South Africa, Tunisia and Botswana show the most promising ecosystems for entrepreneurs in Africa, according to Analyse Africa’s analysis of data from the 2016 Global Entrepreneurship Index.
In South Africa, for example, the cost of starting a business has dropped significantly in recent years, from approximately $355 in 2010 to $21 in 2015. Simplifications to the the registration process for starting a new company have helped to reduce costs. It also ranks first in Africa for the availability of the latest technologies, according to the Global Competitiveness Report.
Tunisia also performs well within Africa. Its advantage is the high quality of maths and science education available, ranking third in the region for 2015-2016. Access to finance has also improved. In 2015, 11.8 percent of Global Competitiveness Survey respondents cited this is as the greatest problem facing entrepreneurs in the country, compared to 17.7 percent in 2010.
Microcred Tunisia, which provides financial services to people excluded or underserved by the traditional financial system, is one example of a successful financing vehicle geared towards start-ups. It launched a loan product called Irada in partnership with Silatech, a regional social initiative, to provide entrepreneurship opportunities for young people. The aim is to finance 450 young start-up entrepreneurs over three years.
In the World Bank’s Doing Business Report, Botswana has consistently been ranked as one of the top destinations to do business in Africa, ranking in the top 4 since 2009. Botswana has also seen the number of new firms increase significantly, averaging a 9 percent increase per year between 2009 and 2014. It also records the highest new business density in Africa with 13.11 new registrations per 1,000 adults.
Nevertheless, the challenges remain significant. In recent years these three countries have also been struggling with high youth unemployment. In South Africa it stands at 50 percent, Tunisia 34.5 percent, and in Botswana 29.4 percent.
All three countries also displayed lower rates of GDP growth than the African average of 3.6 percent through 2015, with Botswana at 2.59 percent , South Africa at 1.40 percent , and Tunisia at 1 percent. The hope is that fostering entrepreneurship will help solve the high youth unemployment rates, also providing a boost to growth
Although these countries have shown marked progress, Africa as a whole compares poorly to the rest of the world. Regionally, it ranks below the world average across all indicators for the Global Entrepreneurial Index. There are still many barriers that hinder new businesses such as corruption, poor education and lack of access to finance.
For instance the 2015 Corruption Perception Index, shows that 46 African countries have a serious problem with public sector corruption. The gross enrolment ratio in secondary education is was under 50 percent across the region. This is significantly lower than other regions, with the next lowest being Asia at 75 percent.
And in the Global Competitiveness Report 2015-2016, more than half of the African countries surveyed cited access to finance as the most problematic factor facing new businesses.
Clearly there is still a long way to go before entrepreneurship can make a dent in the region’s underemployment problem, but concerted efforts to improve the environment are underway.
Source: This Is Africa Online