Another challenge that policymakers are grappling with is how to generate more jobs for Africa’s burgeoning youth demographic in an increasingly competitive global environment. From sustainability focused startups to MSMEs and family-owned businesses, African entrepreneurs have taken on the myriad challenges facing the continent to build a more sustainable and economically prosperous future. Thus, Chapter 3 is dedicated to the entrepreneurs and small businesses that are responsible for most job creation on the continent, and the supportive policies needed to foster these ventures and to sustain the high-growth potential of African entrepreneurship.
The Science, Technology and Innovation Strategy for Africa (STISA-2024) is the first of the African Union's ten-year incremental phasing strategies to respond to the demand for science, technology and innovation to impact across critical sectors such as agriculture, energy, environment, health, infrastructure development, mining, security and water among others.
Guide for Small and Medium-Sized Enterprises in the ECOWAS Region
This guide was created to help small business owners, traders and producers, especially women, in the Economic Community of West African States (ECOWAS) understand how the African Continental Free Trade Area (AfCFTA) works. The guide complements the presentations prepared for the ECOWAS-led workshops in April 2021.
Africa boasts the world’s highest rates of entrepreneurship, with more than 1 in 5 working-age Africans starting a new business and more than three-quarters of the youth planning to start one within five years. We must begin to reconsider the models of entrepreneurship support that exist in Africa to ensure that young people are not being blinded by a false narrative of future wealth and stability. Academic institutions, governments, donors, and capital providers should be more intentional about promoting a more enabling environment for entrepreneurship to thrive with the intention of creating jobs on a massive scale in Africa.
This report focuses on the role of digital entrepreneurship in the sustainable development of Africa, identifying the most promising sectors for development and exploring the opportunities and challenges in each. The fi ndings and conclusions provide an important framework for further collaboration with other stakeholders in Africa. It was developed by the United Nations Development Programme (UNDP) Istanbul International Center for Private Sector in Development (ICPSD) in partnership with the HP Foundation and the African Union Commission.
Although Africa’s successful firms differ widely in their geographic and sector focus, what they have in common is the imagination to see the continent’s unmet needs as opportunities for entrepreneurship, and the long-term commitment required to build businesses of meaningful scale. Indeed, the fastestgrowing and most profitable businesses in Africa typically see challenges as a spur for innovation. For entrepreneurs ready to solve problems and innovate to meet Africa’s unmet needs there is tremendous opportunity for growth.
The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, subregional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.
Despite the growing number of women and youth entrepreneurs in Africa, they continue to face significant challenges that hinder their growth and success. A report by the African Development Bank in November 2023 highlighted some of the key barriers:
- Limited access to finance due to lack of collateral, credit history, and gender bias
- Inadequate business skills and entrepreneurial training
- Lack of mentorship and networking opportunities
- Sociocultural norms and gender stereotypes that limit women's participation in business
- Insufficient access to markets and technology
Success Stories: Women and Youth Entrepreneurs Making an Impact
Despite the challenges, there are numerous inspiring stories of women and youth entrepreneurs who are driving innovation, creating jobs, and making a positive impact in their communities. Here are a few examples:
- In January 2024, Ecobarter, a Nigerian startup founded by Oluwadamilola Soyombo, won the YouthADAPT Challenge for its innovative solution to combat urban flooding by transforming waste into value. The company collects and recycles plastic waste, which is then used to create eco-friendly paving tiles for flood-prone areas.
- Bleaglee Waste Management, a Cameroonian enterprise founded by Juveline Ngum Ngwa, is using drones and working with waste collectors to reduce waste and flood risk for urban communities. The company won the YouthADAPT Challenge in 2021 and has since expanded its operations.
- Kimplanter Seedlings and Nurseries Ltd., a Kenyan company founded by Carolyne Mwangi, is helping farmers adapt to climate change by providing a range of climate-resilient seedlings. The company won the YouthADAPT Challenge in 2021, which allowed it to expand its offerings and reach more farmers.
