Made in Africa: Unleashing the continent’s entrepreneurial potential through digitalisation
Africa is a continent of entrepreneurs. A study by the African Development Bank (AfDB), the Organisation for Economic Co-operation and Development (OECD), and the United Nations Development Programme (UNDP) found that in 2017 22 percent of Africa’s working-age population were starting or running new businesses — the highest entrepreneurship rate in the world. For women the number is even higher: 27 percent of Africa’s female adult population is engaged in early-stage entrepreneurial activities. This means that African women are twice as likely to start a business than women elsewhere in the world.
Digital technologies offer many opportunities for these entrepreneurs, according to Treasure Maphanga, Chief Operating Officer of African Electronic Trade Group (Ae Trade), a social enterprise that aims to leverage the digital transformation to increase intra- and inter-African trade. “Digitalisation is creating new marketplaces that can help local businesses to scale up. In turn, these businesses are creating many new jobs,” Maphanga said. Ae Trade Group supports Small and Medium Enterprises (SMEs) across the continent to sell their products through online platforms.
“Unfortunately, there are still important gaps to fill when it comes to access to these technologies,” Maphanga explained. “Supporting digital entrepreneurship in Africa means bringing down barriers through the entire ecosystem, including those related to connectivity, payment systems, data protection, financial inclusion, and logistics.” This is why, according to Maphanga, entrepreneurs need a comprehensive support system that includes capacity building, affordable credit, and facilitated access to new markets.
Together with the Southern Africa Innovation Support (SAIS) Programme, Ae Trade Group is co-hosting the side session “Fostering Africa-Europe peer-to-peer partnerships for inclusive digital transformation” at the upcoming Africa-Europe D4D Hub Multi-Stakeholder Forum, which will take place online on 18 March.
The promise of cross-border e-trade
Since 2018, the African Union and its Member States have been engaged in setting up the African Continental Free Trade Area (AfCFTA), which aims to increase trade of goods, commodities, and services across the continent. “The African Union has been working on regional integration for a long time,” explained Maphanga, “and finally in 2018 there was impetus to create the AfCFTA, a breakthrough that offers businesses so many possibilities for scale.”
According to Dr. Amani Abou-Zeid, African Union Commissioner for Infrastructure and Energy, the AfCFTA seeks to create an integrated market of 1.27 billion consumers (expected to reach 1.7 billion by 2030), with an aggregated gross domestic product of up to $3.4 trillion. Within this context, the creation of an African digital single market could become a game-changer for African businesses. Harmonised rules and regulations can enable a common space for innovation and e-trade.
Bringing the private sector to the table
For Maphanga, the private sector is a key player with a very important role to play for entrepreneurship to thrive in the African context: “The private sector can play the role of investor, innovator, and skills developer. As such, African enterprises have the opportunity to work together with governments to ensure that the policy environment is favourable for their activities.”
Connectivity is an example of potential collaboration. “Governments have an interest in increasing access to Internet, so they could facilitate an enabling environment for the private sector to invest in connectivity projects,” Maphanga said.
Fostering peer-to-peer intercontinental exchanges
According to Maphanga, there are plenty of opportunities for African and European companies to work together. “Companies in Europe might have the technology, some of them might also have some experience working in Africa. But partnering with an African enterprise could make them more trusted by the local ecosystem,” she said.
At the same time, exchanges of experience are valuable. Maphanga noted that Africa’s digital innovation ecosystem is becoming stronger and that there are many emerging actors, but that it remains fragmented. “Europe has a very active and vibrant ecosystem, so it is interesting to build bridges, share experiences, and learn from each other.”
What policies are needed to boost entrepreneurship in Africa? How can African and European actors work together to support digital innovation? Register for the Africa-Europe D4D Hub Multi-Stakeholder Forum here to join the discussion.