The role of Government in driving innovation and entrepreneurship?

“Let me clarify this, policy does not drive innovation. People drive innovation.” Strong opening words from Imad Mesdoua at the Africa Technology Business Forum’s Policy Panel in June. To most, innovation and entrepreneurship seems like a quintessential personal activity. An individual or a small group has an idea, spots a niche in the market and decides to set up a business. What does any of this have to do with Government?

Of course this has a lot to do with Government. Moderator Gosbert Chagula referred to Government as ‘the ever-present illusive force causing mischief in the background.’ Not only does Government set regulations and policy that can stifle or spur innovation, is responsible for putting in place basic infrastructure, it can also provide direct access to finance. The Global Entrepreneurship Monitor Programme (GEM) has found that almost one third of social enterprises rely directly on Government funding: “Governments are not equipped to solve all of the world’s problems — nor should they be — and are looking for innovative solutions from the private sector. Social entrepreneurs will play a vital role.”

Rather unsurprisingly, given the abundant need for innovation even to complete the most basic tasks, Africa has one of the highest number of entrepreneurs in the world: more than three times that of Europe. Many of them are social entrepreneurs in the sense that they are aiming to tackle fundamental social problems such as improving education or healthcare. On the flip side, the GEM data also shows, that the majority of entrepreneurship is necessity driven instead of opportunity driven and that the failure rate is more than four times higher than in the West (16% average whereas US and Europe between 3–4%).

It is evident that the start up spirit is alive and well on the continent, but that the struggle is still real. A clear signal and data-driven outcry for Governments to put in place basic enabling infrastructure. We are talking transportation, clear regulations, transparent taxation and electricity supply. It is not enough to be able to innovate, but start-ups must get the tools to mature and grow.

Government support is key for start-ups and businesses.

As usual, some countries are performing better than others. Malawi is sending the right signal with its ‘Digital Foundation Programme’ to modernize government operations, increase internet access across the country and train youth on digital skills. Kofi Addo, Commissioner for Trade and Investment at the Ghana High Commission, for example explained during the ATBN Forum how his Government aims to use ICT to increase transparency and support businesses through effots in land mapping and digitalisation of records. Ghana is hoping this and a range of other measures

will improve the business environment and attract investment. Kenya and Nigeria are also commonly cited as open for entrepreneurs with a relative ease of going about your business and even supportive signals from a policy perspective. On the other hand, restrictions on the use of the Internet in places like Cameroon, Democratic Republic of Congo or Ethiopia make life difficult for young start-ups.

This would echo Andrew Sekandi’s point who stressed throughout the forum that it comes down to the values a Government embodies and that the right policies will flow from that. Government is responsible for the overall infrastructure in a country, and this includes access to education, decent roads and other transportation links. There is also a case for supporting basic technology development, at the university level, for example, because of the spillovers or externalities throughout the economy.

Creating an enabling environment for women-led businesses

One area where Government could really push the envelope is to actively support women entrepreneurs, who still have a considerably harder time than their male counterpart to start, nurture and scale their enterprises.

The entrepreneurial resilience and spirit of African women is unmatched by the rest of the world. The Global Entrepreneurship Monitor programme (GEM) cites Ghana, Zambia, Uganda and Nigeria as one of the 10 countries where there are more women than men starting businesses.

While initiatives such as ATBN’s women-focused accelerator #HerFutureAfrica are working to equip women with the right tools and network access to increase their chances of success, Governments have an important role to play in creating an enabling environment around technology through increasing stable internet access, expanding IT literacy and digital education which would especially benefit women entrepreneurs. The OECD’s recently published Future of Business Survey suggests that women-run businesses are more likely to leverage online tools to make their businesses succeed. Stories such as the one of Saudat Salami, who grew revenues in her pre-prep cooking business in Lagos by 30% after advertising on Facebook, are clear indicators that the future of business is digital. Especially in Africa, Facebook is quickly become a dominant advertising platform due to its accessibility on mobile phones, the dominant mode of online access for many customers across the continent.

Brainstorming at the #HerFutureAfrica Business Innovation Bootcamp

Governments around the world need to embrace technology and upskill their policy makers to support these drivers of innovation, who, in turn, will solve a lot of their headaches, such as youth unemployment, crime, health and education challenges. African entrepreneurs must be given the chance to succeed because of their Governments not despite their Governments.

First published on the Africa Business Technology Network Blog

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