You have most likely heard that entrepreneurs will save Africa. It’s a lie. Most likely not a deliberate lie, but it’s an exaggerated optimism. Startups can’t unlock Africa’s potential unless they have a path to becoming big businesses that can create significant economic value, including employing millions of Africa’s youngsters. To deliver that path, strong business managers are necessary to unlatch the crippling scalability and infrastructure bottlenecks.
You Would Never Guess What African Startups Need Most To Scale
Entrepreneurship is booming in Africa. From Addis Ababa to Accra, Africans are creating businesses that are changing their lives and their communities. This movement is being met with favorable government and private sector programs; and is forming ecosystems that will further fuel the continent’s entrepreneurial movement. Unfortunately, strong business talent or the lack thereof is already stifling this rising tide.
According to a research conducted by Rippleworks, talent acquisition is the most prevalent and acute challenge faced by social entrepreneurs in emerging markets, including entrepreneurs in Africa. Though one may think that hiring for technical positions is the toughest obstacle entrepreneurs face, it is not. Overwhelmingly, entrepreneurs are desperate for sales and marketing help. Specifically, their research shows that senior business and middle managers are particularly difficult and time-intensive to hire. Consistently, they point to the same core go-to-market capabilities – customer acquisition, business development, and sales & field management for meeting growth expectations.
*Overwhelmingly, entrepreneurs are desperate for sales and marketing help. Specifically, their research shows that senior business and middle managers are particularly difficult and time-intensive to hire.
Are small businesses in Africa doomed to remain small?
When I visited my home town in Burkina Faso in 2013, I stopped by my favorite childhood local shop. Though the shop opened over 30-years ago, besides minor inventory updates and optical changes, it had remained the same. Even the same cashier (and owner) who sold me candies over 20 years ago, was behind the check registrar. If you have lived long enough in Africa, you probably have plenty of similar examples to reference. The continent is full of small businesses for whom remaining small appears to be a fatality.
Fortunately, the tides are changing slowly but surely. For instance, some family businesses are finding a renewed growth through leadership changes with younger and more educated generations. Western educated Africans are also returning home to start businesses with the goal of making them national and regional powerhouses. I caught up recently, with one of those who had returned home from the US to start a trucking business. When asked why scaling appeared to be such a challenge for African small business owners, he replied that many business owners lack the knowledge and understanding to tap into an increasingly sophisticated business ecosystem (including financial, business development, supply chain and marketing) that exists to support their growth. To these challenges, venture capitalist Vusi Thembekwayo adds in a very charismatic Tedx speech: culture. He argues that Africans have had and promoted, for too long, a conversation that makes it “ok to just start a business”. While diverse inputs are going to be needed to transform the small business narrative around Africa, many bold and bullish business leaders would be necessary to drive this transformation.
*Many business owners lacked the knowledge and understanding to tap into an increasingly sophisticated business ecosystem (including financial, business development, supply chain and marketing) that exist to support their growth.
Globalization Is Knocking on the Door
If Africa is to have a respected seat at the global economic stage, it needs more globally recognized brands. While Africa can be proud of a number of companies that have expanded globally: SABMiller, MTN, Naspers, etc. the global footprint of African brands is almost nonexistent. As an example, not a single African brand is listed with the 500 most respected global brands. Even within Africa, African brands do not perform well compared to international ones. Based on Brand Africa annual brand study across the continent, only MTN is featured in the list of the ten most admired brands in Africa. Programs such as Made in Africa are striving to change this desolate portrait of African brands but much more remains to be done.
In fact, the pressure is increasing for African businesses to operate with a global mindset. Enlightened by the recent effects of global commodity markets, Africa business leaders are also taking note that talent is a global challenge. Per Myafela, CEO of Bizworks, going global was never an option for his company; it was mandatory to remain competitive. Africa is undeniably the next battle ground for global brands. Driven by the statistics and narratives of Africa's rising urbanization and middle class, global brands are manifesting a new interest in Africa. Companies such as L'Oréal, Ikea, GE, Yamaha, IBM, Microsoft, etc. are significantly increasing their investments in the continent. These have included among others, designing and producing products specifically for Africa’s middle class, as well as deploying capital for manufacturing and supply chain development. These global firms are increasingly going to require Africans with world class business leadership skills to manage their operations and investments. Likewise, incumbent African businesses are going to need similar talent to compete effectively.
*The pressure is increasing for African businesses to operate with a global mindset. Enlightened by the recent effects of global commodity markets, Africa business leaders are also taking note that talent is a global challenge.
Want to bridge Africa’s Infrastructure Gap? Develop Stronger Project Managers
One of the biggest bottleneck to Africa’s growth and development is the poor state of its infrastructure. Africa infrastructure gap is estimated to damp the continent’s economic growth by approximately 2% annually. Massive Investments approximated by the World Bank at US$90 billion every year for the next decade are required to address this deficit. As daunting as this may look, African governments, traditional and new development financial institutions, as well as private investors are increasingly mobilizing more funds to solve the energy gap. While funding remains a priority, other issues are plaguing the deployments infrastructure solutions in Africa; chief among which is the lack of strong project managers.
Projects in Africa are simply not getting started, or are being significantly delayed. Per a report by E&Y, nearly three-quarters of infrastructure projects in Africa are not getting off the ground partly because of poor project management. The continent lacks talent who can manage multiple stakeholders and ensure that complex projects run on time, within budget and according to specifications. Assuring that projects starts and are completed on time are key to providing a sustainable solution to Africa’s infrastructure challenge. In fact, this will ensure that current projects deliver returns to investors, thus attracting more investments in the continent. Projects managers
*The continent lacks qualified project managers who can ensure that complex projects run on time, within budget and according to specifications
Entrepreneurs, SMEs, big businesses, and project developers are constrained by the lack of strong and experienced managers. Now more than ever, Africa needs masters of business administration _African MBAs, not to be naively confused with MBA holders_ in order to succeed.