(CNN) – President Barack Obama will travel to Nairobi this week to address the sixth Global Entrepreneurship Summit (GES), and the first to be held in sub-Saharan Africa.
This gathering of hundreds of entrepreneurs, investors, nonprofits, and government officials, co-hosted by the governments of the United States and Kenya, will spotlight the growing importance of Africa as a center of business innovation and entrepreneurship. Likewise, it will put a spotlight on the importance of Africa’s innovators to job creation and sustainable and equitable economic development.
It is difficult to overstate the role that entrepreneurship plays in lifting people out of poverty and contributing to social wealth. It is difficult to overstate the impact on the individual which comes from feeling empowered economically through personal effort and hard work.
Entrepreneurs are connected to their communities. They have deep insights into local consumer demand and development gaps and often discover inventive ways to meet social and economic needs.
It is not unusual in the African context to hear stories of entrepreneurs whose business ideas were inspired by the struggles of those closest to them prompting them to develop, for example, new healthcare delivery units, adaptive models of agricultural processing and web-based trading platforms accessible on smartphones.
Given that 122 million young Africans will enter the labor force by 2020, and tens of millions are already unemployed or underemployed, we need to look at creative ways to generate the jobs for African youths. With luck, Africa’s critically needed investments in infrastructure will materialize and provide some measure of continent-wide employment. But the rest of the job gap will need to be filled from small and medium enterprises; just like it is in America and the rest of the developed world.
So our collective mission must be to create the conditions for the entrepreneur to succeed. But to do so, we must first understand the obstacles to individual success.
This week, the Africapitalism Institute, a pan-African policy and research organization supported by the Tony Elumelu Foundation, will release a survey of 2,000 aspiring entrepreneurs across the continent, supplemented by dozens of focus groups. The findings confirm what many of us who have dedicated ourselves to this field for years have always understood: that no one can do it alone.
According to the findings, 60% of respondents indicated that it was very difficult to start a business, and 65& said they required additional skills for themselves and their workers to be successful. Nearly 90% of respondents said that obtaining start-up capital was one of their most significant challenges.
This is due mainly to the lack of credit bureaus in Africa, as well as the reluctance of banks to lend to customers with no track record. An overwhelming majority of survey respondents also cited the high costs of core inputs such as power, transportation, telecommunications, and business property as among their chief concerns. These are the costs necessary to run any business in Africa, but they are particularly burdensome for a small business in its nascent stages.
As we move into the GES in Nairobi, with the participation of the U.S. President, we need to directly address these challenges as an integrated community of stakeholders — the private sector, African governments, non-government organizations, and other donors. We must make a commitment to put in place policies and programs that address the biggest hurdles facing African entrepreneurs.
When we look at capital requirements, we must figure out how lending institutions are enabled to make financial commitments at the earliest stages of business development, even without requisite collateral, and how to facilitate alternate sources of financing from the philanthropic sector.
Governments must commit to predictability and transparency in the process required to start up a business, employing user-friend technology solutions. Donors need to take a hard look at their own development strategies, particularly as they relate to supporting the vast need on the continent for infrastructure investment. Finally, we must invest in numerical and reading literacy, education, technical skills, we must train for the next generation of job creators.
Beyond dialogue, events like GES provide an opportunity for those promoting entrepreneurship around the world to coordinate their efforts. This coordination is already at work with the Spark Coalition, the private sector arm of the U.S. government’s global entrepreneurship initiative whose membership we hope will grow exponentially in the coming months. Spark provides a greatly needed platform for global collaboration.
On May 9th of this year, in announcing the GES, President Obama issued a global challenge to generate $1 billion in new investment for emerging entrepreneurs worldwide by 2017. Our continent must rise to this global challenge.
The Tony Elumelu Foundation is trying to lead the way by endowing its own $100 million dollar entrepreneurship support fund to assist the next generation of our continent’s innovators by addressing the biggest challenges they face including access to capital, training and mentoring. As I said at the onset, it is difficult to overstate the role that entrepreneurship plays in lifting people out of poverty and contributing to social wealth.
This article was originally published on CNN.