The entrepreneurial revolution in Africa is stimulating growth, creating fresh opportunities and increasing the number of jobs. Entrepreneurship has proven to be a means of providing income for families and lifting African communities out of poverty. According to the Global Entrepreneurship Monitor 2014 Global Report, entrepreneurs in factor-driven economies — the stage of economic growth most African countries belong to — are more positive about entrepreneurial opportunities to start a new venture and they believe in their abilities to do so, making likelihood of success high. However, financing remains a barrier to entrepreneurial success on the continent.
Ahead of the visit of the United States President Barack Obama to Kenya, East Africa’s largest economy, for the Global Entrepreneurship Summit, GeoPoll, the Global Entrepreneurship Network and the U.S. State Department released a survey of 1,000 business owners throughout sub-Saharan Africa on entrepreneurship in their countries.
GeoPoll surveyed 200 entrepreneurs each in the Democratic Republic of Congo, Ghana, Kenya, Nigeria, and South Africa. The mobile survey platform asked the entrepreneurs what resources are most needed to encourage entrepreneurship, what programs they have participated in to improve their businesses, and also what are the biggest challenges facing new businesses. 36 percent of respondents opined that there was a need for more financial resources to be made available for entrepreneurship, while 24 percent think with better services and facilities, the number of entrepreneurs in Africa will increase and 23 percent believe government support will boost entrepreneurship.
Although financing was identified as the prime resource needed to encourage entrepreneurship, it is also the most scarce resource. According to the survey, financing is the biggest challenge facing new businesses. Another challenge is the paucity of high-skilled workers, as well as information on markets and government support.
The International Finance Corporation (IFC) estimates that up to 84% of small and medium-sized enterprises (SMEs) in Africa are either un-served or under-served, leaving a value gap in credit financing of $140 billion-$170 billion. However, a report by the Omidyar Network which cites the IFC estimate notes that while capital supply may be limited, financiers argue that most of the projects presented for funding are not fundable. The situation is changing as entrepreneurs now focus more on developing sellable business plans and understanding of the sector they are working in. The emergence of angel investors and venture capitalists is also affording African entrepreneurs access to the much-needed funding. But as the poll suggests, there is still a long way to go in improving financing for entrepreneurs.
Participants of the survey also identified training and events necessary for entrepreneurial support and guidance. Financial literacy courses top the list of needed training at 28 percent. Participation in Businesses Courses is also important, according to the respondents, 22 percent of which agreed. 21 percent chose networking events as crucial while others believe mentor programs and trade events are more important.
“As policymakers explore smart and sophisticated steps to develop healthy entrepreneurial ecosystems across the African continent, the voice of the entrepreneur must remain in the foreground,” said Jonathan Ortmans, president of the Global Entrepreneurship Network. “Being able to hear directly from the entrepreneurs helps guide our conversations at the Summit and beyond.”
President Obama visits Kenya this weekend where he will attend a conference on global entrepreneurship at the capital, Nairobi. He may make a quick stop at Nyang’oma Kogelo village, the home of his late father.