The time for African entrepreneurs is now
The ‘Africa Rising’ narrative is alive. For aspiring entrepreneurs in Africa, there’s never been a better time to start a business.
But what’s the reason for this optimism? From macro-economic factors to the opportunities offered by slow development in the past, there are plenty of reasons to be excited about the future of the continent. Here’s why:
The growing middle class
For so long, Africa has been incorrectly characterised as poverty-stricken, corrupt and undeveloped – and that’s definitely changing. As the economies of various African countries grow, a new powerful middle class is emerging.
The African Development Bank (AfDB) says the number of middle-class Africans will grow to 1.1 billion by 2060. The McKinsey Global Institute predicts African consumer spending will rise to US$1.4 trillion in 2020.
With more people having disposable income for goods and services, there’s a major opportunity for African entrepreneurs to develop companies to serve the new aspirant middle-class.
Connectivity is core
In 2013, Africa had only 16% internet penetration, and just 67 million smartphones. Both these numbers have grown wildly over the last few years. The continent has the fastest growth globally.
Frost & Sullivan says there’ll be four billion connected devices in Africa by 2025, with around 600 million Africans online. Africans are using the internet for more social and economic activities than ever before.
This is a huge opportunity for entrepreneurs, opening up new markets and giving them the chance to develop services that appeal to tech-savvy Africans.
Not so long ago, investing in Africa was considered extremely risky, with investors steering clear. That’s changing as foreign venture capitalists become aware of innovative businesses built in Africa.
According to the Disrupt Africa African Tech Startups Funding Report 2015, over 120 African start-ups raised a total of almost US$190 million in funding last year, with the number set to increase as more investors come to Africa.
A few years ago, an entrepreneur without personal wealth would struggle to get a business off the ground. Now there are a variety of funds, angel investors and accelerator programmes offering capital to start-ups.
When asked what the government can do for them, most entrepreneurs instinctively say ‘leave me alone’. There’s been speculation government involvement in business is associated with red tape.
This is changing. The governments of Kenya and Nigeria are now bending over backwards to assist local entrepreneurship ecosystems, while Egypt has even launched a fund for tech start-ups. Increasingly, governments are understanding their local start-up spaces and lending a hand.
This redoubled support – whether in the form of training, networks or funding – is invaluable to entrepreneurs, who can now, in some cases, count on their government as a partner, or even a customer.
Problems become opportunities
Africa may be making tremendous progress, but there are still challenges on the continent – which also offer great opportunities for entrepreneurs.
Take financial services, for example. Around 80% of the continent’s population, approximately 330 million adults, doesn’t have access to formal banking. Or power provision, with almost 600 million people lacking access to electricity – not to mention areas like health and education.
With all these challenges needing to be addressed for so many, the opportunities for entrepreneurs are endless, with a market desperate for quality goods and services.