Uzoamaka Madu, founder of What’s in it for Africa

On the 28th of November, the Vrije Universiteit Brussel (VUB) and the University Centre of Development Cooperation (UCOS) organised the seminar ‘Entrepreneurship in Africa: Who really profits?’. 

Min 00:00     Intro Sebastian Van Hoeck
Min 04:00     Intro moderator Jean Bossuyt
Min 08:16     Keynote Karel Uyttendaele
Min 23:10     Keynote Nikolay Dentchev
Min 39:00     Remarks by Khadijat Abdulkadir
Min 52:40     Remarks by Patrick Develtere
Min 1:03:00 Debate
Min 1:30:00 Q & A

The old construct where foreign brands merely open sales offices in Africa without design or research centres is now being challenged by African entrepreneurs. New African companies are creating own innovations and competing with foreign ones. These African entrepreneurs will transform the continent with the brainpower of the citizens and offer a road map to a new African economy by providing African solutions for African problems.

UZOAMAKA MADU, POLITICAL COMMENTATOR – Entrepreneurship has always been booming in Africa! Specifically, survival entrepreneurship – where people turn to entrepreneurship is in order to fulfil their basic needs as opposed to some grand plan to be a market leader. Survival entrepreneurship is a response to the lack of basic resources afforded to people by the state, whether it is manufactured goods, transport, energy. education or healthcare.

Yet, the collapse of the commodity boom created a more aggravated push for countries and their citizens to invent other ways to survive because benefits like unrestrained imports were no longer sustainable. Beside this, was the peak of the financial crisis, when African professionals who were located in the U.S. and Western Europe returned to their countries after they lost their jobs. They returned with top-grade technical skills, managerial experience, and international networks. But because there were limited available jobs in Africa as the recession destroyed stock markets and businesses, most of these individuals went into entrepreneurship and partnered with local professionals.

That is why today, we are seeing African companies with core intellectual properties (IPs) emerging out of Africa. Like Safi Sarvi(an organic fertilizer producer) and UMT (a 25-minute non-blood malaria tester) which are focused on solving local problems. This is unlike in the past when African businesses were centered on becoming a representative of a global company, now new companies are creating their own innovations and where possible competing with the foreign ones.

This offers prospects for local companies that offer products that can be priced without direct consideration of the forex market – and I would like to say here that this is of great benefit to the local population and the local entrepreneur as they are dependent on forex market prices but are rather counting solely on the local market prices, thereby enabling them to be competitive. [UM1]

The old construct where foreign brands merely open sales offices in Africa without design or research centres is now being challenged by African entrepreneurs. Now locals have the edge because they have embraced frugal innovation. This again means we see direct benefits accruing to local people – they have the power to determine what they want to sell in line with local demands and needs, also it is a truly African endeavor in this sense so we don’t see so much of these monies made being expatriated to head offices or shareholders outside of the country’s borders and therefore it is more likely to stay in the country, be reinvested within those borders and again accrue benefits to local populations. [UM2]

These type of entrepreneurs will transform the continent with the brainpower of the citizens and offer the road map to a new African economy by providing African solutions for African problems!

Migration as a driver

Whilst the market realities are the driving force of the type of entrepreneurship we see on the continent, we also cannot sit in Brussels at the heart of the EU, where solutions are being sought to stem the migratory flows from African countries to Europe, and not look at some of the policy drivers that have pushed the African entrepreneurship narrative to the forefront of mainstream media and shifted the focus of development aid increasingly away from budget support to governments and towards private sector investments.

The EU has recently in the midst of the increased migratory flows, been framing its development policy around ‘tackling the root causes of migration’ which include low employment levels, slow economic growth and therefore instability – essentially poverty And it has put its money where its mouth is in terms of turning this shift in narrative into reality – the EU’s European External Investment Plan (EIP), launched in 2017, for example would encourage €44 billion in private investments by offering a combination of grants, loans and financial guarantees worth €4.1 billion to boost jobs, growth and stability in Africa and the European Neighbourhood countries. The G20 Partnership with Africa is also supporting private investment and employment through joint compacts with specific African countries who have the appetite to not only partner but also construct their own offering/business case for investment.

My point here is that the role of European countries in this African entrepreneurship story has been to increasingly direct development aid monies to the private sector activities, investing in start-ups and the business environment in African countries – to create an enabling environment for entrepreneurship. The policy imperative towards Africa is moving increasingly away from development aid in the building schools and hospitals sense, and more towards growing the private sector, creating jobs and economic growth. Since this is the new policy direction, the western/European media narrative has had a more business-focused and entrepreneurial focus to it – which is also positive, images of hungry, abandoned children are slowly being replaced or counteracted with images of young, professional, career hungry Africans, and business focused media outlets are also carrying more of these entrepreneurial stories, this is causing a slight shift in the media landscape – this has added a more diverse and richer spectrum of African stories to the mainstream media offering about the continent.

Fetishization of African entrepreneurship

The darker side of this shift in development policy is the almost fetishization of African entrepreneurship, to a degree where it is almost treated as the magic pill administered by outsiders to solve all of Africa’s quite complex problems. Now this does run the risk of fundamental problems being neglected. One of Kenya’s best-known tech investors, Ory Okolloh criticizes what she calls the “fetishization” of entrepreneurship in Africa and I would like you to listen directly to her explanation of the problem….

Essentially, my warning here is to be cautious and ensure that we do not mask the structural challenges being faced on the continent with the promise of entrepreneurship, whilst the private sector can deliver so much in terms of economic growth, it cannot replace the role and responsibility of the state in securing the basic infrastructural needs for its citizens – it is still their job.

[UM1] As governments move money out of commercial banks, thereby depressing bank revenue base, the banks are cutting costs to be leaner, innovative, and more affordable. So African entrepreneurs will play major roles as they redesign business models in a period of currency controls, currency devaluations, and government stasis.

[UM2] Barclays Africa is exiting Africa because it cannot compete in a suddenly tough market, while Equity Bank Kenya is flourishing.

This post is also available in: EN