Business creation is not a new thing in Africa. Indeed, history teaches us that Africans were big traders. Time has passed and entrepreneurship has not really changed. But as you know, set up a business in Africa, large or small, is sometimes a long and difficult road to walk into. It takes knowledge, resources, tools, and ideally a mentor or a sponsor to support you and give you that helping hand to progress into this administrative and financial jungle. Often times in Africa, the lack of financial solution prevents young business and management students to follow through their ideas and create profitable businesses.
There is no doubt that the creation of small businesses would allow economic recovery of certain villages, cities, and would offer to youngsters the opportunity to stop the exodus in search of an imaginary Occidental paradise and work for the development of our continent. But, for this to happen we must first, create an environment conducive to entrepreneurship.
Indeed the issue of entrepreneurship in Africa is a problem we must address at the core. As an African proverb says, “The construction of a house, always start with the foundation”; thus develop entrepreneurship at its core and base concepts. And that can be done by addressing the factors that hinder the development of entrepreneurship in Africa. Here are a few:
- Low entrepreneurial culture in Africa: Young Africans face a socioeconomic environment that does not promote the spirit of entrepreneurship. We must educate the public about the benefits of entrepreneurship which in principle is the key to Africa’s development. The lack of support and mentor to young entrepreneur is also a problem to solve.
- The lack of access to adequate financial services: opportunities for business financing are very slim. It is difficult to find an appropriate financial institution for adequate and long term funding. This funding problem does not arise with the same intensity for all genres or regions of the continent, entrepreneurs need a financing for working capital, financing for advances on markets, project financing (investments). Many entrepreneurs here have to resort to the tontine system as found in Africa. It is a savings that could be called informal and is often used and invested directly in the small family business or craft and substitute bank credit to finance the informal sector; Thus Africa’s financial systems must be adjusted in order to address these deficiencies. Basically we need to multiply the institutions of venture capital, to increase tenfold guarantee funds, to improve the financial market and diversify funding.
- Cumbersome administrative procedures and Justice: The process of business creation is complex and distributed among several agencies or institutions. With the scourge of corruption in some African countries, we must “put hand in pocket” if we want the process to be accelerated. In general we have to wait long enough and put the price in order to finally open a business. At this level the politics must allow the centralization of administrative procedure, lower legal steps and cost to reduce the time to create a business.
- Lack of skilled workforce for business management: Business and management schools are increasing in Africa, but there are not many young people who are capable of managing large firms and assert themselves as entrepreneur. We have to reform our education system to have even in science major, courses in business management, marketing, sales and economy. Because most of our graduates are skilled but don’t have any knowledge about money and business management.
Examples of suitable financing
Despite all these difficulties, it would be incorrect to say that entrepreneurship is dead in Africa because there are hundreds of successful private companies in our soil and some whose sponsors had faith in them and were able to find good financing suited to their projects here is a partial list:
- SITRAFER: rehabilitation of the railroad in Madagascar.
- 3T: specialized in transit, has raised funding from IFC leasing.
- TUNDE Group: First printing craft, became a structure involved in the printing industry, transportation and agribusiness through Cowrie Investment.
- Ecobank: Deploying the west and center, plans to open a subsidiary that specializes in investment (IFC).
- People Input: IT, West Africa and Central Africa.
- Les Moulins du Burkina: privatized mills, viable structure with the support of EBID.
- TRADEX: imports petroleum products, distributes petroleum products, made the “bunker” at sea.
- Niger Milk: industrial manufacture of milk derivatives by BOAD and Cowrie Investment.
The development of entrepreneurship in Africa will require the creation of an African concept of entrepreneurship and not necessarily an exact copy of what exists abroad. We must combine the best practices in Western business creation with African context and concepts. The concept of African entrepreneurship is based on the value of African culture but also on the joint development by highlighting the socioeconomic environment.
Think African entrepreneurship is also up to resolve once and for all the problems of finding adequate funding and the cumbersome procedures, the development of local initiatives such cooperatives in the countryside and village groups.