Entrepreneurs Called to Ignite Economic Growth for Africa and Beyond

july obama

Since 2010, when President Barack Obama presided over the first Global Entrepreneurship Summit (GES) in Washington, D.C., it has expanded to a global event, subsequently hosted by the governments of Muslim majority nations, Turkey, the United Arab Emirates, Malaysia and Morocco. This past weekend, the focus shifted to Africa as the U.S. president travelled to Nairobi where he joined Kenyan President Uhuru Kenyatta on stage for GES 2015.

 

As I leave Nairobi at the end of this Summit, the context could not be more conducive to the discussions on fostering entrepreneurship. The promise of high-growth entrepreneurs is just as high here in Kenya as in more advanced entrepreneurial ecosystems.


The African Development Bank showed, using one-year growth rates in employment as a measure of firm growth, that about 15% of SMEs in Africa are high-growth firms, meaning that their one-year payroll was greater or equal to 20%. Moreover, according to EY’s most recent survey, Sub Saharan Africa entrepreneurs are the second most confident group of entrepreneurs when it comes to their workforce growth — with 61% expecting to add people in the next 12 months.


The Global Entrepreneurship Index (GEI) offered a preview of its 2016 report to be released this November, showing that Kenya’s performance in tech transfer is far above the regional average. Kenya is also a top country in the region for R&D expenditure as a percentage of GDP. Another Global Entrepreneurship Research Network (GERN) member Endeavor Insight also recently put the spotlight on Kenya, showing that scale-ups have created 72 percent of new jobs in the past three years, despite representing only five percent of Kenyan firms.


However, given the country’s projected population growth of 3.4 million additional people by 2020, Kenya will need to create over 3.9 million new jobs for young people. Several other countries are not strange to this is enormous challenge.


So, what program and policy ideas were among the GES top discussion picks?


More female and young entrepreneurs needed


Over the past decade, you may have heard of the nascent tech industry in Kenya propelled by key rock star entrepreneurs, such as those behind Mobile money (M-PESA), which leapfrogged traditional banking infrastructure and cultural payment habits and granted access to financial services for millions of unbanked people. This handful of successful scale-ups made entrepreneurship to be perceived as a viable route to success for young people.


In order for Kenya and the Sub-Saharan region to grow and add more jobs, economies will need a new wave entrepreneurship. Experts at the GES this weekend argued women and youth are in the best position to create a strong current that can drive new wave of high-potential startups.


When much of the discourse on entrepreneurship in the region has focused on rather small changes in countries’ regulatory framework, this new approach focused on diversity is refreshing. Relevant data is equally in demand. The Female Entrepreneurship Index (FEI) is keeping track of improvements in this regard across 77 countries, but data for Sub-Saharan countries is scarce. Of the nine countries included in the report, South Africa leads the way in the region, and ranked 36th globally.


Last Friday, the Global Entrepreneurship Summit kicked off with the GES Youth + Women event, featuring opening remarks by Akon, a Grammy-nominated R&B and hip-hop artist and entrepreneur. Born in St. Louis but raised in West Africa, he founded the Akon Light Africa project, an initiative to bring solar power to streets and households across 14 African countries. He was joined by Julie Hanna, Executive Chair of Kiva, the microfinance platform that has lending teams focused on youth and women.


Opening the program, Catherine Russell, U.S. Ambassador for Global Women’s Issues, announced a new exchange program to help young female founders in Africa grow their startups and reach new markets, the Women’s Venture Xchange—Africa. The pilot program – starting in Nairobi and Kampala – will serve as an exchange and mentorship program for high-potential women entrepreneurs, tapping the partners and programs of the Global Entrepreneurship Network, the Case Foundation, Mara Foundation and the U.S. State Department.


Wrapping up the GES Youth + Women event, the Spark the Fire Pitch Competition gathered 30 entrepreneurs from around the world to compete for $30,000 in cash and additional prizes. Airbnb cofounder and CEO Brian Chesky served as one of the competition judges, declaring Indonesian startup eFishery, the grand winner. I had the pleasure of handing the trophy to its founder, Amsi El Farizy who, along with all 30 finalists — 15 idea stage and 15 startup stage — also benefitted from one-to-one sessions with various mentors at the competition.


In addition, Spark Global Entrepreneurship, which I am honored to co-chair, has been working to mobilize more funding and resources to support female and young entrepreneurs. In fact, President Obama announced this weekend that the Administration’s goal to generate over a billion dollars in private investment for emerging entrepreneurs around the world by the end of 2017 has already been exceeded. Half of this goal will be specifically for women and young entrepreneurs.