These are just a few examples of the many women and youth entrepreneurs who are driving innovation and making a positive impact in Africa, despite the challenges they face.
Government Initiatives to Support Women and Youth Entrepreneurship
African governments and international organizations are increasingly recognizing the importance of supporting women and youth entrepreneurship as a key driver of economic growth and development. Here are some recent initiatives:
- In December 2023, the United States African Development Foundation (USADF) launched the second cycle of its African Women Entrepreneurs Program-Reimagined grant, which provides funding and support to women-owned businesses in seven African countries.
- The African Development Bank's Affirmative Finance Action for Women in Africa (AFAWA) initiative aims to reduce the $42 billion financing gap faced by women entrepreneurs in Africa through a multi-pronged approach.
- The Global Center on Adaptation and the African Development Bank are implementing the Youth Entrepreneurship and Adaptation Jobs pillar of the Africa Adaptation Acceleration Program, which aims to promote innovation and inclusive growth for youth in climate-resilient jobs.
While these initiatives are a step in the right direction, more needs to be done to create an enabling environment for women and youth entrepreneurs to thrive. This includes addressing systemic barriers, providing targeted support, and fostering a culture of entrepreneurship and innovation.
As Africa's women and youth continue to drive the continent's entrepreneurial ecosystem forward, it is crucial that they receive the necessary support to overcome challenges and achieve their full potential. By investing in women and youth entrepreneurship, Africa can unlock a powerful engine for inclusive economic growth and sustainable development.
NEWS SOURCES
- https://www.afdb.org/en/news-and-events/press-releases/african-development-bank-report-highlights-challenges-and-opportunities-women-entrepreneurs-africa-53291
- https://opportunitydesk.org/2023/12/28/usadf-african-women-entrepreneurs-program-reimagined-grant-2024/
- https://au.int/en/newsevents/20240308/invest-women-financial-and-economic-inclusion-forum-international-womens-day
- https://gca.org/youthadaptchallenge/
In January 2024, the Secretary-General of the AfCFTA announced that 24 new countries will join the seven already participating in the Guided Trade Initiative, the pilot phase of the free-trade project that began in October 2022. This expansion aims to boost intra-regional trade and act as a catalyst for industrialization and economic growth in Africa.
The World Bank estimates that the AfCFTA could increase the continent's real income by up to 9% by 2035 if all policies under consideration regarding investment, e-commerce, and intellectual property are adopted. The free-trade agreement is also expected to make Africa more resilient to external shocks by increasing intra-regional trade and attracting more foreign direct investment (FDI).
Challenges and Opportunities for Intra-African Trade
The AfCFTA, which commenced trading in January 2021, aims to create the world's largest free trade area with a potential market of 1.3 billion people and a combined GDP of $3.4 trillion. However, progress has been slower than expected due to various obstacles.
The lack of logistics infrastructure, for one, remains a medium-term brake on African countries' ability to increase exports within the continent. Additionally, some argue that African economies do not complement each other well due to varying stages of economic development.
African ministers meeting in Niger's capital Niamey in November 2023 also called for accelerating economic diversification, value addition, and structural transformation to boost intra-African trade. The United Nations Economic Commission for Africa (UNECA) also emphasised the need to increase regional trade to spur Africa's integrated development.
On the upside, real progress has been made in reducing Africa's dependency on the rest of the world. The Pan-African Payment and Settlement System (PAPSS), launched in September 2021, allows cross-border transactions to avoid using third currencies, resulting in annual savings of USD 5 billion and faster transactions.
NEWS SOURCES
- https://www.downtoearth.org.in/news/world/com2024-african-ministers-express-worry-after-report-shows-poor-intra-african-trade-94863
- https://www.un.org/africarenewal/magazine/january-2023/africa%E2%80%99s-free-trade-track-more-efforts-needed
- https://www.ifpri.org/news-release/new-report-african-trade-highlights-opportunities-challenges-trade-expansion
- https://www.cov.com/news-and-insights/insights/2024/02/africa-technology-regulatory-update-adoption-of-the-afcfta-protocol-on-digital-trade
- https://economic-research.bnpparibas.com/Media-Library/en-US/Will-Africa-free-trade-take-2024-2/8/2024,c40476
- https://english.news.cn/africa/20240303/285b37ccadb94daa9b06014daffdce13/c.html
Africa is on the cusp of an e-commerce boom, with the number of online shoppers projected to surpass 500 million by 2025, representing a steady 17% compound annual growth rate.
