African Development Bank: Africa's progress is contingent upon entrepreneurship

Entrepreneurship must be at the center of initiatives to improve Africa's economic prospects, according to a June 2021 African Development Bank white paper titled "Entrepreneurship and Free Trade: Africa's Catalysts for a New Era of Economic Prosperity."

According to the study, the Covid-19 issue has sparked changes that offer opportunities for improving resilience and economic growth. The continent is at a turning moment as its economy start to recover from the crisis. The paper also points out that a number of developments, such as digitalization and the creation of business opportunities connected to greening economies, are starting to gain traction and may lead to more equitable economic growth.

The appropriate initiatives might provide a pathway for the young, innovative businesspeople on the continent and assist in establishing connections with the major corporations that are the main forces behind supply chains, generating employment and money that would support company expansion. 

According to Dr. Khaled Sherif, vice president of the AfDB for regional development, integration, and business delivery, "the White Paper aims to reframe the narrative within Africa's private sector and, moving forward, guide initiatives supporting entrepreneurship on the continent to capitalize on fresh possibilities."

The paper's publication comes after the Alliance for Entrepreneurship in Africa's May 2021 debut, in which the African Development Bank will play a significant role. To promote Africa's private sector, with an emphasis on micro, small, and medium-sized businesses, the Alliance will enlist the assistance of partners in the form of financial and technical resources.

The Alliance also supports the Bank's idea of using African youth entrepreneurship investment banks to coordinate more efficient financial and non-financial support to young entrepreneurs.  In order to accomplish the development goals of the continent, including a sustainable and more equal future, the paper makes the case that young entrepreneurs' intelligence, creativity, knowledge, and technology abilities will be essential to harnessing the Fourth Industrial Revolution in and for Africa for the very first time.

According to the study, among Africa's almost 650 tech hubs are "accelerators, incubators, university-linked start-up support labs, maker parks, and even co-working sites."More than a third of these are located in Egypt, Nigeria, Kenya, and South Africa, but most nations and regions have tech centres of some kind. Even though this is a significant advancement, a more resilient ecosystem and network are still required to reach smaller, less developed economies.

On the demand side, the report suggests that both business owners and investors might have to reduce their hopes for funding and profits. By changing expectations, there is a better chance of accelerating ecosystem development and enabling more start-ups to access capital at stages that were unthinkable prior to 2015.  Though transformational, change won't happen suddenly. Africans will not become wealthy and stable through innovation and digital apps alone; instead, systems, digital connection, and infrastructure, along with enhanced human resources and access to services, will be essential for success and stability.

African-specific ecosystems are required to support African entrepreneurs, especially small and medium-sized businesses. To do this, the study suggests that stakeholders collaborate with entrepreneurs across the whole growth path as opposed to using a fragmented strategy.

Given that the African Continental Free Trade Area (AfCFTA) started operating in early 2021, trade can act as additional impetus for entrepreneurship.

By creating new value chains and taking advantage of chances to expand up through increased commerce in regional markets, entrepreneurs will make the AfCFTA successful. 

The document makes suggestions to boost intra-African trade and private sector participation while the agreement's final details are still being discussed over the next ten years.  These include one-stop automated border processing, collaborations with business associations to assist trade-enabling information platforms, and faster support for innovation clusters. They all stress the significance of size, connectedness, integration, and information dissemination.

According to Frederik Teufel, task manager for the White Paper and advisor to the vice president, "entrepreneurship has been an engine of economic growth around the world, and Africa should be the same. An extremely entrepreneurial culture already exists. The private sector may operate as an engine for equitable growth across the continent with the appropriate policies and conditions.