A sizeable youth population, a culture of entrepreneurship and finding innovative ways to harness technology to address the unique challenges of owning a business in Africa contribute to its growth potential.
According to the World Economic Forum, two in five children worldwide will be born in Africa by 2050. And when combined with some estimates that 77% of Africans are under the age of 35, small businesses and entrepreneurs have a potential platform to become the next Google, Microsoft or Amazon.
Young entrepreneurial potential
Given unemployment, the youth population is turning to entrepreneurship to become economically active. Younger generations have grown up with digital technologies and think differently about addressing the challenges unique to Africa.
It is as much about finding ways to solve their daily difficulties as it is about generating an income.
“Hypergrowth across small businesses across the continent will help create an enabling environment for others to follow.” – Lee Naik
Indeed, the lack of infrastructure and the widening digital divide still contribute to a split between those with access and those without. The past two years have highlighted the importance of digital transformation.
And yet, across the continent, many governments struggle to provide citizens with access to affordable healthcare, reliable water and electricity, and security. Mobile data remains costly even though devices have become more affordable.
An entrepreneur – or small business looking to become competitive – needs to think out of the box to overcome these issues if they are to be successful. If they do not have connectivity or access to electricity, then the means to be competitive are significantly reduced.
In addressing these challenges, entrepreneurs and small businesses can create an enabling environment that will benefit others.
Of course, the reality of these uncertain times means that small businesses must know where to find the capital needed to survive. For instance, the African Development Bank has invested more than $20 billion in various projects since its launch in 2016. Increasingly, venture capital firms are looking for start-ups beyond ICT who differentiate themselves and provide a compelling business case.
Digital drives progress
That is not to say that technology should not be considered. For example, integrating mobile commerce, digital services and food delivery can reinvent how spaza stores and other small businesses manage customers. [Indeed. Inc.Africa has a story in the pipeline about a company doing just that with a mobile app. Watch this space – Ed.]
Insurers are using airtime data for premiums to address the large unbanked population. More digital banks are launching, enabling those who cannot open traditional accounts to use their phones to join the economy.
Ultimately, it comes down to the entrepreneurs and small business owners understanding the target market, and the trends that will shape that industry as we head into 2022 and beyond.
Remember, it is not about developing a solution, product, or service and finding customers. It is about adapting to market requirements and filling gaps with something relevant.
Of course, this cannot happen if the entrepreneur or small business owner is not part of a financially inclusive environment. Companies who give these previously ‘credit invisible’ Africans access to much-needed credit will play an increasingly important role in the new environment.
Company leaders must actively champion products and services that drive financial inclusion, and look to data-driven decision-making to help entrepreneurs and SMMEs access the finance they need to start and sustain their businesses.
In this way, entrepreneurs and small businesses can better meet the needs of their communities, which will ultimately benefit the broader economy. This hyper-growth across small businesses across the continent will help create an enabling environment for others to follow. All it needs is the momentum created by the entrepreneurs looking to break free from the difficulties of the past two years.