By Kelly Fisher and Amber April, hosts of the Brown Girl’s Guide podcast
Youth empowerment in South Africa and Africa is something that we are fiercely passionate about. It’s why we started the Brown Girls Guide podcast. Yes, we use it to talk about anything and everything that affects people and women of colour, but we’ve made it our mission to ensure that all our topics are relatable and accessible for young people — because that’s where empowerment and true change starts.
One of our first episodes, in fact, touched on what to do after school. And, as part of this, we hoped that those who have that entrepreneurial spark would consider starting their own business, as these start-ups are the backbone of our economy. It could be a small idea or something large, but it’s something that we believe in and something that we have and will always encourage. That being said, the reality is that it’s not easy for people of colour to secure funding for their businesses. And it’s not easy to make the connections needed to get a business off the ground. These obstacles often hinder growth and progress for young entrepreneurs from our continent — or deter them from even thinking like this in the first place.
Africa is in desperate need of an entrepreneurship funding mechanism that enables fast-paced innovation. The more conventional forms of funding vehicles that exist are anchored by excessive red-tape which stifles entrepreneurship on the continent. And this has meant that, instead of experiencing sustained growth and generating employment and other economic opportunities for their populations, African economies are stuck with stillborn entrepreneurship ideas and innovations due to a lack of access to funding and compatible funding models.
Today, unemployment rates for young people are at an all-time high, having been exacerbated by the Covid-19 pandemic. In South Africa, for example, and according to a recent labour report by Stats SA, 33% of the 10.2 million young people aged 15-24 years old and 44.2% of young persons aged 15 to 34 are unemployed. The World Bank reports that African youth account for almost 60% of the continent’s jobless population.
It is entrepreneurs that will change this situation. Entrepreneurs are able to create opportunities by identifying a need and catering to that need. By digging into the social values they can contribute to, such as access to education, water, food security, healthcare and more, entrepreneurs can not only create a better life for themselves but also a better future for all.
A recent White Paper released by the African Development Bank noted that entrepreneurship needs to be at the heart of efforts to transform Africa’s economic prospects and that the right interventions are needed to open the door for young entrepreneurs to scale up their business, create jobs and generate revenue. To encourage strong, innovative entrepreneurial young leaders who will drive our economies forward, we need to fundamentally change the way we look at and approach entrepreneurship.
As an example, the story of a packaging company YELI founded by a young entrepreneur from Uganda, Andrew Mupuya, shows exactly how innovative young Africans are and how agile they are in generating ideas to assist them to take advantage of opportunities. Young Mupuya saw an opportunity to build an environmentally friendly paper bag manufacturing company when the Ugandan government banned the use of polythene plastic bags.
Goodie Tutors led by 23-year-old Godiragetse Mogajane is another example of an entrepreneurship venture modelled to respond to an African-specific challenge. Seeing the growing challenge in education outcomes for Mathematics and Science subjects in South Africa, Godiragetse established this education enterprise in 2016 and has since then ensured his students achieved an average of 90 to 100% in their Grade 12 results.
These entrepreneurial ventures interestingly all had the challenge of accessing funding to scale up their startups. It is difficult to find funding, but it is definitely there. Organisations such as the Anzisha Prize, for example, cater for African entrepreneurs whose needs are particularly different — and require a different approach. And these businesses have grown from strength to strength over the years.
It is quite clear that there is a rising appetite among young Africans to establish businesses and tackle joblessness and other challenges on the continent, yet the majority of them continue to hit walls when searching for investments or capital to grow their businesses. This is why we are particularly endeared to the Anzisha Prize which is designed to focus solely on providing support and funding to young entrepreneurs between the ages of 15 and 22 in a bid to significantly improve their chances of success in business.
Moving away from a traditional approach to supporting entrepreneurs
One of the biggest obstacles these entrepreneurs face is a lack of credibility due to their young age. In addition, there is the stumbling block of complex administrative and legal requirements that can be difficult to understand or meet.
More so, even when they do gain funding, young entrepreneurs often find it difficult to make a success of their venture due to the demands of investors to see returns on their investment as quickly as possible — one of many contributing factors to the 96% failure rate of new businesses around the world. It’s therefore clear that we need to make accessing funding much easier, but we also need to change the way the funding ecosystem works with young entrepreneurs, adapting to their needs and environment.
In a smart move, Anzisha Prize developed the Young Entrepreneurs Fund (YEF) as an “age-appropriate” financing model that is tailored specifically to very young entrepreneurs to enable them to access funding more easily and grow their business in a much more flexible environment. The YEF programme was created with a debt instrument and legal framework that avoids jargon and is easy to understand. But, most importantly, the fund operates on a system of “borrowed trust”. Through a Letter of Guarantee, a vetted young entrepreneur who has graduated from any African Leadership Academy Programme is able to “borrow” credibility from the fund in order to acquire funding, of which co-investments up to $50 000 will then be matched by the YEF.
Through this fund, the entrepreneur is not required to make any repayments during the times when they are not generating any revenue and only need to start paying back the investment once they start making a profit. This means that instead of focusing on ROI, the priority is potential.
Changing who we view as entrepreneurs
Very young people are generally not seen, or taken seriously, as entrepreneurs whether by clients, suppliers or by investors, making it difficult for them to get their enterprises off the ground or gain the right support to do so.
Africa is the youngest continent in the world, with 60% of the population under the age of 25. Because of this, the antiquated idea that someone young without experience is too high a risk or can’t be a good or successful entrepreneur will hinder the development of the entrepreneur ecosystem in Africa, necessary to create jobs, solve problems, and drive economic growth. If only people with years of experience are eligible for funding, then it becomes extremely difficult for young entrepreneurs to achieve success.
To echo the words of one of Africa’s greatest entrepreneurs, Tony Elumelu, only entrepreneurship can create opportunities where none seemingly exists, and it is young entrepreneurs and those they inspire who are the lifeblood of Africa’s rise.
Entrepreneurship offers the youth the ability to create new marketable opportunities for themselves and therefore it is vital that we create an environment that is as frictionless as possible for young people to become entrepreneurs.
Shifting to an entrepreneurial mindset
In order to encourage and promote entrepreneurship in South Africa, we need to fully understand what most commonly stands in the way of young entrepreneurs’ success and move away from a traditional way of thinking when it comes to financing young entrepreneurs.
With few conventional employment options to absorb all young job seekers, we need to start supporting their development as job creators instead. Young people need to be enabled and empowered to pursue entrepreneurship so they can grab hold of a brighter future with both hands — not just for themselves but for their families and their communities.
Through the work of organisations such as Anzisha Prize and through our small efforts on our podcast, we hope to continue to shine a light on the amazing entrepreneurs and opportunities on our continent and in our country We hope that funders and institutions will take heed of these opportunities and not be put off by age or other demographics, but rather see the potential that exists exactly because of these factors. Because history has shown us that when we do enable Africans to solve African problems, they step up.