The Chief Executive Officer of the Tony Elumelu Foundation, Parminder Vir, in this interview speaks about challenges and opportunities for start-ups and small and medium scale enterprises in Africa, as well as on the forthcoming Tony Elumelu Foundation Entrepreneurship Programme that holds in Lagos next week. Nume Ekeghe presents the excerpts:
What do you think are the challenges facing African entrepreneurs?
Entrepreneurs face enormous challenges throughout their entrepreneurial journey. Amongst the challenges the TEF Entrepreneurs say they face are accessing start-up capital for their businesses. This can be addressed if banks and other formal lenders can reduce the collateral requirements; operating costs to buy machinery, equipment, technology or raw materials needed to operate. Power of course is the biggest challenge; government regulation and compliance from business registration, something government can easily fix by setting up on stop windows for SMEs; finding, training and retaining talent is a challenge for those trying to grow their businesses, government should consider tax relief for SMEs to enable them to stabilize their businesses; and business development for SMEs to access the supply chains of the large corporates
Government is the major driver of economy and policy maker across Africa, what kind of working relationship do you have with governments?
The importance of government in establishing and maintaining healthy and competitive enabling business environment cannot be over stated. The economic ecosystem is determined by the policies and functionality of government. Their effectiveness is critical to the success of SMEs. The Foundation continues to engage with government policy makers and leaders. At the fourth edition of the TEF Forum we will welcome the President of Ghana, Nana Akufo-Addo and President of Kenya, Uhuru Kenyatta, to engage in an interactive dialogue with the TEF Founder, Tony O. Elumelu CON. In July this year we welcomed President Macron of France to engage with over 2000 TEF Entrepreneurs shaping Africa. In 2016, we welcomed President of Sierra Leone to the TEF Forum. The Vice President of Nigeria, Yemi Osinbajo joined the Form in 2015 and 2017 to name but a few. Over the past four years the Tony Elumelu Foundation has played its part in helping African governments see that innovation, entrepreneurship and economic growth are inextricably linked. For example, Rwanda has streamlined its business registration procedures to such an extent that it only takes 6 hours for an entrepreneur to register and be ready for operation. Kenya’s economy has been transformed through entrepreneurship. The Ghanaian government’s Youth Enterprise Support initiative provides young entrepreneurs and innovators with opportunities to grow their businesses from idea to implementation to scale. Enterprise Uganda is a programme of the Ugandan government which offers young entrepreneurs training and financial literacy aid as well as a credit facilitation service that provides guidance around available sources of financing.
These few examples are proof that attempts are being made to create entrepreneurial ecosystems that encourage and promote business development. While establishing a quality business environment is important, from our engagement with thousands of African entrepreneurs, the governments also need to address the broader issues: affordable power, reliable infrastructure, taxation, cross border business, access to credit etc.
The Foundation participates and supports high-profile pan-African and international business conferences, summits, and forums to highlight the economic value of entrepreneurship to policy makers, promote entrepreneurship as good career choice and support the development of an entrepreneurial culture across the continent.
What is the focus of this year’s annual TEF Entrepreneurship Forum and why this focus?
One of the most vibrant aspects of the TEF Entrepreneurship Programme is the annual TEF Entrepreneurship Forum. The fourth Annual Tony Elumelu Foundation Entrepreneurship Forum, is taking place on 25th October at the Federal Palace Hotel, Lagos, Nigeria. The Forum has grown and scale every year with over 5,000 entrepreneurs and the entrepreneurship ecosystem players expected to converge on Lagos for this year’s Forum.
This year, we are celebrating the 2018 beneficiaries of our Entrepreneurship Programme bringing the total beneficiaries of our $100 million seed capital, mentoring and world-class training to 4,470 African entrepreneurs. The forum is also an opportunity for the entrepreneurs to engage with and learn from with established entrepreneurs, global investors, leaders from the African public and private sectors and developmental organisations. In keeping with the Foundation’s track record―most recently with President Macron of France―of bringing politicians face to face with the new generation of young business women and men shaping Africa, the Forum will include an interactive session with President Uhuru Kenyatta of Kenya and President Nana Akufo-Addo of Ghana, moderated by TEF Founder, Tony O. Elumelu. We will also launch TEFConnect, the world’s largest digital platform for African entrepreneurs, dedicated to connecting African entrepreneurs and the entrepreneurship ecosystem. The programme will also include a fireside chat with TEF Trustee, Gavi Champion for Immunisation in Africa and CEO, Avon Medical, Dr. Awele Elumelu, Moderated by CNNMoney Africa Correspondent, Eleni Giokos, on “The Role of the Private Sector in Furthering Economic Development across Africa”. An interactive pitching event and judging panel with a cross-section of judges from the private sector and development organisations.
This year’s event will be the fourth edition, what has been the impact of the programme so far, especially looking back at past beneficiaries and their businesses?
