Understanding Entrepreneurship in Africa

Being an MIT student, of course I am interested in learning about entrepreneurship. Other than a lot of successful stories in US (coming out of the valley and Boston yay!), we most often hear about Israel, China, Korea, but rarely do we hear about what the entrepreneurial landscape is like in Africa.

By attending the Africa Study tour class lecture series, I opened my mind and heard successful stories and watched product demo videos on both big corporations and individuals who figured out innovative ways to improve human interaction and business practices. For example, learning about how M-Pesa gained traction in Kenya is a really fascinating story, considering some participants live in areas without even stable electricity. The essence of innovation is to identify the need and figure out the technology to fulfill the need. M-Pesa is not a fancy ISO app as most people can’t afford smart phones in Kenya; it is simply a text messaging system that enables easy money transfer between people and business.

Entrepreneurship in Africa still faces a lot of challenges.

First of all, it is limited access to capital. Statistics shows that 45% of funding comes from personal and family loans, and once this resource is exhausted, it is very difficult for entrepreneur to source additional funding in another category.

Secondly, the supply of skilled talent is limited. The informal sector is pervasive in Africa; as a result the continent sees a significant amount of informal entrepreneurship. This reality often prevents SMEs from professionalising and thus scaling their operations. In cases where entrepreneurs have more technical backgrounds, the need for experienced managerial talent to complement a company’s technical talent is all the more critical.

What’s more, the unreliable and costly infrastructure still is a big hurdle.

Despite all the difficulty, entrepreneurship still flourished on the continent. We will be meeting with energy officials and some entrepreneurs during our study tour. I very much look forward to talking to people on the ground and gaining deeper understanding of this interesting issue.

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