Entrepreneurship and Structural Change – Foresight Africa 2024

Putting entrepreneurship to work for Africa’s youth

Ada Osakwe, Founder and Managing Partner of Agrolay Ventures and Nuli Juice Company

The challenge is that this entrepreneurship is primarily self-employment in the informal sector, which the International Labor Organization classifies as “vulnerable employment.” 95 percent of Africa’s working youth fall into this category.³ This compares to less than 50% in the Americas, Europe, and Asia. Vulnerable employment is reflected in low productivity, low incomes and difficult working conditions.

Entrepreneurship in Africa, whether in the informal or formal sector, is often plagued by issues including, but not limited to:

1. Lack of access to appropriate financing options needed to start, maintain and grow a business.
2. Operational costs are high due to inadequate infrastructure.
3. Bad macroeconomic situation.
4. Government policies that do not support business.

These problems, combined with low levels of economic growth and poor social protection systems, mean that African economies are expected to face further youth employment problems in the future.

As an entrepreneur, I have experienced most of these hurdles firsthand. In 2016, I started Nuli Foods, a mid-sized agribusiness that produces nutritious beverages using locally grown fruits and vegetables. Nuri has contributed to Nigeria’s economic health by creating jobs for youth, reducing post-harvest losses, generating stable income for smallholder farmers and better nourishing Nigerians. However, building this business came with significant challenges, including difficulties in obtaining financing from banks and public institutions, high operating costs, crippling inflation rates, and instability in government policies.

Despite the myriad challenges faced by those looking to start a business in Africa, Africa’s youth remain highly entrepreneurial, making entrepreneurship a solution to Africa’s job insecurity. It is considered a strategy. This is partly driven by the growing influence of digital technologies, which offer new opportunities for innovation across the sector. As a result, billions of dollars have been invested in developing African entrepreneurs over the past decade. However, most public and donor-funded youth projects fail to adequately provide the systematic support that Africa’s young entrepreneurs need. For example, a recent report from Voxdev states that around US$1 billion is spent annually on entrepreneurship training in developing countries.^Four The report also notes that the returns from these investments are not delivering economic and social impact.

Rethinking entrepreneur-led job creation in Africa

We must start rethinking the models of entrepreneurship support that exist in Africa so that young people are no longer blinded by false narratives about future wealth and security. Academic institutions, governments, donors and capital providers should be more intentional about fostering an environment in which entrepreneurship can thrive, with the aim of creating large-scale jobs in Africa.

One possible way to do this is to provide focused support to the “Small and Medium Enterprise Eagles.”

Micro, small and medium-sized enterprises (SMEs) account for 80% to 90% of the continent’s employment and contribute significantly to socio-economic development. Some of them are notable for their resilience, as they have perfected their business models, built strong operating structures, grown revenues and expanded their operations despite facing the unique challenges outlined above. Includes companies that have shown. These companies are called SME Eagles.

SME Eagles has the ability to provide secure wage employment to millions of young people and serves as an anchor for job creation and retention. One example is his 150 tons per day milk processing factory in northern Nigeria, owned by a 30-year-old entrepreneur. To meet the needs of the factory, the entrepreneur created an effective “outgrower” with a milk collection center where rural pastoralists, mostly young people and women, deposit their milk daily in exchange for income. developed a model. After just one year of operation, 18,000 farmers have now joined his SME Eagle network. This equates to 18,000 stable new jobs for him, with thousands more likely to be hired as the factory expands production.

Wage employment is also created when new enterprises are established. Because SME Eagles are tried, tested, and led by experienced entrepreneurs in proven markets, we reduce the risk of failure for new entrepreneurs by replicating their businesses. We could consider socially innovative franchise programs that match young people with these businesses, especially in areas where they have the greatest potential for impact. SME Eagles shares their processes and business models with them, so they not only benefit from leapfrogging the trial and error stages of entrepreneurship, but also the peace of mind of establishing an already proven business with existing market demand. You can get the feeling. In addition, these young people will also receive essential leadership training, mentorship, and business structure support.

To facilitate entrepreneur-led job creation by SME Eagles, affordable capital must be provided through blended financing mechanisms. For example, to make grants and other preferential funding, credit guarantees, interest rebates and other bespoke financing solutions available for the acquisition of SME Eagle franchise businesses or the establishment of SME Eagle Entrepreneurial Partnership Programs. I can.

After all, if entrepreneurship is to live up to its promise of job creation, small business Eagles need to be able to grow. Focusing financial and policy support from governments, donors and the private sector on SME Eagles reduces the high risk of entrepreneurial failure. Supportive business policies and institutional support, effective government regulation and incentives, workforce training subsidies, and affordable financing for already de-risked, high-performing, and productive local SMEs. This will foster more resilient forms of entrepreneurship and promote job security. Creation and inclusive economic growth for Africa’s youth.