Entrepreneurship Hubs: Exploring Their Place in the Africa Development Story
Hubs, accelerators, incubators… where is the band marching to?
I read a book recently that described an era of believers who see private sector (start-up and SME) growth as the path to Africa’s renaissance. It described them almost as unfortunate misguided fools who were so optimistic they couldn’t see the sad truth that was right before their eyes. It was painful to read. I am one of these fools. Frustrated with the previous models of development that we Africans have pegged our hopes on in the past and, to be fair, the present; from democracy and governments building sturdy economic structures to expertly placed aid from the seasoned specialists running development agencies; I have seen the burgeoning of a grassroots led private sector as the only way to get Africans to a place of economic independence. A place where they can discern the future they want for themselves and work to bring it to fruition.
52% 10 year CAGR on investments in Africa’s entrepreneurs, Briter Bridges.
Looking at the continent’s underwhelming development story over the past few decades, private sector growth has seemed to me the most obvious model to employ considering the lack of success with the preceding models of development. It is clear I have not been alone in this belief. Africa has seen an exponential increase in investment in start-ups and Small and Medium sized Enterprises (SMEs) in the last decade. Briter Bridges reports a 52% 10 year cumulative annual growth rate on investments in Africa’s entrepreneurs, growing from less than USD 100m in 2013 to USD 5.4b in 2022. The number of entrepreneurship hubs dotted across the continent has risen to 1031 in 2019 from 90 in 2014. There have been multiple schools, hubs, apps and other forms of ecosystem support set up with an explicit objective of imparting skills to young Africans that will increase the number and quality of new businesses they create.
The dust is settling around the drive to ‘entrepreneurialise’ Africa.
All these developments deserve applause. It is almost as if knowledge and exposure that was once the preserve of elite MBA classrooms and alumni networks is steadily getting democratised. But, with that applause should come a pause. The dust is settling around the drive to ‘entrepreneurialise’ Africa. The secret sauce of success on the business front has been spilled. There is need for a pulse check on the endeavours of the last decade and a half. What can we learn from all the investment that’s gone into this? Are we creating the level of impact we set out to create? What can we do better? Unfortunately in this sector, as in most other sectors on the continent, data is a scarce resource. This makes the job of building an understanding around a phenomenon such as this difficult.
A few years ago I taught a class of MBAs a course on doing business in Africa. I highlighted that one of the biggest challenges they’ll face running a business in Africa is a lack of information to aid decision making. They’ll struggle with understanding their position in the market and consequently struggle with designing and executing a fitting strategy. How should they address this, they asked? Invest in collecting and managing the data you need yourselves. This lesson also applies to building an understanding of the wider impact of entrepreneurship ecosystems on the African development story.
Thankfully, there are already a few organisations that have recognized the value of data and are starting to gather and share it openly for researchers and analysts to use. They remain, for the moment though, few and far between. More sector players, from universities, to independent innovation hubs, to venture capitalist driven start-up hubs, to government funded entrepreneurship centres, etc, need to work both individually and collectively to shed light on the wider impact of the ecosystem they are part of. If we truly do mean the ambitious mission statements we espouse about working steadily towards an ‘African renaissance’, the task of defining what progress looks like and checking whether we are within its bounds falls on us.
As a longstanding stakeholder and cheerleader of the African entrepreneurial ecosystem who is also a propagator of evidence-based resource allocation (blame the accounting background), I’ve become an inadvertent student of the connections between our work, enabling private sector growth, and the wider development story. Over the next few months (perhaps longer), I’ll share what I’m learning here. I hope it sparks interest and action in others as well.
Next theme: the history of business incubation in general and on the continent.
