African entrepreneurialism has reached historic peaks in recent years and the entrepreneurial spirit in Africa is booming. Young entrepreneurs are feeling more positive about the prospects of successful business.
It is important to understand why this economic activity is occurring now. The Harvard Business Review explains how historical events that transpired across the globe led to the uptick in commercial activity. After the Great Recession, many Africans living and working outside of Africa lost their technical, managerial and international jobs. Because of the massive job losses, many Africans returned home, where they developed an entrepreneurial spirit due to the lack of native jobs.
The number of young entrepreneurs in Africa has been on the rise due to young Africans not seeing job prospects with livable wages. Moreover, 60 percent of Africans ages 18-34 are optimistic about the availability of good business opportunities and believe they have the skills and knowledge necessary to start a business, according to a joint study conducted by the Global Entrepreneurship Monitor and the Youth Business International. Confidence plays a key role in a new business’ success, and according to EY’s 2015 global job creation and youth entrepreneurship survey, Sub-Saharan African entrepreneurs are the second most confident group of entrepreneurs with 61 percent expected to add employees in the next 12 months. Sub-Saharan Africa holds the world’s highest percentage of young people involved in new business, 29 percent, according to Weforum.org.
A great deal of entrepreneurs carve their way into the market by creating their own upgrades for technology, among other upgrades for local success. This technique is beneficial due to the fact that after the recession companies struggled to find affordable technology solutions, and local innovations created an anterior path to follow. According to the Harvard Business Review, banks are still being cautious about who and what to lend money, and fluid entrepreneurs with the ability to modify business models flourish. For this reason, local businesses are reigning king in Africa at the moment.
Of course, there are many challenges that come along with opening a new business, and some of the hurdles African entrepreneurs have to jump over deal with poor funding and lack of support services and training. However, there are great benefits that can be seen for the county with new companies including creating of jobs, unique products and services and wealth for the entrepreneurs themselves. In addition, there is a profound economic impact including turbulence created through entries or exits in industries, changes in size of distributions in specific regions, number of market participants, influence over the number of business owners and self-employed individuals, and the economic history of previous economies influence growth.
For businesses looking to expand into Africa, research and training is key. Since local entrepreneurs are utilizing new skills that challenge the way modern corporations run, knowing who and what you are going up against can be a challenge. More so, the Harvard Business Review further cites that governments are decreasing international training and imports, and supporting more local entrepreneurs.
Continuing the growth of the entrepreneurial spirit in Africa is key, and confidence is a quality that can be a young entrepreneur’s best friend.
Zandre Campos is chairman and CEO of ABO Capital, an international investment firm that invests in companies in the healthcare, energy, transportation, hospitality, technology and real estate sectors throughout Africa. ABO’s mission is to create global value for developing countries in Africa, while contributing to their economic development.