empowerment of our people”
He highlighted efforts by the Tony Elumelu Foundation (TEF), to support young African entrepreneurs through the Tony Elumelu Entrepreneurship Programme (TEEP).
e-Commerce and Digital Transformation
Also, the Global Managing Director, McKinsey & Company, Dominic Barton, stressed the need to support small businesses in the continent.
Borton, who said he was optimistic about the future of the continent, pointed out that even though there are lots of media headlines emphasising the negative issues on the continent, there are many good things going on in Africa.
“This is the second fastest region in the world even the drop in commodity prices. If you look at the trend, this continent has the youngest population in the world. So, we have to make sure the youths are educated. If you look at urbanisation, which is also one of the biggest drivers of productivity growth, it is also happening at a fast pace over the last 20 years.
“Technology is also going to be a critical enabler. Another area I want to point at is e-Commerce. e-Commerce is actually one of the fastest growing areas for Africa right now and it helps SMEs to connect. That is the single reason why we are seeing growth in the Chinese consumer market. So, we must also focus on the integration of the continent to encourage the free flow of trade among people in the continent,” he said.
On her part, the Founder, Graca Machel Trust, South Africa, Graca Machel, stressed the need to improve the standard of education in the continent. According to her, for Africa to catch up with job demands in the global market, there is need for governments and the private sector to re-invent their system of education.
“We have not been able to give opportunities for children to learn and be able to develop knowledge and skills. We have not been able to improve education, anticipating the needs of skills in the next 10 -15 years.
“That is what a system of education should do. I don’t see us really moving as we should if we don’t take a deep look at how we can re-invent our system of education. Here, I am not talking about the public sector; I think the private sector has a role to play to look at the skills that would be required in 20 years’ time so that the system would enable the young ones to prepare for the future,” she added.
On his part, the Chief Executive Officer and Vice Chairman of the Board, Agility, Kuwait, Terek Sultan Al Essa, said digital revolution will help Africa to leapfrog the challenges of infrastructure that in the past had held back the continent from developing.
“I think the real and proactive way to think about it is to ask ourselves who is going to be doing the digital revolution. That comes down to SMEs and we have to look at the ways to address the issues on the way of SMEs in the continent.
“We all know that nine out of every new job I the emerging markets come from the SMEs. So, I think we think of ways of improving Doing Business in Africa and that is really the medicine that we need to unlock digital revolution. There is also need to improve trade in the continent and also infrastructure,” he said.