Survey Highlights Challenges Young Entrepreneurs Face In Africa | Independent Newspapers Limited
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Survey Highlights Challenges Young Entrepreneurs Face In Africa

Posted: Apr 1, 2016 at 2:30 am   /   by   /   comments (0)

Ikechi Nzeako, Lagos

Young people are the future of any society, including Africa because of the strategic position they occupy and the critical role they play in the sustenance and development of society. But, young people face different challenges in their quest to realize their dreams of becoming entrepreneurs, especially in the area of finance.


However the Anzisha Prize, the premier award for Africa’s best young entrepreneurs, has published the Anzisha Youth Entrepreneurship Survey 2016 this month and provides insights into the realities facing young entrepreneurs in Africa

A huge per cent of the respondents said that finance is major obstacle hindering entrepreneurship among young people on the continent.

However, speaking on funding as an obstacle among entrepreneurs, Tunji Ope, managing partner at Unlock Nigeria Limited, Lagos, agreed that funding is a major hindrance to entrepreneurship in Nigeria, but said that entrepreneurs are unable to access funding because their businesses do not have proper structures to access funds from financial institutions.

Ope, who is a business trainer for the Bank of Industry, added that all the major financial institutions in the country have developed schemes to assist young entrepreneurs access to funding, regretted that “the loans are lying idle in the vaults of the banks because Nigerian entrepreneurs have not properly structured their businesses in way that they can access funds from the banks”.

Another expert in the area of small business development and chief executive officer of Pruvia Integrated, Valentine Igbinovia, said many Nigerian entrepreneurs, including the young ones, do not have the requisite skills and knowledge to manage their businesses. Although he also agreed that funding is an obstacle to the development of entrepreneurship on the African continent, he said there is the need to address the skills gap among young entrepreneurs.

The Entrepreneurship Survey is based on an emailed questionnaire answered by a selection of young entrepreneurs within the 15 to 25 age group, and located across the African continent. The survey focused on five areas of operating a business, namely growth, sales and marketing, human resources, funding and support.

It is hoped that stakeholders, such as policy makers, support organisations, and entrepreneurs will benefit from these insights. Survey respondents overwhelmingly stated that access to finance is their main barrier to growth, with 48 per cent highlighting it as the biggest obstacle to expanding their companies. Only 27 per cent of young entrepreneurs received any form of outside investment, with family members (59 per cent) and grants (52 per cent) being the major sources of funding accessible.

Despite challenges faced, 84 per cent of the entrepreneurs reported employing others, underscoring the employment creation potential of youth businesses. However, a large proportion of respondents (41 per cent), described the level of support available to enable and scale young entrepreneurs in their countries as “poor” and “very poor”. This suggests that significant work remains to make it easier for young business people to succeed.

Anzisha Prize applications are currently open for young entrepreneurs between the ages of 15 and 22 to compete for a share of $100,000 in prize money and receive access to support and networks to scale up their businesses. Applications will close on 15 April 2016. The Anzisha Prize is offered in partnership between The MasterCard Foundation and African Leadership Academy.

“African Leadership Academy is excited to be investing in research such as this,” says Josh Adler, Vice President, Global Programmes at African Leadership Academy. “It is our hope that this and future reports will guide the work of teachers, policy makers and other stakeholders in the youth development sector.”

The youth surveyed overwhelmingly reported pursuing entrepreneurship primarily to make a difference in the world (57 per cent of respondents). They largely have a focus on communities and use face-to-face client visits as the primary sales channel (56 per cent) and word of mouth as the primary marketing tool (83 per cent). In terms of human resources, 84 per cent of ventures reported having employees. Young CEOs reward and incentivise their employees in a variety of ways, with training programmes (51 per cent) and bonuses (47 per cent) being the most popular. A large percentage also allowed their employees to participate in the success of the business through profit sharing (37 per cent). Young entrepreneurs are in a position to impact others through employment and skill building. However, they reported that the level of support available for entrepreneurs in their countries is inadequate.

“There is a large deficiency of knowledge and insights on young African entrepreneurs,” says Koffi Assouan, Programme Manager at The MasterCard Foundation. “This report provides critical data that can drive programmes and strategies to support youth entrepreneurship and spark a much needed conversation among practitioners and stakeholders in this space.