Entrepreneurship: A Powerful Catalyst for Growth & Development

African entrepreneurship is on the rise. The young demographic in particular is driving innovation and using its relentless determination to spur economic development by creating unique solutions that address local challenges. 

Over the past five years, the number of businesses and start-ups in Africa has increased by 20 percent. A record for tech start-ups was registered in 2021 with nearly US$2.15 billion in investment capital directed toward the sector, a staggering 206 percent increase over the previous year. The continent now boasts seven “unicorns” – new businesses valued at over US$1 billion – mainly in fintech and e-commerce, up from zero in 2014. Fully-fledged start-up scenes are disrupting how we think about African agriculture, industry, IT and sustainability. 

In the majority of cases, these businesses are spearheaded by Africans under the age of 35. In Benin, between 2019 and 2022, the number of young people opening new businesses skyrocketed, more than tripling from 7,416 registrations to 23,213 – equaling a growth of 212 percent and massively outperforming, for instance, neighboring Togo. 

Africa has the fastest growing and youngest population in the world, with 70 percent of sub-Saharan Africa under the age of 30. The median age on the African continent is 19. While birthrates are tumbling in richer nations, Africa’s baby boom continues apace, fueling the youngest, fastest growing population on earth. 

Over the next three decades, the region will experience the fastest increase in working age population. Up to 12 million youth will enter the labor market across the region every year in the coming decades. 

When it comes to creating value, Africa’s youth are increasingly taking an active role in shaping their future. Young Africans are turning to entrepreneurship as a means of not just economic empowerment but also as a vehicle of positive change. Innovation is playing an especially critical role in tackling development challenges. There are countless examples. 

Matiedje Nkenmayi Gislaine from Cameroon is the CEO of Mumita Holdings, a youth-led agricultural startup that supports farmers in a climate-vulnerable country in producing crops sustainably year-round using low-cost greenhouses and solar-powered irrigation. The firm mainly targets rural women farmers that cultivate African indigenous green leafy vegetables – an important source of revenue and nutrition. The low-cost greenhouses Mumita provides are made from materials such as wood, cement and mesh that are sourced locally from farmers, reducing the cost of building a greenhouse from US$2,500 to about US$500. 

Gloria Kisilu is the founder of Shaba studio in Kenya, a virtual platform that created a digital supply chain for rural communities making craft products. Local products from developing countries account for 65 percent of all handicraft exports around the world, but artisans often lose significant revenue to intermediaries. However, rural communities often do not have access to markets. Kisilu developed the Smart Community Centre App, which allows artisans in rural communities to receive and process orders directly, providing them with an efficient and transparent platform to take orders and track sales. Today, the project benefits over 400 artisans, increasing their profit margin from 6 percent to 60 percent. 

Another example is the Malawian inventor William Kamkwamba, who gained global attention with his story documented in the bestseller “The Boy Who Harnessed the Wind”. When he was only 14, to power his family’s home Kamkwamba built an electricity-producing windmill from spare parts and scrap, working from rough plans he found in a library book and modifying them to fit his needs. Today, Kamkwamba’s vision is embodied in the Moving Windmills Project, which he co-founded in 2008 and with which he went on to build low-cost community water wells, install solar pumps and energy systems, renovate local schools with new facilities and learning materials, and nurture development programs in several communities. 

Female entrepreneurship 

Parallel to the ascent of youth entrepreneurs, the drive for gender equality and women’s empowerment has given rise to women entrepreneurs and female-led startups. Historically underrepresented in business, African women are now leading change and breaking barriers. Women entrepreneurs contribute significantly to economic development and financial integration through job creation. According to a Harvard study, African women have the highest rate of entrepreneurial activity globally and are more likely to start businesses compared to women in other parts of the world. Sub-Saharan Africa, in particular, has the highest rate of female entrepreneurs at 26 percent. Botswana, South Africa and Ghana are among the countries with the highest share of women entrepreneurs globally. 

Fatou Juka Darboe is a young Gambian who is blazing a trail for women fueled by her passion for STEM (Science, Technology, Engineering and Mathematics). She co-founded the country’s first and only 3D printing company “Make 3D Company Limited” in 2019, with which she created equipment for healthcare staff during the COVID-19 pandemic. Partnering with the United Nations her company manufactured over 8,000 face shields for the country’s primary referral hospital and developed prosthetic limb prototypes, offering affordable solutions and hope to amputees. 

