Ms. Elsie Kanza, Head of Africa and Member of the Executive Committee, World Economic Forum,
Theo Sibiya, Partner and Head of Africa, A.T Kearney and Co-chair of the Africa Regional
Business Council
Distinguished Participants,
Ladies and Gentlemen,
I am pleased to participate in this Africa Growth Platform
Roadmap Planning session commencing the journey to
actualise the initiative’s inspiring vision of bringing
together governments, investors and entrepreneurs to
enhance funding prospects and create better enabling
environments for business growth. At the fore of Africa’s growth challenges is unemployment.
With a youth population of 420 million, two-thirds of the
continent’s youth are unemployed and discouraged.
To counter the debilitating effects of unemployment, most
African countries are rapidly moving from resource-based
economies to entrepreneurial economies driven by
technology and innovation.
Entrepreneurship avails an array of economic benefits,
which include fostering innovation, enhancing productivity,
facilitating technology transfer and knowledge spill-overs
from research to industry and, above all, creating jobs.
For this reason, promoting entrepreneurship is
increasingly seen not only as an integral aspect of national
economic strategy, but the key to employment creation
and overall economic growth.
Ladies and Gentlemen,
Since the time of renowned economist Joseph
Schumpeter, the entrepreneur has been acknowledged to
be the fundamental phenomenon of economic
development. Yet, despite there being plenty of
entrepreneurial talent and drive in Africa, economies have
not been expanding rapidly enough and many of the
youths in the continent remain either unemployed or
underemployed. It is discouraging to note that African entrepreneurs have a high discontinuation rate of 14%,
higher than other emerging economies

This reality has led to the acknowledgement that the
existence of entrepreneurial talent and drive alone is not
enough. Rather, while it is true that the entrepreneur is
the key factor in economic development, the context in
which the individual entrepreneur operates also matters.
This appreciation has underscored the need for a systemic
understanding of the entrepreneurial process in which
both the individual and the context counts. This thinking
has, overtime, given rise to the concept of entrepreneurial
ecosystems which describes the contextual conditions that
are required for entrepreneurs to spin successful
Ladies and Gentlemen,
The key components of an entrepreneurial ecosystem
have been identified as including sound government
entrepreneurship policies and strategies, business friendly
regulatory frameworks and infrastructure, financing,
culture, mentors, advisory support systems, education,
training, and markets. I am encouraged that the Africa Growth Platform initiative
is focusing on supporting African countries to strengthen
these elements of the entrepreneurial ecosystem.
I will highlight a few of the components of the
entrepreneurial ecosystem which, I think, the Africa
Growth Platform and indeed all governments, should
Government policy: Supporting government to develop
clear national roadmaps on how to promote
entrepreneurship is an important priority. There is no
standard design of entrepreneurship policy and the
socio-economic context and specific development
challenges unique to each country will determine the
overall approach to entrepreneurship development. This
is where it will be critical to mobilize the data needed to
inform effective entrepreneurship policies.
Beyond the national entrepreneurship policy, the data
should also inform the formulation of a youth specific
integrated national entrepreneurship strategy highlighting
the core elements that have a significant impact on youth
Regulatory framework: Focus also needs to be trained
on optimizing the regulatory framework to ensure it is
conducive for entrepreneurship. As we have done here in Kenya, this will involve simplifying the regulatory
requirements – such as licenses, procedures,
administrative requirements, benchmarking time and cost
of starting a business; introducing transparent
information and fast-track mechanisms as well as one-stop
shops to provide business-related government services –
which in Kenya we call Huduma Centres. Also, part of the
regulatory framework is the need to make contract
enforcement easier and faster as well as guaranteeing
property protection.
Access to finance is another key priority. Finance
remains a key constraint for start-ups and SMEs
development. Bank lending remains the main source of
funds for financing start-up, cash flow and investment
needs. However, most start-up enterprises and SMEs, are
unable to access bank lending often because of high
collateral requirements, high banking fees and inadequate
youth-friendly products. Moreover, and in many cases, the
youth lack financial literacy.
There is need, therefore, to broaden the range of
financing instruments available to SMEs and young
entrepreneurs, to enable them to play the critical roles of
creating wealth and jobs. The menu is wide, in this
regard, and the Africa Growth Platform can assist African
countries to put in place financing options other than straight bank debt. These techniques could include asset-
based finance, alternative debt as well as hybrid and
equity instruments.

