How small businesses can help
How can these two countries recover their pre-pandemic economic level and grow it? One key is to support Small and Medium-sized Enterprises (SMEs).
SMEs account for 96% of businesses and 84% of employment in Nigeria, and 85% of businesses and over half of full-time employment in Ghana, making them extremely important to both economies. However, they are being disproportionately affected by the pandemic.
The New Economy Booster program final event consisted of a discussion on the role of entrepreneurship in rebuilding Africa’s economies.
Claude Grunitzky, serial entrepreneur, founder of Trace TV and the event’s keynote speaker, expressed the need for Africa to focus on ‘market-creating innovations’, new ways to create jobs and prosperity for Africans. With this focus, the pandemic could actually become a take-off moment for African economies.
SMEs are the best suited for these kinds of innovations, as they need to be agile and flexible by nature. But what exactly does this focus look like? And what are some of the barriers for entrepreneurs and SMEs in Africa?
Barriers to SME growth
According to Grunitzky, youth-led businesses are a major key to unlocking Africa’s potential. However, the three main hurdles that young, African entrepreneurs are faced with are lack of access to investment, poor knowledge and a negative mindset.
It is notoriously difficult for indigenous African companies to gain funding due to a lack of trust in Africa’s volatile economies. And most of the funding on the continent goes to expatriates instead of locals. This needs to change if we are to see significant growth in African economies.
Grunitzky also highlighted a knowledge gap. In his words, “workers are not trained to do the kinds of jobs that are needed to sustain growth across Africa.” One key way to support SMEs and entrepreneurs is to provide them and their employees with access to affordable training and the resources they need to effectively address the problems they face.
Finally, and perhaps most importantly for Grunitzky, many African entrepreneurs do not have the right mindset to succeed. Due to a culture of not valuing young voices and not being encouraged to take risks, many entrepreneurs lack the boldness required to succeed in their businesses.
How the New Economy Booster addressed these issues
These are some of the challenges the New Economy Booster set out to solve. The businesses and entrepreneurs that participated in the program were selected for their level of innovation and the impact they were having or hoped to have on key economic areas. Their solutions create jobs and prosperity, often for those who need it the most.
The initiative provided in-depth training and access to resources to help close the knowledge gap and, in doing so, give the entrepreneurs the confidence and information they would need to take risks and succeed. In addition, the businesses were given access to investors from across the African continent and taught to pitch their ideas in order to secure funding. It saw significant success, with some businesses securing partnerships with international organisations and governments, and others in due diligence processes with investors.