Young African entrepreneurs fast track development

Europe's World

Asia, Africa & Emerging Economies

Picture of Gina Martí
Gina Martí

Research Assistant at the Fuel Freedom Chair for Energy and Social Development

African countries have been and still generally are portrayed as a monolith – one ridden by disease, hunger, conflict, drought, poverty, corruption and instability. But there is another side of Africa seldom shown in the headlines – one filled with opportunities and hope, where young entrepreneurs across the continent are using new technologies to empower themselves and their communities.

The first wave of change emerged in the early 2000s when mobile phones boomed across Africa. In the 1990s, the continent had less mobile phone subscribers than the state of New York. Today, the number of mobile cellular subscriptions has almost reached a billion. But in Africa mobile phones signify much more than a mere phone call to a family or a neighbour; it also provides access to finance through mobile money, allowing users to transfer money via SMS. Given that only around 30% of Africans have a bank account, this new form of money has been a revolution in itself.

But this was just the beginning.  The financial inclusion that came with mobile money opened up a pool of opportunities, especially when combined with growing Internet access and other new technologies. Young digital entrepreneurs made use of these novelties to solve many of the issues faced by their communities, often related to a lack of accessibility and affordability of education, health or energy.

By harnessing new technologies and integrating innovative business models such as ‘pay-as-you go’ – which allows customers to pay in small mobile money instalments over longer time periods instead of paying up front – entrepreneurs have toppled accessibility and affordability barriers across all sectors. From selling off-grid home solar panels to appliances that monitor babies’ health, these ventures are social in nature, since the biggest market gap in Africa is found in the basic needs market.

Solutions must come from Africans, for Africans

Many of these start-ups offer sustainable solutions. For example, the cooking fuels sector is being slowly transformed. With extensive use of firewood leading to deforestation – contributing to CO2 emissions, soil erosion and decreasing crop yields – several companies now offer access to clean cooking fuels and stoves in rural areas. Strongly benefiting women and children, who before using these alternatives, were used to spending an average of seven hours per week collecting firewood. They also suffered from the negative health impacts of inhaling toxic smoke while cooking with biomass – causing more deaths in Africa than HIV, malaria and tuberculosis combined.

Not only do these ventures offer sustainable solutions for communities, but they also provide employment opportunities that translate into higher purchasing power, ultimately driving economic growth. It is interesting to observe how, by covering basic needs and increasing purchasing power, these solutions have had a knock-on effect, enabling other businesses to flourish.

In the last years, tens of millions of dollars in venture capital flowed into countries like Kenya, Rwanda, Nigeria and South Africa. This has been reflected by the rapid growth in start-up culture and technological entrepreneurship throughout Africa, with 618 active technology hubs to date that provide facilities and support to tech entrepreneurs. This represents a 40% increase from last year’s 442 technological hubs.

For decades, development in Africa has typically been driven by non-governmental organisations, foreign aid or international organisations. While these have all contributed to countries’ development in different ways, Africa can only grow and develop in a sustainable manner from within. In other words: solutions must come from Africans, for Africans.

External support from international partners could be truly beneficial in bolstering long-lasting and expansive growth

The narrative of digital disruption having the capacity of stimulating socioeconomic development is highly persuasive, especially when considering scalable initiatives that have swept the continent, such as mobile money or off-grid solar panels. However, most entrepreneurs are trying to stay afloat, and build up revenue streams in a relatively young start-up ecosystem where returns are not immediate. Moreover, lack of education and training, especially in technology, engineering and mathematics, as well as insufficient institutional and regulatory support from governments are still significantly limiting Africa’s entrepreneurial potential.

This is where external support from international partners could be truly beneficial in bolstering long-lasting and expansive growth. For example, Germany recently proposed a new approach to cooperation with Africa – the so-called ‘Marshall Plan with Africa’. Key points of the plan include supporting African solutions for African problems, prioritising jobs and opportunities for young people, investing in entrepreneurship, creating value and reforming partnerships. This approach to cooperation with Africa is better aligned with Africa’s reality than any other plan to date.

It is time for other European countries to follow suit and start viewing Africa as a land of opportunities and innovation, because if someone deserves such praise, it is none other than Africa. The continent’s young entrepreneurs have been able to think outside the box and provide, with limited resources and institutional support, solutions to complex problems. They demonstrate how access and affordability – once seen as perennial roadblocks to Africa’s development – can finally be overcome.

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