Wiki: As of 2019, approximately 1.3 billion people are living in 54 countries in Africa. It is the world’s poorest inhabited continent. The entire combined GDP is barely a third of the United States. There are a number of reasons for Africa’s poor economy. European colonization and the subsequent challenges created by decolonization and exacerbated by the Cold War, created an environment of economic and social instability. Entrepreneurship is a key to growth.
Global Edge: The first and perhaps most obvious factor affecting entrepreneurship in developing countries is the lack of capital and financial innovation. Many people in these countries have limited personal savings and lack the necessary capital to start their own business. Entrepreneurs must then turn to external financing where they are charged high interest rates due to the risky nature of new business projects.
The African Exponent: Africa boasts of the world’s highest entrepreneurship and female entrepreneurship rates. However, while entrepreneurial potential is high, the contribution to economic growth has been limited. The big question is: Why?
According to the African Development Bank, 22 percent of Africa’s working-age population are starting businesses. This is the highest entrepreneurship rate in the world. Africa’s female entrepreneurship rate is also the highest in the world; 27 percent of the female adult population is engaged in early-stage entrepreneurial activity. This means African women are twice as likely to start a business as women elsewhere in the world.
Gender Inequality: African women make up the majority of entrepreneurs on the continent yet their businesses are generally less profitable and provide fewer jobs than those of males. This problem is traceable to the gendering of work and marginalization of women from the mainstream economy during colonization. Men account for 92% of partners in the top 100 venture capital firms and, unsurprisingly, only 2% of female-founded businesses receive venture capital.
For the African entrepreneurship boom to translate to sustainable and scalable development, gender inequality has to be decisively addressed. Gender equality is an imperative rather than an option in Africa. African women comprise a lot of “survival entrepreneurs” who are pushed into entrepreneurship by unemployment.
Village Enterprise is a highly reputable non-profit that is making a difference. Village Enterprise has started over 48,000 businesses and trained over 185,000 East Africans. Over 75% of our business owners are women. Why is this important? Seven out of ten of the world’s hungry are women and girls. When women are financially empowered, they prioritize things like health care, nutritious food, and education that benefit their families and communities.
Program Outline: Creating Sustainable Businesses. Transforming Lives.
TARGETING – We identify participants for our program who live on under $1.90 a day, have no prior business experience, and are unable to provide for their family’s basic needs
TRAINING – Our business mentors deliver three-four months of business skills and financial literacy training
- BUSINESS SAVINGS GROUPS – 10 businesses (30 entrepreneurs) each
SEED FUNDING – Village Enterprise provides an initial cash grant as seed capital to start the business after the business group develops a business plan with the help of their business mentor
MENTORING – Business mentors guide each new group