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What we can learn from Africa

February 06, 2019

Entrepreneurship in the cradle of humankind

Six African countries rank among the top 10 of the world's fastest growing economies and entrepreneurs are driving their economic development. Analyzing certain patterns brings exciting insights. What is different, what is the same and what can we learn?

African entrepreneurship
What can we learn from African entrepreneurship?

How startups are created

Start-ups, new businesses and start-up projects are brought about by people who are not satisfied with the status quo; these people want to change something - and end up making their ideas a reality. This applies to Kenya, South Africa and Mozambique as much as it applies to Europe. Yet the motives are different. In African countries, one of the key catalysts for entrepreneurship is necessity. Often, people become entrepreneurially active because they have few alternatives in the face of weak job markets, undersupply or drought. “Necessity is the mother of invention”, and some startups develop very dynamically. Of course, such “push” startup processes exist in our part of the world as well. What we can re-learn from Africa, though, is what people are capable of doing if they simply have little choice - and that individual responsibility is something crucial that drives entrepreneurial initiatives and promotes innovation. That said, it is important to keep in mind that the innovative strength stemming from “push” startup processes is not as great as that stemming from “pull” startup processes. If entrepreneurs become active because they see entrepreneurial opportunities in innovation situations, in other words, if they are “magnetically” drawn into the startup process by market opportunities, the resulting businesses will have considerably more growth potential.

Ingredients of success

An entrepreneur who has to go it alone will have a hard time. It takes infrastructure, funding, co-founders, legal counseling, clients and more… Because of this, African entrepreneurship happens mainly in hubs, such as Silicon Savannah in Nairobi or Mombasa. People use methods like lean startup, design thinking and co-creation as well as the power of networking. The education systems, research facilities and universities also play a fundamental role on the African continent. Everywhere in the world, they are catalysts for new ideas, and almost always they serve as the starting points for the development of entrepreneurship ecosystems. Those who want to foster entrepreneurship need to invest, first and foremost, in infrastructure. IT, co-working spaces, incubators, networking platforms, forums for getting together, support in the early stages of development — these are the ingredients it takes, in Africa as well as here.

Picture of an entrepreneurship co-working space
the right infrastructure is really important for entrepreneurship - for example co-working spaces. Photo © CC0 Licence

African strengths

When it comes to digitization, Africa is rapidly catching up. In many cases, markets are less regulated than European markets, and people are fast and flexible. For example, “Within six hours you can start a business online,” says Aphrodice Mutangana, the General Manager at Rwanda's first major innovation hub, kLab, who recently participated in an event at the WU Executive Academy. Hence, a lot can still happen in politically stable countries. Unlike here, the young make up a particularly high proportion of the population; “Every second person living in Rwanda is younger than 20; 75% of the population are under 35,” adds Mutangana. It goes without saying that this is a great opportunity. There are, of course, older entrepreneurs, but, generally speaking, the young tend to be more flexible, more creative, more willing to take risks and less well established, in other words they have not so much to lose in case their entrepreneurial endeavors be unsuccessful. In the West, by contrast, demographic change and aging societies pose challenges that are also evident in the context of entrepreneurship; this makes it impossible for managers to simply copy the African model, which should, nonetheless, serve to remind them of this shortcoming. So, in terms of entrepreneurship, it matters how well we succeed in both integrating young people from immigrant families and offering activities that ignite a true interest in startups and the innovation community.

Problems of African entrepreneurs

In structural terms, the problems facing entrepreneurs in Africa and the West, respectively, are not fundamentally different. Personal risks, uncertainty, funding problems, and the like are common ground. What is different, though, is that in Africa there is much less of a social safety net as in Europe. On one hand, this creates a drive— a fervor that that we may look at with envy. On the other, too much pressure is dangerous. Fear can have a paralyzing effect, preventing many innovations from becoming a reality.

Pic of a net with a hole
In Africa there is much less of a social safety net as in Europe - this creates a drive but also more risks. Photo © CC0 Licence

Moreover, tribal and clan affiliations are particularly important in some African societies. They can, of course, be an asset to individuals if they give them access to networks. That said, all forms of discrimination and curtailment of free interaction fundamentally hamper economic development, and this applies to Africa as much as it applies to the rest of the world. The more freedom and democracy prevail in societies, the better—also in the case of entrepreneurship.

Read here about what two local experts say about entrepreneurship in Africa.

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