Empowering African youth to find meaningful work by starting their own businesses is crucial. With over 600 million people entering the working-age population, the continent needs to create 15 million jobs annually to keep pace, but that is not happening. In light of a job market that cannot keep up, young people in Africa are taking the initiative to create their own opportunities.
Despite facing significant challenges, young people in Africa are launching startups and turning their passion projects into income streams. This bold move is driven by the need to earn a living and a desire to create meaningful change in their communities, especially in the absence of a healthy job market. However, the journey of entrepreneurship is not easy. Although starting a business may seem like a promising solution to the unemployment crisis, it comes with its own difficulties.
Many young entrepreneurs often find themselves navigating without guidance, as they frequently lack the necessary funding, mentorship, and tools to succeed. Furthermore, they face additional obstacles like unreliable infrastructure, complicated government processes, and cultural or societal biases.
Entrepreneurship is more than just having a great idea; it involves navigating a system that often feels stacked against you. While many recognize that entrepreneurship is a valuable tool for creating jobs and increasing incomes, the challenges of starting and running a business in Africa can discourage some young people from pursuing their dreams or cause some to give up early. The critical question is: how can we make this journey smoother? How can we ensure that young entrepreneurs not only survive but thrive? This is a conversation worth having, and let’s begin with this article.
Understanding the Challenges Inhibiting Youth Entrepreneurship
Entrepreneurship often feels like navigating a maze filled with bureaucratic hurdles, limited financial resources, poor infrastructure, and societal pressures.
1. Unfavorable Business Environment
Starting a formal business in Africa can be challenging due to cumbersome and outdated government regulations and processes. This poor business environment is reflected in the large informal sector, where it is often easier to begin selling goods or services without registering, obtaining a tax ID, or committing to operating legally. According to the International Labor Organization, 83% of employment in Africa and 85% in sub-Saharan Africa is informal. Registering a business can take months or even years, depending on the type of business, the specific country, and whether you have connections within the relevant government agency. Additionally, the high costs associated with registration and taxes can further strain limited capital resources.
Corruption leads to significant frustration for young entrepreneurs. Widespread corruption stemming from weak institutions and governance results in bribery and delays in business processes, which effectively discourages young people from starting or sustaining a business. From bribes to inconsistent regulation enforcement, many navigate a system that seems designed to hinder their success rather than support it. Poor governance, fluctuating currencies, inflation, and economic downturns create an unpredictable environment for business investment.
Reduced consumer purchasing power further impacts demand, making it more challenging to sell products or services, especially in communities facing economic hardship. Currently, 429 million people live on less than $2.15 a day. Even large companies struggle to thrive amid the persistence of poverty. Starting a business is one challenge, but the lack of a robust middle class and limited job availability makes it difficult to succeed, often discouraging young entrepreneurs from even attempting to start a business. For those operating on tight margins, these factors can be the difference between survival and closure.
2. Limited Access to Finance
Securing funding is one of the biggest challenges facing African entrepreneurs. At KilSah Consulting, where we strive to empower young entrepreneurs, we have encountered many individuals who struggle to start or grow their businesses due to limited access to financial resources. Traditional banks often overlook these entrepreneurs, requiring collateral and a banking history that many do not have. Those who manage to secure loans frequently face high interest rates, which can burden young business owners.
While alternative funding options such as venture capital and angel investors can be beneficial, they are often not readily available in developing countries or challenging to access, particularly in rural areas or for non-technology-based businesses. As a result, many young entrepreneurs rely primarily on small contributions from friends and family, which is rarely sufficient for sustainably scaling a business.
3. Poor Infrastructure
Infrastructure plays a crucial role in connecting entrepreneurs to their customers. Adequate infrastructure—such as a reliable energy supply, an efficient and safe transportation system, affordable housing, and dependable communication systems—is essential for developing and supporting entrepreneurship. Without electricity, for example, a business cannot operate effectively. Unreliable electricity and poor transportation systems constantly hinder entrepreneurs. Currently, nearly 600 million Africans lack electricity access, accounting for 83% of the global electricity access deficit.
Imagine trying to run an online store, developing an app, managing a production facility, or operating a frozen food store while struggling to stay productive due to frequent power outages. Daily disruptions caused by unstable or nonexistent power can lead to significant losses in productivity.
Inadequate infrastructure also contributes to the digital divide, posing a significant challenge for youth entrepreneurs. While urban centers may have reasonably good internet access, rural areas are often neglected, making it difficult for entrepreneurs in those regions to engage in the growing digital economy.
4. Cultural and Social Barriers
Significant societal pressure remains to pursue “safer” career paths such as law, medicine, or engineering. Society views these fields as secure options; while it can be challenging to find jobs in them, the likelihood of success is generally higher than in entrepreneurship. This perspective is understandable, given the numerous obstacles that entrepreneurs face. For many parents in Africa, entrepreneurship is often perceived as risky or even a sign of failure if traditional job routes do not work out.
Additionally, women and girls encounter additional biases regarding their potential and capabilities, which makes it even more challenging for them to succeed as entrepreneurs. Cultural norms can restrict female entrepreneurs’ access to essential resources and decision-making opportunities, and societal expectations may hinder their ability to start or grow their businesses.
Despite their talent and drive, youth entrepreneurs may feel discouraged from pursuing entrepreneurial paths. Given the current landscape, this apprehension is understandable.