In asset-based financing – which offers more flexible
terms than collateralised traditional lending – firms obtain
funding on the basis of the value of assets – including
inventory, accounts receivables, machinery, equipment
and real estate, rather than on their own credit standing.
In alternative debt financing, SMEs obtain funding from
investors in the capital market, rather than banks. This
calls for the development of a corporate bond market for
SMEs, and, as some countries have done, including Kenya,
encouraging the creation of SME trading venues.
Hybrid instruments, which combine debt and equity
features into a single financing vehicle, also offer an
alternative way of funding entrepreneurs. In recent years,
governments have offered hybrid tools to SMEs through
direct public financing of SMEs under programmes
managed by public financial institutions as we do here in
Kenya through the Uwezo Fund. It may also be enabled
through guarantees to private institutions that offer SMEs
financial facilities as is the case with the Young Kenya
Works Programme managed by Government in partnership with the Mastercard Foundation. The project
aims to train and transition 5 million young Kenyans into
decent and fulfilling work. The guarantee mechanism is
executed in collaboration with some of the major lending
institutions in the country.
Equity finance also offers seed and early-stage funding
for boosting firm creation and development. Equity
instruments, such as specialised platforms for SME public listing, can provide financial resources for growth-oriented
and innovative SMEs.
Implementing these financing options has important policy and regulatory implications and African countries need support in navigating through the necessary institutional and legal requirements. The idea, however, is to provide a wide range of youth-friendly financing options, enlighten the youth on the same and encourage them to utilize them to finance start-ups of their choice.
Market access support is critical for the success of youth entrepreneurship. Many youth-owned enterprises with immense potential often fail due to the inability to access the markets for their products and services.
Supporting youth-owned enterprises to access markets in domestic, regional and international markets can be done
in several ways including:

  • organizing marketing events such as trade fairs, exhibitions, and conferences that offer young entrepreneurs a platform to network, showcase and market their products;
  • plugging youth enterprises into value chains which will involve analysing value chains, segmenting the tiers of products that roll up to create the finished product, and then help youth-owned enterprises to improve their capacity to produce quality and adequate volumes of output to supply targeted markets;
  • facilitating market linkages between small youth-owned enterprises with large established private enterprises or government institutions with a view to enabling the youth to learn from and trade with
    the established enterprises or institutions.

The linkages take such forms as subcontracting,
outsourcing, franchising and business mentorship
and business development training;
 introducing public procurement laws that set aside
a percentage of government spending to purchase
goods and services produced by youth enterprises –
as Kenya and Rwanda have done;

 ring-fencing market opportunities for youth to
supply certain components and end products to
public agencies and even private buyers willing to
allocate a portion of their spending specifically to
youth-owned enterprise.

Education and training is also key to the growth of
entrepreneurship in Africa. The key to equipping the youth
with entrepreneurial knowledge and skills lies in
mainstreaming entrepreneurship education and training in
the formal education system. It would be particularly
helpful to integrate apprenticeships and entrepreneurship
education into the Vocational Education and Training
(VET) system as we have done here in Kenya. This will
enable apprentices to gain hands-on business knowledge
while on workplace assignments.
The Africa Growth Platform can engage in this area by
supporting vocational training, apprenticeship and
mentoring programmes, and the promotion of
entrepreneurship educators’ networks in Africa.
Apprenticeship and mentoring programmes are
particularly important in enabling young people to acquire practical technical skills and knowledge in particular fields of business in an actual workplace setting.

In conclusion, it is important to emphasize that broad
partnerships are needed to succeed in unlocking the
entrepreneurial potential in the continent. Start-up and
SMEs rely on co-operation with other organisations such
as suppliers, customers, universities, established
businesses, development partners, civil society and public
agencies for their success. This initiative will serve as an
ideal platform for forging the much-needed partnerships
and networks. It will also enable smalls firms to not only
access markets and capital, but also benefit from
knowledge networks for their innovation activities.
The Government of Kenya is open to playing a central role
in furthering the objectives of the Platform and will
continue to collaborate with other countries to level the
entrepreneurship landscape.
Thank you.

Translate »