This rapid adoption of digital commerce is being driven by increasing internet penetration, the ubiquity of mobile phones, and a young, tech-savvy population eager to embrace online shopping.
Africa leads the world in mobile internet usage, with 69% of its web traffic coming from mobile devices in 2021 - 13% higher than the global average. This mobile-first environment is shaping the trajectory of e-commerce on the continent. Entrepreneurs are leveraging social media platforms like Facebook, Instagram and WhatsApp to reach customers, showcase products and facilitate sales.
Local online marketplaces are also gaining prominence, catering to regional tastes and bridging the gap between sellers and consumers. However, challenges remain that are hindering the full potential of e-commerce in Africa.
Barriers to E-Commerce Adoption
Despite the promising growth, Africa still lags other regions in e-commerce adoption. A study by Mobile for Development (M4D) highlighted several barriers:
- Poor internet connectivity and high data costs
- Low affordability of smartphones
- Lack of trust in online transactions
- Unregulated online retail environment
- Insufficient logistics and delivery solutions
- Preference for cash payments over digital methods
The study found that up to 97% of micro, small and medium enterprises (MSMEs) reported increased sales after adopting e-commerce, especially in Ghana and Kenya. However, most still prefer selling via social media rather than dedicated e-commerce platforms due to higher trust, flexibility and lower commissions.
Experts argue that building trust through regulations on cybersecurity, data privacy and consumer protection is critical. Improving digital literacy among MSMEs and investing in logistics infrastructure are also key to unlocking Africa's e-commerce potential.
New Regional Strategies Aim to Boost E-Commerce
To address these challenges, regional bodies are developing strategies to accelerate e-commerce growth:
- The Economic Community of West African States (ECOWAS) recently endorsed a regional e-commerce strategy to diversify economies and create jobs.
- It aims to build trust, harmonize regulations, promote digital payments, and empower vulnerable groups like women and informal cross-border traders.
- The African Union is developing a continent-wide e-commerce strategy ahead of the African Continental Free Trade Area (AfCFTA). This will complement national and regional strategies to create a thriving digital market.
- UNCTAD has been supporting these efforts through its eTrade Readiness Assessments, which identify key barriers and provide policy recommendations.
Intellectual Property Protection Becomes Paramount
As more businesses shift online, protecting intellectual property rights has become a pressing concern. Counterfeit products sold on e-commerce platforms can undermine consumer trust and harm brand reputations.
African countries are strengthening IP laws and enforcement in the digital realm. However, businesses must also be proactive in monitoring online marketplaces, using authentication technologies, and educating consumers on the risks of counterfeits.
China-Africa E-Commerce Cooperation Grows
Cross-border e-commerce is becoming an important engine for China-Africa economic cooperation. Chinese platforms like Kilimall, Alibaba.com, Kikuu, and Shein are entering the African market, while African goods like coffee, tea, and cashew nuts are finding their way to Chinese consumers.
Live-streaming events and online shopping festivals have boosted sales of African products in China. For example, sales of Kenyan black tea and Ethiopian coffee surged during a recent festival. Chinese companies are also investing in African e-commerce infrastructure and creating jobs.
As Africa's e-commerce landscape matures, cross-border cooperation with China and other partners can help overcome barriers and unlock the sector's full potential. With the right strategies, investments and policy frameworks, e-commerce can be a catalyst for Africa's economic growth in the digital era.
