27 July 2015, Nairobi, Kenya — The research and policy arm of the Tony Elumelu Foundation, the Africapitalism Institute, released a groundbreaking study on Africa’s entrepreneurial ecosystem at the sixth Global Entrepreneurship Summit in Kenya where President Obama gave the keynote address.
The 86-page report, titled Unleashing Africa’s Entrepreneurs, based on original research leveraging the Foundation’s pan-African network of early stage African businesses, identifies and analyses the factors inhibiting the potential of entrepreneurs across Africa.
Key findings from the report include:
- 87 percent of respondents indicated that obtaining the necessary seed capital was their primary challenge. Only 3 percent of those surveyed had a commercial bank loan, while 69 percent used personal savings to finance their business.
- 53 percent of entrepreneurs indicated that it was “not at all easy” to obtain the necessary machinery, equipment, technology or raw material needed to operate, citing the high cost of land and office space as the primary cost concern. The second most costly operating expense is electric power.
- 63 percent of respondents said that government needs to “improve the general quality of infrastructure” as a key to reducing overall costs which are hurting their competitiveness.
- 82 percent of entrepreneurs said that access to a business start-up accelerator or resource center was “very important” to their business, while 66 percent indicated that they are currently part of a business incubator or accelerator.
“Entrepreneurship is the key to unlocking the abundance of untapped human potential across Africa,” said Tony O Elumelu, CON, Chairman of Heirs Holdings. “That is why I have endowed the Tony Elumelu Entrepreneurship Programme with $100 million in an effort to empower 10,000 entrepreneurs throughout Africa over the next 10 years,” he said.
The report’s insights were gained from surveys provided to the 20,000 emerging entrepreneurs from 54 African countries and territories in the Tony Elumelu Entrepreneurship Network. The resulting set of data is the world’s largest and most diverse assessment of entrepreneurship from the perspective of emerging African entrepreneurs themselves.
The business climate across the continent has fundamental challenges that inhibit the viability and competitiveness of entrepreneurial endeavors. The Africapitalism Institute conducted the study to better understand the specific constraints Africa’s entrepreneurs face, and to find solutions to present to public sector leaders for action.
“We want to improve the enabling environment for all of Africa’s existing, emerging and aspiring entrepreneurs,” said Parminder Vir, OBE, Tony Elumelu Foundation CEO. “With the results of this study, we have an opportunity to educate policymakers across Africa about the importance of empowering entrepreneurs, and the critical role government plays in removing the barriers that inhibit their success.”
In addition to conducting the surveys, the Africapitalism Institute held two focus groups with 100 entrepreneurs from different countries and sectors in order to solicit their ideas for addressing the challenges that confront them as entrepreneurs. Some of the solutions proposed include the creation of a single location to register new businesses, a stronger patent regime to protect proprietary intellectual property, and the need for schools to make teaching entrepreneurship part of formal education.
The Africapitalism Institute’s Director, David Rice, indicated that this is just the first in a series of studies to be conducted on African entrepreneurship. “The wealth of information we have allows us to gain unique insights on the needs of Africa’s entrepreneurs,” he said. “And we intend to leverage these insights to turn the Tony Elumelu Entrepreneurs into advocates for positive change, with particular emphasis on public policy and the role of government.”