Entrepreneurship is central to Africa’s future economic development

Speaking at the Africa Transformation Forum in Kigali in 2016, Mr Kelvin Balogun, President of Coca-Cola, Central, East and West Africa said, “Almost half of the 10 million graduates churned out of the over 668 universities in Africa yearly do not get jobs.”  This is frightening. African countries are sitting on a time bomb. There is need to find something for these graduates to do. One way of addressing this problem is by promoting entrepreneurship among the graduates. Key to this would be an appropriate education system that promotes entrepreneurs and not employees.

Most education systems do not have entrepreneurship in their curriculum. Students are being trained to work for someone and not to be employers in their own right. Even parents and society view being employed as a great achievement and tend to shun entrepreneurs because of the risks involved.  Entrepreneurs are key for economic development and governments should therefore put emphasis in creating a conducive environment in which budding entrepreneurs can shine.

The policies in place and the funding should be geared at promoting the emerging of entrepreneurs. There are a lot of benefits that a nation will get by promoting entrepreneurs. Countries like the USA, Canada and Australia promote entrepreneurs and as a result their economies are flourishing.  What role do entrepreneurs play in the economic development of countries? Research indicates that entrepreneurs are the engines of job creation and economic development.

Their impact on the economy is at times underestimated because the businesses will be small as they start. However research has shown that in the US entrepreneurs contribute significantly to job growth and economic development in the United States.  The research carried out found that an estimated 50 million people are employed by entrepreneurs, and this is slightly more than 25 percent of the working population of the United States.

Entrepreneurs impact positively on a number of sectors of the economy and the community and the community they operate from.
We often attribute more job creation to the large industry players because we see them providing jobs en masse. What we however fail to appreciate is that the entrepreneurs have the capacity to create jobs, not only within the local community, but within the whole country because through innovation, some of these entrepreneurs may grow into rapid-growth firms, which may create perhaps hundreds of jobs and become industry leaders of tomorrow.

Think of Microsoft, it started very small but now it has spawned the whole world and has created lots of jobs. This is as a result of the innovative prowess of entrepreneurs. Initially though, the entrepreneurs might not offer better jobs than the large firms in terms of compensation and stability nevertheless the small firms do assist immensely in employment.
Consider the dot com companies that are producing apps for use in a number of industries. These companies end up creating huge impact on the economy because of the ripple effects and multiplier effect the introduction of that app will have on the economy.

Uber for example started with an app to provide taxis service. The result of this has been a lot of unemployed people hooking on to this project and getting employed as they are providing taxis services.  Entrepreneurs play a very crucial role in the economic growth of the local community which would otherwise be ignored by large enterprises.
Their impact is felt in the services they provide and the creation of local jobs for skilled personnel in that community. The good thing about entrepreneurs is that they offer diverse employment opportunities to a wider range of skilled professionals and tradespeople within a community.

Thus a community can maintain a heterogeneous or mixed bag offering of work skills rather than if it were a large organisation it would only be offering jobs for particular skills rather than to a varied array of skills. Entrepreneurs also play a critical role in improving the quality of life for the community they operate from. By employing the local people the entrepreneurs help in improving the standard of living of that community.  The locals in that community will begin to have disposable income which they will use in the shops within their locality thereby ensuring the shops become viable.
A lot of residents are usually engaged in what might be termed “economic travel” to nearby centres for commercial purposes because the services they will be looking for are not found in the local community.  However once entrepreneurs start providing the same services the local community will save their hard earned funds and use them for more productive activities.
Thus by encouraging the development of diverse entrepreneurs the country will stimulate the local economy by retaining income within that community and in the process attracting new residents. Entrepreneurs have been known to produce a lot of patents on new innovations. This does boost the introduction of new products on the market. Usually when entrepreneurs are first established, they provide an opportunity for the business owners to test their business ideas in the market. They obviously have to protect their ideas through patents.

If these businesses survive the rigours of the economic environment they will in the long run provide economic stability for owners and their families. They will provide a steady source of income to business owners and employees.  Innovation is very possible in entrepreneurs because employees usually work closely with consumers and therefore learn first-hand about their needs and thereby develop ways to attend to those needs.  Innovation is encouraged in small organisations because there is less bureaucracy which usually frustrates employees from putting their ideas into action. Also entrepreneurs are not afraid to take risks by being innovative.

Entrepreneurs contribute also to the fiscus through corporate taxes and income taxes for their employees.
If entrepreneurs contribute so much to the economies and the communities they operate from then a conducive environment should be created.
Governments should ensure that entrepreneurs are getting the resources they need to grow: that is, finance and good infrastructure and favourable policies. The environment is ever changing and is very dynamic.

We need to do something that will not only help entrepreneurs succeed, but thrive in an ever changing economy. The small entrepreneurial firms should have access to capital to fund their projects. Access to business advisors would also be extremely invaluable.  The tax authorities should come up with smart regulations and tax structures that are particularly aimed at giving entrepreneurs a boost and a better chance of survival.  Export economic zones should be set up for these budding entrepreneurs to start their business and export to other countries.
The economic zones should have certain tax concessions that will ensure that these entrepreneurs don’t get stifled in the growth of their ventures.

Business associations and the government should come up with programs to support the entrepreneurs around the country so that they gain the necessary tools they need to be sustainable and become profitable ventures. The future of Africa will be owned and operated by entrepreneurs.
Stewart Jakarasi is a business & financial strategist and a lecturer in business strategy and performance management. He provides advisory and guidance on leadership, strategy and execution, preparation of business plans and on how to build and sustain high-performing organisations.

l For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: sjakarasi@gmail.com or +266 58881062 or on WhatsApp +266 62110062