Entrpreneurship in the Digital Economy
Earlier this month I spoke at a conference on “Industry 4.0” (4IR) in Morocco as the guest of the UN Industrial Development Organisation. Morocco has one of the highest numbers of e-platforms in Africa (after SA and Nigeria). It is also extremely good at attracting investment in the digital economy (one of the 5 best). It was also interesting to talk to an audience whose main markets are Spain and France, about the opportunities of the AfCFTA. Although this means a major move in focus for Moroccan trade, the Minister made a very clear appeal for Morocco to look ahead at the potential, in one of the best speeches I have heard on the potential of the African Free Trade Area.
One thing that Africa has no shortage of is entrepreneurs. However, it is in the creation of an enabling environment – a startup ecosystem – that will see entrepreneurs make a real impact on the continents economic growth. According to the World Economic Forum (WEF) 60% of Africa’s 420 million young people are currently unemployed, and more than 11 million job seekers are entering the market every year which highlights the desperate need for new solutions to drive employment growth. At the same time, Africa’s young population have an entrepreneurial spirit with early-stage entrepreneurial activity 13% higher than the global average. However, due to insufficient support and infrastructure, the region’s startups are 14% more likely to fail than those elsewhere in the world. Across Africa, we see entrepreneurs harnessing technology and creating innovative solutions, tackling some of the Continent’s most critical issues. From access to water, agri-tech and energy to health services and banking. This entrepreneurial spirit must be harnessed, and the startups created by young African entrepreneurs nurtured and supported. Most of the “GAAFAs” (Google, Amazon, Apple, Facebook, Alibaba, plus Microsoft) are offering training systems to empower learners through computing skills. For example, this month Amazon Web Services (AWS) announced the launch of the AWS Equity Equivalent Investment Programme (AWS EEIP) with over R365 million to invest in the development of sustainable 100% black-owned South African small businesses within the ICT sector.
Still, many tech startups in Africa are facing failure. The main challenges are accessing financing, specifically venture funding, that will help them take their business to scale. We have looked at this issue previously in this Newsletter. Recently the World Economic Forum (WEF) launched the Africa Growth Platform, to help Africa’s startup enterprises grow and compete in international markets. The platform is all about creating an enabling environment: firstly, by securing commitments from governments to implement policy reforms aimed at stimulating and accelerating business growth. Secondly, it seeks to build a community of investors, that will include private investors, foundations, multilateral institutions and corporate intrapreneurs. Enabling better coordination and pooling of resources that could facilitate larger subsequent rounds of funding. Third, the platform will create and sustain a community of startup businesses themselves, promoting collaboration and sharing best practices. This is what WEF calls the private-public partnerships.
The World Bank has launched another public-private partnership project – l’Afrique Excelle – to address critical gaps in existing acceleration programs for francophone African entrepreneurs. L’Afrique Excelle is an investment-readiness accelerator programme designed to support the expansion of 20 startups from francophone Africa, with the aim of early-stage capital between US$250,000 to $5M.
An excellent example of this is the Caribbean “Climate-Smart Zone” and Accelerator. This has created an unprecedented coalition including 26 countries and over 40 private and public sector partners. The goal is to implement climate solutions for resilience, renewable energy, development of sustainable cities, oceans and transportation. This climate-smart zone will not only protect the region but create jobs and a new economy based on climate-smart infrastructure. An initiative Africa could well replicate.
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