According to the International Labor Organization, 1 in 5[1] of the 400 million youth on the African Continent are unemployed, and a much greater number are under-employed. These high levels of unemployment have been further worsened by the economic shocks linked to the COVID-19 pandemic, creating an urgent need to foster entrepreneurship and the scaling of resilient businesses that will provide decent jobs for young Africans.

There are at least three critical steps to drive change:

1. Create an Enabling Policy Environment for Entrepreneurship and Job Creation: African governments operating at the regional, federal, district, and local levels must create an enabling policy environment for businesses to emerge and thrive. This enabling environment must be rooted in evidence-based and data-driven policy design and followed by the practical and transparent implementation of critical interventions, including investment in infrastructure. In addition, intellectual property rights protection laws, streamlined registration, taxation, and consistent and supportive sector policies must set and enforce standards for operating in the business environment. Governments must prioritize key growth sectors, which also have significant employment generation potentials, such as agriculture and food processing, technology and knowledge, energy and climate adaptation, the creative industries, and construction.

There are promising examples of progress in Mauritius and Rwanda, which consistently lead Africa in the World Bank Doing Business Rankings, which measure a range of factors, including the ease of registering a business, obtaining construction permits, and electricity and enforcing contracts. Rwanda even offers free business registration, all online.

The commencement of the African Continental Free Trade Area (AfCFTA) on January 1st 2021, holds great promise for creating "one African market" and fostering greater economic linkages between entrepreneurs. However, the significant deficit in inter-continental transportation infrastructure, inefficiencies and opaque rules at borders, and the currency transfer, language, and cultural barriers must be addressed to truly unlock the growth and employment opportunities that AfCFTA offers.

2. Prepare African Youth for Employment and Entrepreneurship: Despite the high rates of youth unemployment on the African continent, most entrepreneurs in the business landscape struggle to find and retain talent, and this challenge limits their ability to scale. This supply and demand gap is linked to the antiquated educational systems being utilized in most African countries, which are not effectively equipping youth with the life, leadership, employability and entrepreneurial skills, and ethics and civics education they desperately need. For example, LEAP Africa’s work with youth, teachers, and social entrepreneurs has demonstrated the impact of providing life, leadership, and employability skills to students over the past nineteen years. The Majority of LEAP’s 100,000 beneficiaries have been able to secure internships or full-time employment, and many have chosen to continue their education.

Given the high rates of attrition between primary, secondary, and tertiary education on the Continent, and growing numbers of out-of-school youth, governments must partner with faith-based and community organizations to provide life and vocational skills.

There is an urgent need for the private sector to partner with the Ministries of Education and the universities commissions in the different African countries to update the curricula to include innovation and technology, entrepreneurial and managerial skills, and practical work experience. In addition, private organizations should partner with universities to support talent development efforts by providing internship and mentorship opportunities for undergraduate students.

3. Unlock Catalytic and Patient Capital and Ecosystem Support: There are a growing number of angel networks, accelerators, incubators, and SME support initiatives in Africa’s major cities. However, entrepreneurs operating across different growth sectors still struggle to access catalytic and patient capital. In fact, access to affordable and patient capital is typically cited as the most significant barrier to the emergence and growth of businesses on the African Continent. The International Finance Corporation estimated this financing gap to be $136[2] billion annually pre-COVID. Sadly, women and youth face even more significant hurdles to obtaining financing linked to their limited access to collateral, limited networks, and investment-readiness support.

It is imperative that African financial institutions, philanthropists, and public sector stakeholders’ partner to increase funding flows to youth-run and women-led businesses through special financing windows. There are also significant opportunities to partner with community and faith-based organizations to de-risk financing to grass-roots entrepreneurs, especially those operating in rural areas.

There is also a critical need to ensure equity, inclusion, transparency, and accountability in the allocation of funds on the Continent. MSMEs also need business development support services to develop and scale resilient business models, enhance their investment readiness to attract funding, build solid brands, and access new markets. As highlighted in "Food Entrepreneurs in Africa, Scaling Resilient Agribusinesses," entrepreneurs thrive when they are part of an ecosystem of support and can benefit from guidance, mentorship, and linkages.

As Africa's population inches towards 2.4 billion people by 2050, there is an urgent need to galvanize its most precious resource – its young people – who are dynamic, creative, and energetic. By creating an enabling environment for young entrepreneurs to emerge and thrive, providing the formal and informal training they require, and ensuring affordable and patient financing to enable them to grow, we can collectively create many more thriving businesses. This will, in turn, foster job and wealth creation, gender equity and may indeed prove to be the catalytic force for transformation that we urgently need on the African continent!

[1] wcms_737670.pdf (ilo.org) [2] African SMEs face a $136bn financing gap annually - IFC - Vanguard News (vanguardngr.com)

Ndidi Nwuneli - Empresária Agrícola