Africa is progressively taking ownership of its position on the global stage as a continent of growth and business opportunity, which will be exploited by African start-ups over the next decade, resulting in more much-needed jobs and prosperity.
However, there has been an ongoing debate on the type of entrepreneur that primarily drives economic prosperity. According to the Global Entrepreneurship Monitor, which SEA Africa co-authors, economic growth is not driven by necessity-driven entrepreneurs, who decrease in number as the economy develops, but rather through opportunity-driven entrepreneurs, who launch new enterprises in response to market needs.
Yet, it has become evident that the culture of entrepreneurship in Africa is now largely defined by necessity-driven entrepreneurship, i.e. those venturing into entrepreneurship as a means of survival and viewed as a last resort, as opposed to the pursuit of an opportunity or aspiration. On the continent at large, necessity is the mother of invention. Reusing and recombining is a way of life and, in many cases, the lack of infrastructure, even old infrastructure, gives us a ‘clean slate’ for identifying and developing new solutions. Responding to these challenges, Africa’s entrepreneurs have begun contributing with a host of cutting-edge, innovative products and services to their respective economies, enabling them to leap forward in fields such as mobile and information technology, agriculture, transportation, healthcare and other key industry sectors, which include food, fashion, music and art, to make a decent living, as often highlighted in CNN’s popular regular television insert ‘African Voices’. In addition, the constant lack of jobs and the high rate of unemployment also sees job seekers seeking entrepreneurial opportunities right in their backyards, so to speak.
A study released in June 2015 by Approved Index, a UK-based business networking group, ranked Africa in the top tier of the entrepreneurship chart. As a testimony to the continent’s rising status, Entrepreneurship around the World report listed Uganda, Angola, Cameroon and Botswana among the top ten on the entrepreneurship list. The group views entrepreneurship as a ‘necessity’ at a time of high unemployment, saying, “When unemployment is high and the economy is weaker, people are forced to start small businesses to provide for themselves and their families.”
As I travel from Nairobi to Lagos or from Dakar to Kigali, a feeling of optimistic exuberance and pride wells within me, as I see many African-inspired institutions begin to bloom. The collapse of the commodity boom has pushed – if not forced – our countries and their citizens to invent other home-grown ways to survive and become more self-sufficient because benefits like unbridled imports are no longer sustainable. I truly sense that this is the dawning of a new African revivalist renaissance, one which will help transform many of the continent’s economies by the sheer power of their entrepreneurs.
Now to fully grasp this economic shift and the enormous positive impact it may have, we need to reflect on exactly how it developed. In the peak of the Great Recession, most African professionals who were based in the U.S. and Western Europe, returned to their native countries after being retrenched, armed with top-notch technical skills, managerial experience and established international networks. But because they faced limited job prospects back in Africa, due to the recession’s decimation of the stock markets and businesses, many of these individuals ventured into successful entrepreneurial activities using their invaluable business skill-sets attained abroad. So how can it be surmised that these necessity-driven entrepreneurial Diasporas contribute very little to lift their economy?
It simply can’t be. With the abovementioned historical facts established, these necessity-driven entrepreneurs contribute immensely to their country’s prosperity, if not more so than their opportunity-driven counterparts.
Yes, necessity-driven and opportunity-driven entrepreneurs differ in many of their characteristics, such as their socio-economic profiles. Also, the motivation to get involved in entrepreneurial activity arises from diverse sources and influencing factors. Moreover, the life cycle and the determinants of success of the entrepreneurial venture in both cases cannot be compared.
All this has important consequences for policymaking, because measures and programmes to stimulate necessity-driven entrepreneurship do not necessarily benefit opportunity-driven entrepreneurs. This factor is something ecosystem stakeholders should take into careful consideration when debating strategies to improve entrepreneurial activity and development in Africa.
In November last year, we launched a Global Entrepreneurship Network (GEN) Africa initiative called 22 on Sloane, which is the largest, most innovative start-up campus on the continent. Over the past few months, I have engaged with over 100 start-ups at 22 on Sloane – representing a healthy mix of necessity-driven and opportunity-driven entrepreneurs. Both sides of these self-starters share the same strong entrepreneurial characteristics, such as commitment, passion, agility, versatility, creativity and open-mindedness.
With this in mind, I am totally confident that Africa’s necessity-driven entrepreneurs can - and will - play a pivotal and more prominent role in mapping a brighter future for our continent.
Kizito Okechukwu, Co-Chair Global Entrepreneurship Network (GEN) Africa – 22 on Sloane and Executive Head SEA Africa