What most young Africans want above all is a job. With 10 to 12 million young people arriving on the labor market every year, this is a real challenge! Many of them work in the informal sector, but thanks to the efforts of public policies, civil society and the private sector (via social business), some succeed in setting up their own business. Interview with Elsie Kanza, Head of Africa, World Economic Forum.

© TANZICT Project
© TANZICT Project

How can entrepreneurship be promoted among young Africans?

We see that there are two types of entrepreneur: those who set up a business because they want to innovate and see a real opportunity in entrepreneurship, and the small entrepreneurs who do it as they have no other choice – for example, because they are in long-term unemployment.

This requires two types of operation: for the first, who are seeking to develop and are ambitious, willing to take risks, their problem is the lack of available capital. Consequently, it is necessary to help them seek funds to allow them to transform a start-up into a multimillionaire company: small companies need a real system to finance their growth.

For the second, even if they are less inclined to expand, they must nevertheless make sufficient profits to ensure their activity is sustainable. Many of them are forced to develop in the informal sector. So, the aim is to establish a conducive environment for business in the formal sector in order to avoid their marginalization and allow them to benefit from the advantages of being recognized, and therefore of being taken into account by their government.

In any case, it is important to improve “tutoring”, training and support for these young people in order to help them transform an idea into a sustainable business and seize market opportunities, both locally and regionally. All actors need to mobilize – both public and private.

 

What are the barriers to investment and entrepreneurship by women in Africa?

An obstacle I have seen is not the lack of ideas of African women, but the constraints they suffer from – some are social, family-based, cultural…

In general, companies managed by women are smaller (less than 5 employees). How can we help them develop all their potential? To develop on a regional level? To be able to manage a team of 100 to 1,000 people? Public policies for gender equity must allow equitable access to financing and resources, and remove the barriers to women’s entrepreneurship. Innovations have emerged to specifically help women gain access to opportunities: banks have developed services dedicated to women’s entrepreneurship – sometimes banks designed entirely for women have even been created! In both cases, these banks offer products and services tailored to women. For example, in Tanzania, until recently (and it is still sometimes the case) banks required real estate as a guarantee to allocate the loan, which restricted access to financing for women, as women did not have the right to own real estate. In view of this, banks have set up systems which make it possible to obtain financing with other forms of guarantee than real estate.

 

Roger Nord, Deputy Director of the IMF’s African Department, mentions that “Africa’s main challenge is to make its growth job-rich and pro-poor”. How to address this challenge? What are your recommendations?

As Africa is the youngest continent in the world, and it is estimated that by 2050, there will be one billion more young people on the labor market, it is clearly necessary to find growth models that can create employment for this youth – and this in all sectors of activity.

The African model is above all agricultural: the challenge is therefore to turn this agriculture into an attractive way of life (allowing a comfortable life to be achieved and personal objectives to be realized). This will only come about if leaders in society in the fields of companies, politics, academic circles and others manage to provide structural funds to allow our farmers to move from basic production to fully processed goods, and to expand into external markets.

In the service sector, certain tertiary industries, such as finance, telecommunications, the retail sector and tourism, are emerging as sectors which could create the jobs of tomorrow. The challenge here lies in improving the efficiency, productivity and competitiveness of these sectors so that they generate these jobs we need.

Finally, although Africa would appear not to have benefited from the industrialization process, the industrial sector still holds great potential for job-creating growth, provided Africa develops an unskilled labor-intensive industry: this is a highly debated issue, as the nature of the industry is not really moving in this direction, all over the world… but I am still convinced that this is how the secondary sector can generate a lot of jobs for young people.

In my opinion, overall, these job prospects will increasingly come from the private sector. The role of the State is to improve the business environment in order to allow the private sector to generate this job-creating growth. Several countries have recently implemented reforms aimed at this objective, but private investors continue to consider Africa as a challenge in itself in terms of doing business. Removing barriers to booming and job-creating private investment poses a real challenge for our political representatives.

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