The Nigerian entrepreneur Temie Giwa-Tubosun is the founder of LifeBank, a start-up established in 2016 that delivers blood and related products to healthcare facilities using WHO-standard cold chain infrastructure. LifeBank uses data and technology to collect blood, then delivers the bags to hospitals in Nigeria, Kenya and Ethiopia. Since 2016, the company has served 1,200 hospitals and saved more than 40,000 lives. 

The Ghanaian entrepreneur Bernice Dapaah founded the Ghana Bamboo Bikes Initiative (GBBI) in her hometown Kumasi. She produces bicycles using environmentally friendly resources such as bamboo and creates jobs for women, making the production much less energy-intensive. For each bamboo stem cut, 10 more are planted by the team. She also aims to offer sturdy alternative means of transport to allow disadvantaged people to brave unpaved roads. GBBI also donates bikes to students: “For every 10 bikes sold, we give one to a student from a poor rural area so that he or she can go to school,” said Dapaah in a radio interview. 

However, despite those high levels of entrepreneurial activity, African women tend to draw the short straw when it comes to funding and compared to their male counterparts, women-owned businesses tend to be smaller, have lower average sales and fewer employees. Several factors such as lack of access to capital and support-ecosystems block the potential of female founders and entrepreneurs in Africa. 

The role of development institutions 

Unlocking Africa’s entrepreneurial potential is no small task. Development finance institutions play a critical role in ensuring the advancement of entrepreneurial ventures. Several initiatives are actively engaged in this mission. 

In 2019, the African Development Bank (AfDB) partnered with the European Commission and the European Investment Bank (EIB) to launch the “Boost Africa” Initiative to stimulate youth entrepreneurship and innovation across the continent with a specific emphasis on empowering entrepreneurs and start-ups. The program aims to empower African youth to create innovative businesses able to compete regionally and globally, attract domestic and foreign investment, while contributing to job creation and economic growth. 

“We seek to position ‘Boost Africa’ as the go-to platform for launching globally competitive companies from Africa, contributing significantly to job creation and economic growth on the continent,” said Martha Phiri, AfDB’s Director of Human Capital, Youth and Skills Development. 

The International Finance Corporation (IFC), together with African and European partners, launched the “Alliance for Entrepreneurship in Africa” to support a stronger private sector, entrepreneurship and the growth of small and medium-sized businesses across Africa. 

“Small businesses and entrepreneurs in Africa are drivers of inclusive growth, economic stability and resilience. Supporting their growth will be critical to creating jobs and helping Africa recover from the COVID-19 crisis,” stated IFC’s Managing Director Makhtar Diop in March 2022. 

To support women entrepreneurs across sub-Saharan Africa, IFC earlier this year launched the “She Wins Africa” initiative, a program designed to unlock the potential of hundreds of women-owned start-ups by offering advice, training, mentorship and improved access to finance. In addition to training women entrepreneurs, “She Wins Africa” will provide gender-smart investing training for funds, accelerators and venture capital investors to help accelerate investments in women-led start-ups. 

The OPEC Fund and African entrepreneurship 

Recognizing the importance of amplifying African entrepreneurship and enabling the key demographics of women and youth, the OPEC Fund works with partners to boost the continent’s development. 

In June 2023, the OPEC Fund partnered with Access Bank Botswana to provide lending to women-owned businesses through a US$20 million loan. “By empowering small businesses and women entrepreneurs, who play a significant role in Botswana’s economy, we are contributing to the resilience, inclusiveness and overall economic sustainability of the country,” said Director-General Abdulhamid Alkhalifa. At least 30 percent of the funds are being specifically directed towards women-owned small businesses. 

In 2020, the OPEC Fund provided a public sector loan for the “Transforming Agriculture through Diversification and Entrepreneurship” project in Malawi to support the value chain and build the capacity of smallholder farmers and rural organizations – benefiting around 1.3 million people. 

In 2018, to boost the promotion of quality entrepreneurial training across East Africa, the OPEC Fund provided a technical assistance grant to ICEP, an independent Austrian development organization. The project directly funded nine vocational training centers in Kenya and Uganda, supporting around 116 teachers and trainers, 4,200 underprivileged youths and 2,700 small entrepreneurs. 

Africa is full of entrepreneurs with energy, ideas and creativity that are reshaping the continent’s future. The potential to contribute to economic development and greater inclusion and to promote a more vibrant economy, is enormous. Governments, policy-makers and the international development community must address the constraints that limit founders’ growth potential. 

The development community has a vital role to play by encouraging and supporting entrepreneurs and actively engaging women and youth, who represent a wealth of untapped potential. A more inclusive and vibrant entrepreneurial ecosystem, that acts as a catalyst for growth and development across Africa, is not only possible but actually now within our reach.