Recommendations
While governments across Africa often emphasize the importance of youth entrepreneurship in their speeches, the reality can fall short of these statements. Policies designed to support young entrepreneurs are usually either nonexistent or poorly implemented. Even when programs are in place, they tend to be hard to access due to bureaucracy, lack of awareness, or inadequate targeting. Youth-specific grants, subsidies, and incentives remain scarce, forcing many young entrepreneurs to navigate challenges independently.
To unlock the potential of youth entrepreneurship in Africa, we must directly address these barriers.
1. Take Concerted Policy Actions
Governments play a crucial role in creating a business-friendly environment. By designing and implementing targeted policies that address the business environment, fiscal policies, and regulatory frameworks, governments can significantly support all businesses by reducing bureaucracy, offering financial incentives, and improving infrastructure. Additionally, governments and international organizations should collaborate with private organizations, such as banks and business support organizations, to develop targeted initiatives that specifically assist young people.
Policy actions should also focus on providing access to funding, training, and mentorship to address the unique challenges faced by young entrepreneurs. Financial incentives, such as tax breaks, startup subsidies, and co-financing programs for youth-led businesses, can help reduce the initial costs of starting and growing a business. Furthermore, offering low-interest loans, flexible repayment plans, and grant programs specifically designed for young entrepreneurs can help bridge the funding gap.
To encourage more young people to formalize their businesses, government institutions need to simplify the registration process by reducing the time and costs and eliminating unnecessary bureaucracy. Creating electronic government platforms can help streamline registration procedures and make them more accessible.
Investing in infrastructure is crucial for promoting youth entrepreneurship. Therefore, governments should pursue and implement development initiatives that focus on infrastructure improvements. For instance, African leaders should take their commitment to Mission 300 seriously—Mission 300 aims to provide reliable and affordable electricity to 300 million Africans. Additionally, investing in efficient transportation networks and affordable internet connectivity can help eliminate significant operational barriers for young entrepreneurs. Governments must also commit to public-private partnerships to ensure that these policy actions are successful and sustainable.
2. Commit to Innovation and Technology
Innovation and technology go hand in hand. With the advancement of technology, youth entrepreneurs can take advantage of business opportunities, but first, the technology must be available, and the youths must know how to use it. The availability and use of digital technologies are closely linked to economic growth and can significantly promote youth entrepreneurship. In 2019, the average cost of one GB of mobile internet as a percentage of monthly per-capita Gross National Income (GNI) was 10.5 percent, which is considerably higher than the 2 percent target recommended by the United Nations Broadband Commission. Governments should prioritize digital inclusion initiatives through decisive policy actions to bridge the gap between urban and rural youth.
Innovation and technology adoption are essential for addressing market and operational challenges. With government support, the private sector should provide subsidies or create affordable solutions for young entrepreneurs, such as mobile payment systems, inventory management software, and e-commerce platforms. Additionally, offering grants or tax incentives to startups that use technology to tackle local issues could promote innovation. Tech hubs and incubators are also crucial for nurturing and supporting youth entrepreneurs. Governments should support local hubs that empower young entrepreneurs.
3. Increase Entrepreneurship Support Services
Every entrepreneur requires guidance, mentorship, and a strong network to succeed. Business development services can fulfill this need for young entrepreneurs. Without trained Business Development Service Providers (BDSPs), youth entrepreneurs may struggle to acquire essential business skills and lack experienced mentors or a supportive community. Business Development Services (BDS) can equip young entrepreneurs with the knowledge and skills to enhance their businesses and achieve sustainable growth.
Governments should streamline business support organizations (BSOs) and service providers by certifying those organizations as qualified to offer training and mentoring services. This process will eliminate unqualified providers from the market and allow youth entrepreneurs to seek assistance from trusted organizations. For instance, in Nigeria, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) certifies Business Development Service Providers (BDSP) through selected certification agencies. SMEDAN only submits approved providers or organizations for government or development training contracts.
Access to mentors and networks is essential for young entrepreneurs. Business Support Organizations (BSOs), governments, NGOs, and private organizations can help by organizing networking events, creating online platforms, and funding mentorship programs to connect young entrepreneurs with experienced professionals. Additionally, fostering collaboration among the private sector, public institutions, and non-profits can lead to shared resources, enhanced training programs, and stronger support systems for emerging business owners.
Conclusion
Youth-led businesses could address gaps that traditional employers often cannot fill. Each small shop, online store, or tech startup created by a young entrepreneur generates jobs for the founders and others in their communities. There is a ripple effect for every food delivery app that launches or local fashion brand that gains popularity. Delivery drivers find work, tailors receive more orders, and suppliers continue to thrive.
Empowering young entrepreneurs in Africa is crucial for unlocking the continent’s economic potential. These innovators can drive change, create jobs, and shape the future. To ensure their success, stakeholders—governments, the private sector, and international organizations—must collaborate to overcome challenges like limited funding, inadequate skills, and poor infrastructure.
With adequate support, entrepreneurship can flourish in Africa, transforming the continent into a hub of innovation, economic growth, and social change. Young entrepreneurs can start and grow profitable and impactful businesses by tackling the challenges of unfavorable business environments, poor infrastructure, lack of access to finance, and cultural biases.
Written by:
Staff Writer
