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