I was fortunate to join President Obama and others as the effort was officially announced at the GES, along with the first wave of support from large corporations including Citi, EY, GE, Google and IBM.


Some of these programs that reflect on this demographic focus where highlighted at the GES in addition to existing Obama Administration Spark programs including:


African Women’s Entrepreneurship Program (AWEP), an outreach, education, and engagement initiative that targets women entrepreneurs in sub-Saharan Africa to promote business growth, increase trade both regionally and to U.S. markets through the African Growth and Opportunity Act (AGOA), create better business environments, and empower African women entrepreneurs to become voices of change in their communities.

 

Young African Leaders Initiative (YALI), which is creating four regional leadership centers in Ghana, Kenya, Senegal, and South Africa to improve the availability and quality of leadership training programs and professional development opportunities for young African leaders. In addition to in-person training and opportunities, the YALI Network provides more than 130,000 members with virtual resources and vibrant physical spaces that equip young African leaders with the skills and connections they need to improve their businesses, communities and their countries.


The focus on youth and women wasn’t confined to Kenya and the GES. The WiSci STEAM Camp opened on the same day as the GES and will continue through August 15 at the Gashora Girls Academy in Rwanda. The camp brings together 120 high school students from across Africa and the United States who have demonstrated interest in the STEAM fields -- science, technology, engineering, arts and math -- and have leadership abilities. The program is part of LIONS@FRICA, an initiative founded by the U.S. Department of State and Global Entrepreneurship Network with Microsoft, Nokia, DEMO Africa, VC4Africa and other partners to help entrepreneurs start and scale new businesses throughout Africa.


Mentors take center stage


Young African entrepreneurs are quick to point to a lack of capital. The growth wall among startup entrepreneurs tend to be, beyond funding constraints, the entrepreneur's own skills and knowledge. Mentors of course help startup teams develop these by sharing their experience in taking businesses to the next level. Mentors are important sources of informed social capital.


Mentorship affects not only growth prospects but also the very decision to take the entrepreneurial path. A 2011 Gallup survey in 83 countries discovered that access to a mentor has the potential to double the rate of new business creation in sub-Saharan Africa: 25% of those surveyed in sub-Saharan Africa who have access to a mentor plan to start a business in the next 12 months, compared with 13% of those who do not have a mentor.


GES organizers brought mentors to Kenya to help the selected promising growth-oriented startups from across the world and instill a mentorship culture among this cohort of entrepreneurs. In addition to Airbnb’s Chesky, three additional rock star entrepreneurs were in Nairobi to demonstrate their commitment to serving as mentors and global ambassadors: Steve Case, Chairman and CEO, Revolution, LLC; Julie Hanna, Executive Chair of the Board, Kiva; and Daymond John, Founder, FUBU and CEO, Shark Branding. The four serve as part of the Presidential Ambassadors for Global Entrepreneurship, a group of America’s most respected business creators who have committed to sharing their time, energy, ideas, and experience to help develop the next generation of entrepreneurs around the world.

 

The PAGE involvement in the GES strengthens what a recent EY survey shows to be a promising mentorship mindset in Africa. It found that 58% of Sub-Saharan Africa entrepreneurs surveyed reported to be engaged in mentoring young people, compared to 34% worldwide.


Investor-ready startup deficit


The Omidyar Network’s own survey analysis contributed to identifying the greatest challenges facing entrepreneurs across Africa, namely: financing, skills and talent, and infrastructure. There is clear link between the first two. “While many Afro-entrepreneurs bemoan a limited supply of capital, financiers point out that many projects are not fundable,” reads the report.


Preparedness for funding is key, and it requires soft skills that are screened by investors, such as ability to cope with uncertainty and adaptability to market changes. Ultimately, these personal traits and skills will determine a venture’s success or failure, GES participants agreed.


Africa to continue as a platform for pushing the entrepreneurship frontier forward


Tony Elumelu, a Harvard Business School-educated Nigerian entrepreneur, has been one of the thought leaders on entrepreneurship-led development and the push for a private sector-driven turnaround of Africa. Other opinion leaders such as Ashish Thakkar, founder of the Mara Group, and other prominent voices within African members of the Global Entrepreneurship Network (GEN), such as the Allan Gray Orbis Foundation in South Africa.  


African leaders will meet again in the next two years, culminating in the convening of the Global Entrepreneurship Congress in March 2017 in Johannesburg. Expect many lessons to be shared as Africa positions itself as ground for policy and program experimentation. As Steve Case, Co-Founder of AOL who was present at the GES said, “Historically, Africa has been viewed by many as a problem to solve – but now there is a growing recognition it is in fact an opportunity to seize and entrepreneurs leading the way.”


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