Africa encourages its youth to become entrepreneurs

The UN Development Program, the African Development Bank and the United Nations Economic Commission for Africa organized the African Economic Conference, shedding light on jobs and entrepreneurship for a better future in the continent.

al-monitor A high-level panel on youth employment and skills at the 2019 African Economic Conference, Sharm el-Sheikh, Egypt. Posted Dec. 7, 2019. Photo by Twitter/@Tahinajuliana.

Dec 12, 2019

Boosting access to finance is the main obstacle facing Egyptian and African youth to become entrepreneurs, participants unanimously agreed during the three-day conference titled “Jobs, Entrepreneurship and Capacity Development for African Youth.”

African and Egyptian entrepreneurs shared experiences in the Egyptian Red Sea resort of Sharm el-Sheikh on the sidelines of a conference Dec. 2-4, organized by the UN Development Program (UNDP), the African Development Bank and the United Nations Economic Commission for Africa.

The private sector and entrepreneurship have emerged as the continent’s pillar for job creation, given the limited opportunities in the public sector. And the core message of the conference was, “If you are jobless, create your own business for a better future.”

“That’s what I have done — I launched my own metal carpentry workshop. I graduated from a vocational school seven years ago. I applied for a loan through a private funding firm assisting startups,” Mahmoud Soleiman, an Egyptian entrepreneur, told Al-Monitor.

Soleiman, 25, said he had obtained 50,000 Egyptian pounds ($3,000) from a microfinance firm three years ago. “My business has been developing since then. I started with three workers. There are seven workers in my workshop now, manufacturing and installing metal doors and windows,” Soleiman said.

As for the obstacles he faced, Soleiman blamed taxation and red tape [excessive bureaucracy] in obtaining licenses. 

“New small businesses should be exempted from taxes for at least five years, especially if these startups are repaying loans. Red tape is still a problem in Egypt. Many public servants complicate procedures for no good reason,” he said, calling for complete eradication of red tape in Egypt. 

Egypt’s microfinancing jumped by 42.7% to 23.1 billion Egyptian pounds (around $1.43 billion) at the end of the third quarter of 2019, compared to the same period in 2018, data from the Egyptian Microfinance Federation showed Nov. 27.

A number of African entrepreneurs spoke of their personal experiences, showing how the youth may bank on the domestic business ecosystems in their countries in launching startups based on simple ideas inspired by the environment.

Ife Adebayo, special assistant on innovation to the vice president of Nigeria, told the conference participants that the Nigerian government is currently offering tax exemptions for startups.

Regis Umugiraneza, a Rwandan co-founder and CEO of Carl Group Company, said he did not know what to do after graduation. However, he found sweet potatoes, which are a popular harvest in his country, could be the answer. “I decided to produce doughnuts from sweet potatoes. I applied for UNDP funding. Now my business is worth more than $200,000 with a staff of 24 people,” he told the gathering.

Chief economist at the United Nations Development Program Raymond Gilpin underlined the facilitating role of ecosystems, which involve factors such as governments and administrative systems, infrastructure and other socio-economic resources, in bridging the youth skills gap in Africa.

“The business ecosystem as a whole — comprising macroeconomic and microeconomic factors — differs from country to country and should be outlined clearly for the well-tapping of the continent’s potential,” Gilpin said at the conference.

As for measures to boost the private sector’s potential for job creation in Africa, John Bee, regional head of Regulatory and Scientific Affairs, Sub-Saharan Africa, at Nestle R&D Center Abidjan, said that one way is to be prepared to look at what is missing “in meeting your own needs and be prepared to invest to fill skills gaps to the extent feasible.”

“This could mean investing in your own training facilities and courses where there is no easy local answer to meeting your skills needs. We invested in vocational training capabilities in Cote d’Ivoire and Nigeria, for example, where local capacity was insufficient for our needs for qualified factory engineers. Here in Egypt, we support the TVET Egypt program and an entrepreneurship competition for female technicians,” Bee told Al-Monitor.

The TVET Egypt, or the Technical and Vocational Education and Training Reform Program, is a nationwide initiative co-funded by the government and the European Union.

Answering a question on how education could help boost the entrepreneurship culture in Africa, Bee explained that entrepreneurship can be taught in formal education settings but is more likely to be successful if applied to real situations. 

“That's why our innovation accelerator program in Africa looks to seek our startups and university students with innovative ideas that help address our own business priorities,” he said.

Bee added, “Often the private sector will be engaging in very practical results, driven initiatives to enhance training capacity or fill gaps, and will have real life results and learning to show. Governments could recognize these initiatives, formally partner with them to complement their own strategies or officially recognize their output within their own education curricula or encourage international partners to accredit to international standards; and look to scale them up by mobilizing bilateral and multilateral partner funding, building on successful bases."

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