Where are Africa’s Unicorn Startups?

AFRICA, this is our time!

This has been a buzz statement for the last 10 years, even the vivacious Shakira belted a juicy sing-along Waka-Waka song that reiterated that it is Africa’s turn to shine.

Is Africa ready to prosper? Has the continent done enough groundwork to allow for true prosperity for her inhabitants? African leaders are pushing for beneficiation through value addition mechanisms that will optimize profits extracted from the continent’s vast natural resource base.

Do we understand what needs to be in place to achieve this noble feat? Have adequate systems been put in place to foster the culture of African industrial growth? It is necessary and sufficient that we, as Africans truly self-analyze and pinpoint the factors that serve as impediments to our development blueprint.
The problems bedeviling the continent are vast and differ from one geographical location to another thus there can never be a one-size fits all panacea to African issues. The complexity of these problems is overwhelming due to the multiple internal and external interfering forces that are not in-sync with the ideal frameworks for sustainable development of member countries.

It is worthy to note that in as much as the contexts in the various African countries differ there exists high level principles which if turned into policy and implemented effectively will foster an environment which allows for every African child to have a meaningful shot at life. Countries ought to encourage wealth growth through:

  1. Adoption of strong ownership rights.
  2. Stimulation of strong economic growth through sustainable local entrepreneurial activity. (Creation of a robust support system for small to medium enterprises).
  3. A stable, well-developed banking system and stock market.
  4. Free and independent media as a conduit to information access and dissemination.
  5. Low level of government intervention in citizens’ pursuit of happiness.
  6. Low income tax and company tax rates
  7. Ease of investment by local and international players.
  8. Low level of trade union involvement to optimize market driven value exchange between employers and employees.

For the purpose of this article, focus will be on the stimulation of strong economic growth through sustainable entrepreneurial activity. The creation of a robust support system for small to medium enterprises lies at the heart of wealth building of nations. Substantial research has been devoted to establishing the correlation between level of entrepreneurial activity and the economic performance of a country. It is widely accepted that the relationship between the two variables is strong and positive, implying that an increase in entrepreneurship generally leads to better economic performance and vice versa (No research papers have been quoted in this article as the author deems that as robbing the reader an opportunity to excavate this knowledge and grow.)
Too often political and economic analysts tend to give too much credit to government office bearers and ruling parties on the success or failure of national economies. It is true that the government actors set the tone for activity in the countries as they have been mandated by the electorate (In a number of African cases, they have imposed themselves on the people via brutal force) to set and implement the countries’ policies. The setting of policies should be institutional and truly representative of the aspirations of the populace but too often than not, African governance systems have been eroded as a direct consequence of “big-man mentality”. Wikipedia defines a Big-Man as a highly influential individual in a tribe.

Such person may not have formal tribal or other authority (through for instance material possessions, or inheritance of rights), but can maintain recognition through skilled persuasion and wisdom. The big man has a large group of followers, both from his clan and from other clans. He provides his followers with protection and economic assistance, in return receiving support, which he uses to increase his status. Economic policies must be formulated in an inclusive manner whereby individuals and or groups of polarized philosophies have to be represented in independent institutions that are free of “big man influence”.

The author is of the firm belief that the greatest lever that any country has to lift the lid of poverty is its people ability to pursue their dreams in an unhindered fashion. The freedom to self-express is at the epicenter of development. Self-expression is a function of one’s environment and it is every citizen’s duty to ensure that their neighbor can fully enjoy the benefits of freedom. The enabling environment for self-expression cannot be delegated solely to government office bearers, it is the duty of every individual to contribute meaningfully to a culture of growth and prosperity.
Individual Social Responsibility (ISR) is the basis for selfless service to oneself and one’s neighbor.

ISR serves as the basis for sustainable corporate social responsibility (CSR).The creation of a robust support system for small to medium enterprises can only be achieved through comprehensive Public-Private Partnerships (PPP).

For PPPs to work it is worthwhile that there should be a fair exchange of value which is mutually beneficial for all players. Why should an individual or private entity be motivated to collaborate with public entities if there is no meaningful value proposition? For a cumulatively exhaustive solution to stimulation and sustenance of entrepreneurial activity, it is paramount that all parties in the PPPs be guided by the philosophy of ISR in achieving fairness in the partnership for the benefit of every citizen of a country.
It would be grossly naïve to assume that successful PPPs are easy to achieve in many countries in Africa. So how can countries use an assets-based approach to exchange value with budding entrepreneurs for mutual benefit? The author is of the conviction that even in the most poorly governed country an ecosystem of entrepreneurs can be established that investors both local and international can tap into. The individuals and/or institutions that are functional should serve as the starting point in developing entrepreneurs and this can be proliferated across the economy as a best practice. For example if the Ministry of Agriculture is the best functioning public department then it is worthwhile to establish agriculture-related entrepreneurship programs and then use the working model to spread across the government and other public entities. If Non-Profit Organizations have a working model, then it is a no- brainer that other institutions adopt these best practices. Currently in Africa, there is a crop of super-wealthy individuals like Strive Masiyiwa who have committed to extensive philanthropy and have setup sustainable development funding models that work in the different African contexts. It would be beneficial to learn from these proudly African working models and tailor make them for adoption continent-wide with special emphasis on context.
If public entities have the funds but no expertise and capacity to support entrepreneurs then competent service providers who are accountable to all stakeholders must be appointed. The converse is true, if individuals, investors and private institutions have no capacity to distribute value to and from budding entrepreneurs then it is worthwhile to consider public institutions that are effective in facilitating this value exchange.
Venture capitalists in the developed world have understood the need to assist startups. The fruits of a successful collaboration are mutually beneficial thus with or without government support it is possible to stimulate economic growth through dedicated ISR from individuals and institutions that care for the well-being of the general populace of each country. After visiting a number of start-ups, co-working spaces and other incubation centers in New York and Boston, the author concluded that the youths in these cities have the same hunger as those in Africa but tend to have a larger appetite for business risk. One major contributing factor to this flourishing “Creative Confidence” – (a term coined at Stanford’s D-School) is the fact that Venture Capitalists in the USA are more aggressive in searching for the next “Unicorn” (successful start-ups like Facebook, Instagram…) thus are willing to bet on even the seemingly silly innovative idea available. It is necessary that VCs in Africa become more aggressive backed by an enabling political and socio-economic environment then African entrepreneurial talent will be locally extracted and not be lost.

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