African Startups to Receive $100M in Funding
Entrepreneurship is increasingly considered to be important for Africa’s economic growth but little is known about how best to support youth entrepreneurship. Young Africans are highly resourceful in generating employment for themselves in a wide range of occupations, though we tend to concentrate in a few business types which reduces our competitiveness. For instance, the typical business most young ladies (both married and single) go into is “buying and selling” where they travel to Dubai, the United States or other developed countries to obtain clothing, cosmetics and other items for resale domestically. This type of business is generally low margin without a lot of room for differentiation. However, there are Africans with sound and innovative business ideas which never see the light of day due to a lack of skills, resources and mentorship needed to nurture and bring these ideas to fruition.
You see, high poverty and unacceptable levels of unemployment are prevalent in most African countries and some of these problems may be addressed through entrepreneurial activity. While entrepreneurship may not be a panacea, it can most certainly form part of the solution but the lack of entrepreneurial education, access to capital and mentors continue to pose a key challenge.
Africa is brimming with entrepreneurs (see my post on January 31). The entrepreneurial landscape in Africa is multi-faceted and includes local and foreign-owned enterprises, all of which are geographically dispersed across rural and urban areas. It also ranges from small enterprises (providing employment for a single individual) to large corporations (employing hundreds). However, in addition to the lack of entrepreneurial ecosystems, structures that are crucial for entrepreneurship activities to thrive, there is also the system itself – business processes and nonexistent/inadequate infrastructure – which don’t make it easy for individuals to launch business ideas and see their efforts thrive. Let me explain.
I chatted with a girl friend the other day who has been in business for herself (designing and sewing clothes) for a while now and one of her chief complaints is the lack of power which is crucial if she is to sew and deliver her designs as promised. She has gone for months with hardly any power and even when the power is on, the wattage is too low to carry an iron. She could use a generator but that would add to the cost of doing business – buying a good quality equipment, budgeting for its maintenance and upkeep and providing the fuel needed to power the generator on a consistent basis. This is one example of how the system raises the cost for launching and running a small business.
Take another example, my younger brother. He consistently mentions the level of red tape involved in simply registering a business, his business. Every time he visits the local business registration office, he receives conflicting information or faces a series of hurdles (several people to see, stack of forms he needs to fill, requirements he needs to meet etc) which he has to overcome if he intends to register the name of his business. As a newcomer to the process, he’s learning to navigate the system for himself and to sort through the various incomplete pieces of information he receives. However, imagine how much easier his experience would be if he had the benefit of someone else’s experience who has been down this road and has successfully dealt with the nuances he now faces.
Having a mentor who is able to provide guidance in navigating some of the challenges faced when building a startup is key, especially in a complex and developing system like Africa where knowing the right people is golden and access to correct information can be challenging. For entrepreneurship to thrive, mentorship and access to funds act as catalysts – quickening ideas and breathing them to life.
Therefore, it was with excitement that I read that Tony Elumelu, a Nigerian billionaire has pledged $100 million to help grow 10,000 African startups. Launched in January 2015, the Tony Elumelu Foundation Entrepreneurship Program (TEEP) wants to help find and grow businesses who will contribute $10 billion in revenue across Africa over the next 10 years. The reason this initiative is even more appealing is because not only will funds be provided but the entrepreneurs will receive mentoring, training and support on their start-up journeys. This mentoring and support is crucial because it will enable these entrepreneurs maintain, steer and grow their startups while equipping them with necessary skills to train others; essentially creating a trickle effect such that with time, the continent is brimming with entrepreneurs, leaders and change-makers. Entries are open to entrepreneurs from all 54 African countries and applications will be accepted in English, French and Portuguese.
I’m excited by what this means for the continent and look forward to seeing all the gains that this initiative will unleash in Africa and around the world. My hope is that more of these kind of initiatives will spring up creating hubs of entrepreneurial ecosystems all over the continent which in turn will spur development and employment for tons of individuals and their families. Only time will tell and you can be sure that I’ll be watching as it all unfolds.
If you do know anyone who could benefit from this entrepreneurship program, I encourage you to share this article with them.