Raheem Akingbolu, who monitored the contribution of former Acting Managing Director/CEO and Executive Director, Small and Medium Enterprises of the Bank of Industry (BoI), Dr. Waheed Olagunju, during the New Ventures Competition organised as part of the 27th edition of the Wharton Africa Business Forum (WABF) at the University of Pennsylvania, Philadelphia, USA, reports that his recommendations, if strictly adhered to, can help developing nations take their youths out of the streets
Among other problems facing developing nations, especially in Africa, the challenge of how best to engage the continent’s rapidly growing number of youths has remained a knotty issue. At various fora, leaders of thought and business leaders, strive to proffer solutions. Another opportunity came their way recently at the New Ventures Competition, organised as part of the 27th edition of the Wharton Africa Business Forum (WABF), which took place at the University of Pennsylvania, Philadelphia in the United States of America.
One of the speakers, Nigeria’s Dr. Waheed Olagunju, who gave a keynote address at the forum was frank enough to tell participants that at least five million potentially viable as well as sustainable small and medium enterprises (SMEs) will have to be established on the African continent annually to provide decent employment opportunities for the continent’s rapidly growing number of youths. According to him, this is the magnitude of annual jobs creation required to create sustainable employment opportunities for the 20 million youths projected by the African Development Bank to join the continent’s labour force on an annual basis between now and 2030.
Olagunju, a former acting managing director/CEO and executive director, Small and Medium Enterprises of the Bank of Industry (BOI), stated that the five million new SMEs could annually generate the 20 million jobs required yearly since each SME has the potential to create four decent jobs. He added that where feasible, existing SMEs could also be either expanded or rehabilitated to enable them retain or increase their workforce.
He told his audience that the multiplier effects per unit of investment in successful SMEs, especially those that engage in agriculture and ventures within their vertical and horizontal value chains are significantly higher than those of large firms and enterprises that operate in other economic sectors with less labour intensive and highly automated processes, plant and machinery.
Olagunju whose keynote presentation was titled “Entrepreneurs as Catalysts for Driving Africa’s Inclusive Growth and Development’’ within the context of the WABF’s theme, ‘‘Moving Africa Forward, Mobilising for the Next Growth Frontier’’, strongly believes that the continent’s growth and development have to be inclusive for most Africans to be lifted out of poverty into possible prosperity. He explained that inclusivity would entail provision of decent jobs for those in the productive segment of Africa’s demographic composition that will ensure the realisation of Africa’s huge market potentials, where the vast majority would have requisite purchasing power by earning daily income far above the poverty threshold of $1.90 that will enable them acquire basic human needs.
Wharton Africa Business Forum (WABF) is the longest-running Africa-focused business conference in the U.S., and since 1992 has convened annually more than 600 young professionals, thought leaders, political dignitaries, and business/industry leaders from around the world, current and prospective MBA and Ph.D. students from peer institutions such as Harvard, Stanford, MIT, Columbia, Yale, Kellogg and Booth. The forum gathered the participants to discuss career leadership, investment opportunities, as well as contemplate Africa as a business destination and inspire educated talents in the Diaspora to get involved in the development of the continent.
This year’s edition, which is the 27th in the series, featured three esteemed keynote speakers: Mrs. Clare Akamanzi, Chief Executive Officer, Rwanda Development Board; Mr. Amane Dannouni, Partner, Boston Consulting Group Morocco and Dr. Waheed Olagunju, former Acting Managing Director & CEO, Bank of Industry, Nigeria.
The former BOI boss lent his voice to the apprehension that the rising youth unemployment could worsen Africa’s economic, political and social problems and render more people vulnerable to illegal activities, while also fueling migration within and outside the continent.
Olagunju stressed that in view of the high number of jobs required to be generated by the private sector yearly in order to realistically address the mounting challenges of youth unemployment, it was urgently imperative to grow investments in SMEs at rates similar to those recorded by BoI when annual disbursements rose by almost 1,500 per cent from an annual average of N1.8billion prior to 2014 (when he was reassigned as executive director in charge of SMEs) to N28.3billion by December 2018 when he retired from the bank.
According to him, the rapid expansion at BOI was achieved mainly due to the robust support given to existing and new entrepreneurs in the SME space by bringing the bank’s services closer to them through establishment of more offices across the country in collaboration with subnational state governments. He added that the bank’s operations were also automated, while youth centric schemes with secure risk acceptance criteria that took into account their circumstances were established, under which Nigeria’s leading entrepreneurship development institutions were engaged to conduct capacity building programmes for young entrepreneurs across the country.
The chief executive highlighted some of the conditions precedent for the establishment of five million potentially successful SMEs annually. These, according to him include the provision of holistic ecosystems in each of the 55 member countries of the African Union that will allow SMEs to thrive and grooming of a critical mass of entrepreneurs across the continent, who can effectively and efficiently convert the areas in which Africa has vast comparative advantages into competitive advantages. He also recommended a fundamental rethinking and radical redesign of the continent’s educational curricula to include introduction of entrepreneurship studies and acquisition of vocational skills at all levels of educational pursuits to build the business capacity of Africans across all age segments.
The leading development expert further advised the establishment of institutionalised mentoring schemes for young entrepreneurs that will include vacation jobs for students in private sector firms, where they could be introduced to how businesses are operated and managed early in life.
In the same vein, the corporate expert advocated the organisation of more entrepreneurship training programmes by state and non-state development facilitating actors on the continent. In this regard, he commended the organisation of the $20,000 New Ventures Competition for which 450 entries were received from across Africa, as part of the Wharton Africa Business Forum. Three of the nine shortlisted finalists came from Nigeria while two each were from Kenya and Uganda. Ghana and Rwanda accounted for one each. Looworks promoted by a Ghanaian female entrepreneur came first. The two Ugandan competitors Sparewo and Xeno placed second and third respectively.
As part of efforts at creating pro SME ecosystems throughout the continent, Olagunju urged African countries to intensify ongoing economic reforms, especially ease of doing business under which according to the World Bank’s ratings Nigeria and Togo emerged amongst the top 10 most improved countries in the world. He pointed out these processes will also help encourage African youths to embrace entrepreneurship that will contribute to the establishment of five million potentially successful SMEs annually on the continent.
He stated that Nigeria’s emergence amongst the 10 fastest reforming economies in the world was a strong signal that Nigeria would soon rejoin the league of 10 fastest-growing economies that it was part of, prior to the 2016 recession. Also before the recession, according to the United Nations Conference on Trade and Development (UNCTAD), Nigeria ranked fourth globally with 35 per cent as regards return on investment. UNCTAD similarly rated Nigeria the number one destination for foreign direct investment (FDI) inflow into Africa for most part of the first half of this decade. According to Olagunju, the fact that almost 60 per cent of the investments in Nigeria’s money market as at June 2019 was accounted for by foreign portfolio investors is a manifestation of the rising international confidence in Nigeria’s economy reminiscent of the pre-recession era.
In line with WABF’s theme, he confirmed Africa as the world’s next growth frontier in view of the fact that the World Bank, African economies to be amongst the 10 fastest-growing in the world in 2018. Four African economies made the top 10 best performers: Rwanda (8.7per cent), Republic of Guinea (8.7per cent), Libya (7.8per cent) and Cote d’Ivoire (7.4per cent). The other countries in the league were Ireland (8.2per cent), Bangladesh (7.9per cent), Cambodia (7.5per cent), Tajikistan (7.3per cent), Vietnam (7.1per cent) and India (7per cent). Ethiopia (6.8per cent) and Ghana (6.3per cent) did not make the top 10 but they also posted impressive performances in 2018.