How to nurture our young entrepreneurs
Africa has a young, vibrant economy full of ideas, energy, innovation and the drive to succeed.
If this seems like a refreshing take on things, that is because it is – we see the region characterised far more often as poor and needy from the outside, and as corrupt and dysfunctional from within.
The failure of Africa to characterise itself as a region of inspiration and promise, both within its own borders and to the world outside, is a huge missed opportunity.
I am lucky through my work to be face to face with exciting young entrepreneurs every day, so this is the reality I know far more than any other.
Not only do I know it is there, but I also see it as one of the surest paths to economic and social development.
But not only should this be the aspect of Africa that we promote, it should also gain a greater share of our support because for all the ideas, motivation and expertise that young entrepreneurs exhibit, there are three things they simply do not have.
The first of these is experience. There is no shortcut to getting that, but learning from someone who has already walked the journey can drastically accelerate the process.
That is why mentorship is so important. Our existing business leaders need to step in and devote some time in their busy schedules to sharing their vast experience with the young entrepreneurs following in their footsteps.
They also need to be prepared to open their address books for these young people and help them to widen their networks and get business.
The second missing link for a young African entrepreneur is credibility. Their target market and their potential clients do not take them seriously or have faith that they can do the job.
Perhaps we have listened to too many stories of cheats and briefcase companies to trust young entrepreneurs easily.
That is where enterprise and incubation centres can fill the gap, giving young businesses not only a physical address but also the backing of a larger and more credible brand.
The third and final gap for a young African entrepreneur – although many people mistakenly put it first – is, of course, capital.
There is plenty of access to capital in East Africa in the form of credit, but not for a risky young entrepreneur.
The entrepreneur either has a track record that is too short, no security or their business is just too innovative and unproven for a bank to stomach.
That is where venture capital financing can come in.
Venture capital is a form of financing in which the funder takes an agreed percentage of shares in the business and becomes a partner with a direct stake in seeing the business grow.
With this form of financing, many ideas that would never otherwise see the light of day can quickly accelerate into success stories.
So whose role is it to do all of the above things? Many stakeholders have a part to play.
Established entrepreneurs need to take up the mantle of mentorship, both informally and through established mentorship networks.
Existing innovation and enterprise centres need to continue to identify and support the most promising young entrepreneurs in Africa.
Private players and governments need to put up the capital to invest money into young businesses through suitably structured funding avenues.
For example, Uganda’s Youth Venture Capital Fund which was launched in February 2012 with Ush25bn ($10m), should offer structured risk capital in the form of equity rather than providing further loan financing through the banks●