How to mitigate the challenges facing African entrepreneurs
Business Management

How to mitigate the challenges facing African entrepreneurs

This is a contributed piece by Dr Álvaro Sobrinho a prominent businessman, philanthropist and chairman of the Planet Earth Institute

 

As a proud African, it gives me great pleasure to see that our continent is gaining recognition as a cauldron of ICT innovation and entrepreneurship. Although Kenya’s ‘Silicon Savannah’ is probably the continent’s best-known tech hotspot, author Jake Bright reports the ‘existence of roughly 200 African innovation hubs, 3500 new tech related ventures, and $1 billion in venture capital to a pan-African movement of start-up entrepreneurs’. What’s more, many of our tech entrepreneurs are creating technologies with a real social impact. Cameroonian entrepreneurs, Alain Ntieff and Dr. Conrad Tankou, deserve special attention for creating Gifted Mom, a mobile health platform that uses low-cost tech to help mothers and pregnant women access health advice in Cameroon and Nigeria. I’ve also been very impressed by M-Kopa, a Kenyan start-up, which is using mobile money technologies and the latest solar systems to provide affordable electricity to east African homes.  

Despite these success stories, African tech entrepreneurs continue to face significant challenges that prevent them from achieving their full potential. Unsurprisingly, many fledgling business owners cite uncertain access to credit as one of the chief impediments to the growth of their companies. What’s more, according to the Economist, African tech entrepreneurs also complain that the dearth of talented programmers prevents them from turning their concepts into fully-fledged products.

This is very concerning both from a business and developmental standpoint. SMEs, start-ups and tech hubs are not simply key drivers of innovative solutions for catalysing progress. They are also a proven source of jobs, especially relevant for the 11 million young Africans expected to join the job market each year for the next decade. Consequently, we must take decisive action to boost the development of tech start-ups from inception to maturity. As the leading source of job creation and a recognised engine of growth, I believe that private sector companies are well positioned to help African countries build the capacity of our ICT entrepreneurs.

First of all, for-profit businesses can help address the much-documented digital skills gap by equipping African students with high-level and industry relevant technological competences. For example, they can partner with local universities to improve the quality of science, technology, engineering and maths (STEM) curricula. Businesses could help cash-strapped faculties that equip graduates with both a deep understanding of technology, as well as practical workplace skills. A great example is US enterprise tech giant, SAP, which partnered with a range of educational institutions to deliver the Africa Code Week initiative, as part of its broader efforts to foster digital literacy across the continent and inspire enthusiasm for software coding among African young adults. In last year’s iteration, the programme saw coding workshops take place across 10 African countries and the provision of high-quality online resources and training sessions. I believe that initiatives such as this are invaluable, as they help build a pipeline of local tech talent that start-ups need to succeed. At the same time, businesses can enhance their reputations in an increasingly important market.

Second, private sector companies can also help start-ups gain access to finance more easily by deploying localised business innovations. Since March 2015, Kenya Commercial Bank, the country’s largest bank, and M-Pesa, Safaricom’s mobile money service, have partnered to issue loans to the country’s micro SMEs by using credit scores derived from mobile phone data. Although most of the borrowers had been considered uncreditworthy due to their non-existent credit history and access to financial services, KCB-Mpesa accepts 80% of applicants, with a default rate of just under 2%. Since funding represents a key constraint to the success of tech start-ups, these initiatives could be both game changing for entrepreneurs and profitable for private sector companies. Given their expertise and resources, I would encourage other private sector companies to explore similarly impactful activities that can generate a competitive financial return.

As part of a survey conducted by mobile pollsters, GeoPoll, in the Democratic Republic of Congo, Ghana, Kenya, Nigeria and South Africa, 61% of respondents said that training programmes would encourage their peers to start their own businesses. Again, given their scale and deep experience, businesses can help African governments address this demand for practical training programmes. For example, executives can boost the continent’s outstanding tech hubs by providing entrepreneurs with much-needed business and skills training. They can also help young start-ups to protect their creations from exploitation by helping raise awareness of IP rights legislation, something Microsoft’s 4Afrika Initiative is doing through the 4Afrika IP hub. This can help build local human and technical capital, a long-term enabler of economic growth, and boost innovation.

Ultimately, building the capacity of our homegrown ICT entrepreneurs will help spur the creation of more innovative technologies that improve our citizens’ quality of life, and contribute to sustainable and inclusive economic growth. I call on private sector companies operating across the continent to join forces with African governments and the broader civil society to help address this challenge.

 

Four cutting edge African companies interviewed on IDG Connect:

A Touch-Screen ‘Heart’ Tablet in Cameroon

Rwanda: A safety algorithm for lethal motorcycle taxis

Gifted Mom: Cameroonian app to promote antenatal care

First Kenyan Wearables Company to Cut Motorbike Deaths

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