In just four years, we have directly impacted 4,470 entrepreneurs, and we are beginning to see the results: they are creating jobs, generating revenues and making a social impact through their businesses. This year began to track the progress of the 3010 entrepreneurs who graduated between 2015 – 2017 and our study of just 1472 entrepreneurs who responded to the survey shows they have generated $52,486,234 after completion compared to $18,155, 241 before they were selected for the programme. In terms of jobs, the same 1472 entrepreneurs, have created 11, 971 jobs compared to 4,034 before they were selected for the TEF Entrepreneurship Programme. Furthermore, our study shows that upon completing the TEF Entrepreneurship Programme, 62 per cent of these businesses are now fully operational while 29 per cent have now become partly operational. This also explains the phenomenal growth in jobs (15% of the entrepreneurs now employ at least 10 people) and revenue (13% of the entrepreneurs now generate above $50,000 annually) recorded after the Entrepreneurship Programme. With regards to gender representation, over the years, the Foundation has made it a priority to ensure that both female and male entrepreneurs have an equal opportunity to apply unto the programme. When the programme was launched in 2015, 76 per cent of the applicants to the Programme were male while 24 per cent were female. As a result, male applicants accounted for 71 per cent of the entrepreneurs eventually selected into the programme while female applicants accounted for only 29 per cent. Given this significant gender disparity, the Foundation developed strategies to create awareness about the programme amongst women and encourage them to apply for the programme. To achieve this, the Foundation ensured that advertisements and promotions of the programme were targeted towards women. On social media, profiles of successful female entrepreneurs on the programme were used to encourage aspiring female entrepreneurs to apply to the programme. Female alumni of the programme took this a step further by organising workshops and trainings to assist them in their application. The result of all these activities was that by 2018, the gap had significantly reduced, male applicants accounted for 58.8 per cent of total applicants (down from 76% in 2015) while female applicants accounted for 41.2 per cent (up from 24% in 2015). Similarly, in terms of selection, the number of selected male applicants fell to 65 per cent, (from 71% in 2015) while selected female applicants increased to 35 per cent (from 29%) in 2015.
In terms of the impact of the Seven Pillars of the TEF Entrepreneurship Programme, the 1472 entrepreneurs who responded to the survey, we saw that both the 12-week enterprise tool kit and the mentorship received at least a 70 per cent high impact rating while 61 per cent of them indicated that TEF provided them with the first seed capital for their business. So clearly, the TEF Entrepreneurship Programme is having an impact. We will be launching the TEF Entrepreneurship Programme: 2015-2017 Progress Report at the TEF Forum on the 25th October, which will provide deeper analysis and insights of impact across sectors, regions and business location.
But beyond the annual forum, do you have a follow-up mentoring programme that allows the beneficiaries to draw continuous support from your ogranisation and enables your organisation to also track the progress of the beneficiaries?
Paramount to the success of TEF Entrepreneurship Programme is our continuous engagement with the entrepreneurs who have successfully completed the programme because we are building to last. We maintain contact with the entrepreneurs both online and offline. Through the online TEF Online Hub, we have built Africa’s largest online network of African entrepreneurs for cross border business growth, skills, and knowledge sharing. TEF Hub is the go-to destination for TEF Alumni and our value-add partners, who provide ongoing products; business information, advisory services, innovation capital, market access, skills & training, and supply chain integration for TEF Alumni. This is also the platform through which we promote the emerging entrepreneurship networks across Africa and globally, important for business opportunities, building cross country networks and fostering a culture of entrepreneurship.
In 2017, we launched TEF Entrepreneurship Awards to recognise the achievements of TEF entrepreneurs from the 54 African countries to raise their profiles and inspire investors and policy-makers to recognise and support African entrepreneurs. We also launched TEF Forum Pitch Competition and we have added TEF Africa Market Place to the TEF Forum where TEF Entrepreneurs can showcase and sell their products and services to a diverse and inclusive pan-African gathering. At the TEF Forum 2018 in October the Foundation will launch TEFConnect, Africa’s largest digital platform, connecting African entrepreneurs globally. Positioned as the “Facebook for African Entrepreneurs”, the platform will provide three main benefits to its users, among others, to empower African entrepreneurs to buy and sell across countries and regions in Africa’s largest digital marketplace with digital traffic reaching millions of people; access free business tools such as financial planning calculators and marketing templates and enable entrepreneurs to promote their businesses to potential investors and other partners. Through TEFConnect, we are scaling our impact by connecting African entrepreneurs all over the world on a single platform and increasing trade opportunities.
How easy is it for the beneficiaries to leverage on your connection to access additional capital from banks and other sources across Africa and beyond?
Access to finance remains one of the biggest challenges for African startups and SMEs. To enable TEF entrepreneurs to access capital, we have formed a range of diverse partnerships with financial services providers and investors to mobilise both early stage and growth stage financing.
Contrary to the perception that African start-ups are risky investments, we have ample evidence that they are bankable provided they are given the right business development support as proven by our entrepreneurship development programme. Based on this we have encouraged commercial banks to embrace SMEs and to set up SME desks as part of their services.
We have signed a partnership with Agence Francaise De Development (AFD)to provide risk guarantee scheme with United Bank for Africa (UBA). In 2018, we will further diversify and deepen the partnerships between financial services providers and investors with the TEF entrepreneurs.
Through our engagement with African start-ups, we are aware that financial literacy is the weak link and we have enhanced our financial management modules to support them. We are also aware that the finance sector also needs to be educated to better serve start-ups and are working with angel networks, promoting public private grants and technical assistance, venture capital, private equity, and financial institutions. TEFConnect will build an investor network on the digital platform.