Like other Afro-preneurs, farmers must overcome a number of constraints to launching and growing a business.
Armed with a Wharton MBA, fluent Chinese, years of experience, and global connections, I could have gone many places. And I did — banking, economic research, management consulting. Then I ended up as a chicken farmer. I probably have little in common with the average African entrepreneur, yet I found myself facing many of the same constraints they face.
Many who attended the 2015 Global Entrepreneurship Summit in Kenya this week will be feeling reinvigorated and optimistic about the future of entrepreneurship in Africa. They heard policy makers and civil society leaders affirm their commitment to solving the challenges that hold back “Afro-preneurs.” These challenges cover a number of areas necessary for success: lack of access to credit and other resources to support the establishment and growth of businesses, little technical support on how best to manage a business or maneuver the regulatory environment, weak power and other infrastructure, and a lack of highly skilled or productive labor, to name but a few.
Despite these pitfalls, what U.S. President Barack Obama highlighted at the summit is that entrepreneurship is not only on the rise, but also a valid means for lifting millions of Africa’s poor out of poverty. That’s especially true for entrepreneurs who establish businesses in sectors with a high labor component and low skills requirement, such as agriculture.
Those who have questioned why I would forgo good job prospects to work in a field where most people have little education are unaware of the rising interest in agriculture from investors — both African and foreign. Here’s why: agriculture accounts for at least 40 percent of African exports, 30 percent of GDP, and 70 percent of employment.What’s more, in sub-Saharan Africa, growth in agriculture is 11 times more powerful in reducing poverty than growth in other sectors. With more than 60 percent of the world’s potentially available arable land — and demand rising along with the continent’s growing population — agriculture represents an opportunity for entrepreneurs like myself to thrive.
Perhaps the most binding constraints that we Afro-preneurs face is the difficulty in accessing financing, whether debt or equity. This problem is particularly acute for women. Although the rate of female entrepreneurship is higher in Africa than in any other region of the world, an estimated $300 billion credit gap exists for female-owned enterprises. To help address this deficit, the IFC has launched a $600 million fund to work with local banks in extending credit to 100,000 women entrepreneurs. This type of support is critically important in agriculture — since 80 percent of farm work in sub-Saharan Africa is undertaken by women, yet they receive less than 10 percentof small farm credit available.
African institutions are also mobilizing resources to support African entrepreneurs. The Tony Elumelu Foundation has launched a $100 million program aimed at identifying and growing 10,000 Afro-preneurs and creating 1 million jobs. There is also a steady increase in private equity and venture capital firms vying for projects in Africa. In my experience, however, these tend to target investments of at least $500,000, which are few and far between.
I was able to start my poultry farm with the help of savings and access to family land. If I had to buy land and contend with the land tenure minefields that abound in Africa, I would not have gotten as far as I have. I have enjoyed the benefit of a good education, savings, access to land and the ability and know-how to study the internet for free technical advice. These are all luxuries that many Africans do not have. What’s more, many who do are still too risk averse to take the leap into entrepreneurship.
Yet despite the hurdles, more Africans are slowly but surely venturing into entrepreneurship. And at the end of the day, when making a sale or paying a salary that I know will have a ripple effect, I feel a real sense of satisfaction in my choice.
As an African woman with an MBA, I might not fit the typical image of poultry farming entrepreneur. But that is exactly the nature of entrepreneurship in Africa — it’s here for any and all to explore, though not the faint of heart. With better access to financing through programs like the IFC’s and Tony Elumelu’s, as well as the establishment of more incubator-like mechanisms that provide a broad range of non-financial support, more of us would — and should — take the leap.
(Top image: Courtesy of Dominic Chavez/World Bank)
Buddy Buruku is the Country Program Manager at the African Center for Economic Transformation (ACET). She is a Ugandan national based in Ghana, and when she is not supporting African governments to implement public financial management reform, she is focused on sustainable and equitable Sino-African investment.