OPINION
Widening Africa ’ s startup ecosystem
By Sean Drake
SEAN DRAKE Sean Henry Drake is the founder of The
Wealth Project - www . thewealthproject . org
The African start-up ecosystem is growing at a rapid pace and will produce large liquidity events for early-stage investors over the next 5-10 years . Africa is the second-largest and second most populous continent on earth with an estimated population in 2016 of 1.2 billion people . With little or no measures in place to address the issue , the 2.4 billion prediction for 2050 is entirely plausible . Across Africa , necessity is the mother of invention . Re-using and re-combining is a way of life and , in many cases , the lack of infrastructure , even old infrastructure , gives Africa a “ clean slate ” for new solutions .
South African government statistics show that small businesses currently contribute 57 percent to the country ’ s gross domestic product and account for 56 percent of employment , 77 percent in the “ informal sector .”
• According to VC4Africa , a large community of very-early-stage startups and investors , investments in startups listed on the platform more than doubled in 2014 , rising from $ 12 million to $ 26.9 million , while the average investment grew from $ 130,000 to more than $ 200,000 .
• According to VC4Africa , the increase of capital is driven by three key trends : growing interest in startups from the African diaspora , the rise of local angel investors , and an increase in cross-border investments .
Entrepreneurs contribution to GDP Confidence in both domestic and global economic prospects remains relatively bouyant , with 71 % of global entrepreneurs feeling optimistic about the economic direction of their domestic market . 66 % feel good about the economic direction of the global economy on the whole . Those in China , India and Middle East / North Africa are almost twice as optimistic as those in France , Australia and Japan . Entrepreneurship and Job Creation
2015 Scenario : 47 % of global entrepreneurs expect to increase their total global workforce in the next 12 months , while 49 % expect their workforce to remain the same size . But only 4 % think it will decrease . 77 % of our roster of the world ’ s most dynamic entrepreneurs — EY Entrepreneur Of The Year participants — expect to increase their total global workforce in 2015 . Either way , entrepreneurs are clearly leading the way when it comes to expanding their workforce .
Another EY report , the April 2015 Capital Confidence Barometer , which tracks job creation in large public and privately held companies in 54 countries , shows that only 29 % of 1,600 senior executives surveyed expect to create jobs or hire in the next 12 months . Among those entrepreneurs who anticipate adding talent , the expected average increase to employee numbers is 17 %. Chinese entrepreneurs are most confident about their workforce growth — with 67 % expecting to add people in the next 12 months , followed by entrepreneurs in Sub Saharan Africa ( 61 %), India ( 54 %) and Mexico ( 52 %). Brazil and Japan are least likely to forecast workforce growth ( 30 % and 33 % respectively ). To conclude , Africa needs to focus on investing in soft infrastructure , especially education and Technology as an access to global leadership in Entrepreneurship .
2016 | Business Times Africa 23