Although entrepreneurship in Africa is growing, Anzisha Prize in their recent study shows that inadequate financing and lack of support from the government are some of the major challenges for young entrepreneurs in the continent.
Africa has the youngest population in the world, which, unfortunately, is not able to get adequate employment opportunities, despite the continent’s fast economic growth over the last decade.
Entrepreneurship plays a critical role in providing better platforms for the young people to advance their lives and those of others, and as such should be given the necessary resources to grow the industry.
In an effort to provide a snapshot of the realities facing young entrepreneurs in Africa, Anzisha Prize has released a study, ‘Anzisha Youth Entrepreneurship Survey 2016’. The survey focuses on five areas of operating business which are Growth, Sales, and marketing, Human Resources, Funding, and Support.
According to the entrepreneurship survey, the study was based on an emailed questionnaire answered by a relatively small sample size of 101 young entrepreneurs within the 15 to 25 age group, and located across the African continent.
The study found that up to 48 percent of the respondents identified access to finance as the biggest obstacle to expanding their companies.
Only a few entrepreneurs (27 percent) received any form of external investment into their businesses. Many of them identified family members and grants as being the major sources of funding standing at 59 and 52 percent respectively.
In spite of these challenges, more than 80 percent of the respondents reported employing others, underscoring the employment creation potential of youth businesses.
One of the major impediments faced by the young entrepreneurs is the lack of support from their countries to scale up. They labelled the support from their countries as “poor” and “very poor”. Governments and other agents should take up the matter and provide the much-required resources as well as reform structures to make it easier for young business people to succeed.
Education, technology and agriculture recorded highest rates in the study, with 15 percent of the respondents saying they work in these sectors.
With technology penetrating Africa at a high speed, ventures that are propelled by technologies to avail faster, cheaper and more efficient services have benefited more. That explains why education and agriculture made headway in the study.
Innovations in agriculture and those in education have eased the way in which people operate at the grass root level. This positive disruption is what is making tech businesses thrive over others.
To reach out to their clients, Uber Taxi uses technology to disrupt the usual businesses in the countries they operate in. Although this is not received well by conventional taxi businessmen, it drove their businesses forward through a simple, cheaper and convenient tech application.
One example of a fast growing mobile education app in Africa is Eneza Education whose mission is to make 50 million kids across rural Africa smarter. Eneza’s educational content is aligned to the local context, and the company uses one of the most common forms of technology in Africa, the mobile phone.
Responding to what drove them into entrepreneurship, a majority of those interviewed said that they were driven by their dream “to make the difference in the world” and “take advantage of an opportunity”. 12 percent were motivated by the desire “to leave a legacy” while only one percent of the respondents wanted “to become wealthy” out of their ventures.
According to the survey, entrepreneurs keep away from the energy which recorded 4 percent, construction at 3 percent and tourism which recorded poorly as the least preferred sector at 2 percent.
With this survey, it is hoped that stakeholders, such as policymakers, support organizations, and entrepreneurs will benefit from the insights.
Image credit: Anzisha Prize
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