In recent years, Africa has experienced major economic growth achieving an average GDP growth of over 5% between 2001 and 2010. Unfortunately, the continent experienced economic decline between 2010 to 2015 revealing much of its achievements concentrated on its oil exporting economies while a highly valuable asset, Africa’s growing labour force, remained untapped. The recession and consequential lack of jobs that followed from this pressed Africa’s youths to become more resourceful thereby unveiling the rise of entrepreneurship.
Economic scholars, as stated by ICF Africa, agree that the solution to Africa’s economic woes is investing in Small and Medium Enterprises. They propose this will create jobs, allow Africa to compete in the global market and increase the collective GDP of all African countries. It is important to note that Africans have long been entrepreneurs with unregistered and informal businesses reaching 60 percent according to Thomas Wolfgang’s 2010 paper, Entrepreneurship and African Development. This owes mainly to the lack of an enabling environment and capital to start-up a successful business while those with the means combat corruption and bureaucracy on a daily basis. Despite the obvious challenges entrepreneurs face in Africa, many still believe it is Africa’s saving grace.
Following the economic growth of recently developed countries such as China and Japan, it is obvious entrepreneurs played a key role in moving the country towards industrialisation. In the 70’s when China loosened its stance on communism and embraced the capitalist market system, it recorded an increase in the number of private owned businesses. Now private businesses such as Lenovo Group Ltd founded by Liu Chuanzhi and Jack Ma’s Alibaba Group contribute to its secondary and tertiary market which make up 90% of China’s GDP.
International Organisations equally agree that the key to Africa’s growth and development lies in the success of it’s entrepreneurs. ICF Africa reports that World Bank claims successful SMEs are:
– Engines of economic growth.
– Essential for a competitive and efficient market.
– Critical for poverty reduction.
– Largest provider of employment in most countries.
– A major source of technological innovation and new products.
– Employers of poor and low-income workers.
– Sometimes the only source of employment in poor regions and rural areas.
In order for entrepreneurship to thrive in Africa, most such as Arthur Minsat of the OECD Development Centre, believe that Government need harness the skill of entrepreneurs, link local entrepreneurs to international businesses and help fund these local companies. Tony Elumelu, a successful Nigerian Entrepreneur, shares the same view and established the well known 10 year Pan-African $100 million Tony Elumelu Entrepreneurship Foundation in 2015 to Empower the next generation of African Entrepreneurs. However, entrepreneur mogul Jack Ma, warns that Entrepreneurship is not a substitute for development, as such Government should not rely so heavily on them.
It is therefore noteworthy that though Entrepreneurship can bring about positive change in Africa, government still must provide the enabling environment for local businesses to remain successful in the long term.