NEWS SOURCES
- https://www.trade.gov/rise-ecommerce-africa
- https://www.trade.gov/country-commercial-guides/south-africa-ecommerce
- https://www.prnewswire.com/news-releases/b2c-e-commerce-market-in-south-africa-cross-border-online-shopping-was-led-by-millennials-and-generation-x-in-south-africa-in-2020-301496579.html
- https://eng.yidaiyilu.gov.cn/p/313953.html
- https://unctad.org/news/new-strategy-set-boost-e-commerce-west-africa
- https://intellectual-property-helpdesk.ec.europa.eu/news-events/news/intellectual-property-protection-and-e-commerce-platforms-africa-2023-10-04_en
The food security situation in Africa deteriorated significantly in 2021, with the continent having the highest prevalence of food insecurity globally. An estimated 322 million Africans faced severe food insecurity in 2021 - 21.5 million more than in 2020. The largest increases occurred in sub-Saharan Africa, particularly in Middle Africa. Northern Africa also saw a concerning rise in food insecurity levels from 2020 to 2021.
Key drivers include climate shocks, conflict, economic downturns, and rising costs of food. The ongoing war in Ukraine has exacerbated the crisis by disrupting grain exports to Africa. With food prices remaining high, access to adequate food is increasingly out of reach for millions of households.
Agribusiness Confidence Drops in South Africa
Sentiment among South Africa's agricultural businesses slumped to its lowest level since the Covid-19 pandemic in the fourth quarter of 2023. An index compiled by the Agricultural Business Chamber (Agbiz) dropped to 40 points, down from 50 in the previous quarter. Port inefficiencies, poor road and rail infrastructure, and ongoing energy constraints weighed heavily on the outlook.
This souring of confidence coincided with a surprise 7.4% quarter-on-quarter plunge in agricultural GDP in the second half of 2023, despite the broader economy managing to expand by 0.6% over the year. The sector faces massive challenges that are hindering its performance and dampening the business mood.
World Bank Ramps Up Food Crisis Response
To address rising food insecurity, the World Bank has significantly scaled up its support to countries across Africa through various programs and financing facilities. Major initiatives include:
- The $2.75 billion Food Systems Resilience Program for Eastern and Southern Africa, aiming to increase the resilience of the region's food systems.
- The $766 million West Africa Food Systems Resilience Program working to boost preparedness against food insecurity in the region.
- Multiple country-specific projects to provide emergency food assistance, expand irrigation, increase agricultural productivity and build resilience. For example, 329,000 farmers in the Central African Republic received seeds and training through a $50 million project.
However, the Global Report on Food Crises 2023 highlighted that despite substantial increases in humanitarian and development funding to food sectors, global acute food insecurity still climbed to a five-year high in 2022. More coherence between humanitarian and development efforts is needed to address the root causes.
Other Notable Developments
- The UN warned that mass violence and human rights abuses continue unabated in South Sudan, threatening the country's stability ahead of landmark elections. The dire humanitarian situation is expected to worsen.
- Malaria cases spiked among farm workers and farming communities in South Africa's Limpopo province.
- Minimum wages for farm workers in South Africa were raised from R69 to R105 per day, drawing mixed reactions from unions and farmers.
While some positive efforts are underway, the overall picture emerging is that of an escalating food crisis across Africa, increasingly interlinked with other shocks like conflict, climate change and economic fragility. Strengthening the resilience of agrifood systems while addressing the immediate food needs of the most vulnerable will be critical going forward.
NEWS SOURCES
- https://www.fao.org/newsroom/detail/un-report-global-hunger-SOFI-2022-FAO/en
- https://www.news24.com/fin24/economy/south-africa/agribusiness-confidence-slumps-to-lowest-since-covid-19-pandemic-20230113 https://www.engineeringnews.co.za/article/agricultural-gdp-plunges-74-in-q3-2023-12-06 https://www.worldbank.org/en/topic/agriculture/brief/food-security-update
- https://news.un.org/en/story/2023/03/1134027 https://www.farmersweekly.co.za/agri-news/south-africa/malaria-cases-spike-in-limpopo-farming-communities/