The so-called millennial generation is reshaping Africa’s entrepreneurship culture one startup at a time, with 90 tech hubs having already been established. Unlike previously when young talented entrepreneurs left their home countries, there is a greater incentive now for entrepreneurs to stay and establish their own companies.
“There is a paradigm shift [in Africa] from seeking employment or the opportunity to leave the continent to creating a future with opportunity,” Eric Osiakwan, co-founder of Angel Fair Africa, which invests in high tech and high growth ventures in Africa, said.
With a flurry of new startups and capital raising occurring on the continent, Africa has the potential become a hub for social entrepreneurialism that can support pioneers and help solve socioeconomic problems that hamper its growth and development.
Today, many African countries face critical socioeconomic issues, namely high rates of poverty and unemployment, and widespread inaccessibility to education. According to Gallup World, the ten countries with the highest number of residents living in extreme poverty, defined as earning less than $1.25 per day, were all from Africa. The World Review predicts that, by 2020, Africa will have more than 122 million jobseekers. These statistics demonstrate the need and market opportunity for entrepreneurial projects that will reduce unemployment, boost the continent’s economic growth and mitigate its socioeconomic problems.
Fortunately, there has never been a more willing generation of young Africans. The Future Awards Africa, an annual award ceremony that spotlights young Africans who have showcased exceptional vision, passion, and commitment to a social or developmental cause, received close to 800 nominations for last year’s count of Africa’s brightest young entrepreneurs below 30 years old. For instance, Alain Nteff, concerned by the high mortality rate of pregnant women and newborn born babies in his own local Cameroonian community created an app called Gifted Mom that helps mothers and health workers calculate due dates. According to Forbes, there has been a 20 percent increase in antenatal attendance rate for pregnant women in 15 rural communities due to the takeoff of the app.
Other impactful African startups include Eco Shoes Projects, which sells crafts made by artisans with disabilities, SunSweet Solar which builds inexpensive small-scale power plants for Tanzanian homes and businesses and Njorku which connects jobseekers with employers across Africa. Several startups, such as Obami and Shasha Iseminar, are geared towards making education more accessible for the masses.
Considering the potential power entrepreneurship has in shaping Africa, it is not surprising, then, that investments in African startups have increased. VC4Africa was founded in 2008 as an online community of venture capitalists, angels and entrepreneurs dedicated to building businesses in African countries. VC4Africa reported in 2015 that 104 investments in startups across Africa were listed in their platform, with a total amount of USD 27 million, which is more than double the prior year’s figures.
Yet, it would be premature to overstate that entrepreneurship will eradicate all of Africa’s problems. It is, however, reasonable to suggest that it will likely move the continent in a better direction socially and economically. Job opportunities are increasing in almost every African country due to the creation of new businesses. Approximately six jobs are created for every new venture, and that number is expected to quadruple resulting in about 4176 new jobs according to a report released by VC4Africa 2015.
The belief that investing in Africa is risky, however, stands in the way for obtaining yet more funding. The costs of service in Africa as well as the cost of electricity and Internet connection are extraordinarily high according to Global Risk Insights. There is a fear that these high costs will eat away at revenue for foreign companies.
Additionally, the majority of African entrepreneurs lack the formal education needed to succeed in the business world. Education is still inaccessible to many citizens in various parts of the continent and the quality of education is still subordinate to that of many non-African countries. The budget allocated to education of a single country such as France, Germany, Italy or the United Kingdom outweighs education spending across the entire sub-Saharan African region, according to a new report from the UNESCO Institute for Statistics (UIS). This naturally begs the question: is it realistic to expect people with an inadequate education to start a business and be successful? Shortage of local talent can be seen as a red flag, especially for investors and executives of foreign corporations.
But despite these systematic problems that might deter foreign investment, this generation of African entrepreneurs is attempting to find big solutions to big problems. Their positive impact is evident today as it pertains to the continent’s growth and development, and it is still possible that Africa will look drastically different years from now with its growing crop of entrepreneurs and investors.