What does the future hold for African entrepreneurs?
The Anzisha Prize, the premier award for Africa’s best young entrepreneurs, recently published the Anzisha Youth Entrepreneurship Survey 2016 , which provides a snapshot of the realities facing young entrepreneurs in Africa.
It focuses on five areas of operating a business, namely (1) Growth, (2) Sales and marketing, (3) Human resources, (4) Funding and (5) Support and its results are indicative of broader trends and attitudes.
A big surprise from the respondents was the lack of reference to business constraints due to practices of the informal sector, corruption, political instability and lack of electricity - all issues that tend to dominate other surveys and findings on the challenges facing Africa’s entrepreneurs.
Here are the key findings from this survey:
-Entrepreneurs who participated are confident about the future. More than three quarters are “very positive” (79%), while 21% are “somewhat positive” about the outlook for their ventures. None expressed any negative sentiments. This optimism is surprising considering African entrepreneurs face some of the world’s toughest business conditions.
-Funding is by far the greatest impediment to growth, with 48% of respondents highlighting it as the biggest obstacle to expanding their companies.
-Only 14% of respondents currently do business internationally, indicating an untapped growth opportunity.
Sales and marketing
-When it comes to marketing their businesses, young entrepreneurs invest in paid-for advertisements on social media networks (57%) as well as exhibitions and events (50%). However, word-of-mouth (83%) is by far the most popular marketing medium. Relatively few make use of more expensive channels such as television (10%), outdoor (17%) and radio (18%).
-In terms of human resources, employee cost (43%) is the biggest challenge facing young entrepreneurs, followed by a lack of adequately skilled talent (20%), motivating staff (12%) and attracting talent (10%).
-Young CEOs reward and incentivise their employees in a variety of ways, with training programmes (51%), bonuses (47%) and gifts/days off (43%) being the most popular. A large percentage also allow their employees to participate in the success of the business through profit share (37%) and equity stakes (22%).
-Only 27% of respondents have secured outside funding/investment for their businesses. Family and friends (59%) are the top sources of capital, in addition to grants (52%) and crowd-funding (22%). The majority of those who have not secured outside funding said they simply did not know how to find potential backers.
-Over 50% of the entrepreneurs surveyed indicated they do have a partner in the business, and in many cases more than one. The top reason cited for not having a business partner is: “I haven’t been able to find someone suitable” (46%).
-Respondents receive support and advice from a variety of sources, such as networking events (64%), mentors (62%), training programmes (54%) and online resources (52%), to name a few.
-The majority described the level of support available to entrepreneurs in their country as “fair” (43%). However, 24% and 17% labelled the situation as “poor” and “very poor” respectively, suggesting significant work remains to make it easier for young business people to succeed.
-When asked what should be the top priority for government to better support young business owners, the majority said that entrepreneurship should be taught in schools (32%). The second most-popular suggestion was to improve infrastructure (20%), followed by the introduction of tax incentives for young entrepreneurs (14%).
SOURCE: World Economic Forum