Ruth Maposa
AFRICA is at a pivotal crossroads in harnessing its potential, particularly among its youth and women. While early projections by McKinsey’s "Lions on the Move" report suggested substantial job creation and economic growth, the continent has struggled to meet these expectations due to slow economic growth, high inequality, and persistent structural barriers.
Migration has historically shaped societies, The Bantu migrations, which occurred over several millennia, were one of the most significant population movements in African history. The Bantu-speaking peoples spread from their original homeland in West Africa across much of the continent.
They introduced agriculture, iron working and new languages, significantly shaping the cultural and social structures of Central, Eastern, and Southern Africa. However, today’s restrictive policies, the significant gender disparity, compounded by the rising trend of migration among Africa’s skilled workforce to overseas, sit at the heart of the issue.
Furthermore, the continent's entrepreneurial landscape is growing, fuelled by a young population eager to create opportunities despite these challenges. However, this entrepreneurial spirit often stems from necessity rather than strategic, sustainable business practices, leading to ventures that struggle to scale or sustain themselves long-term.
Let’s start with the gender disparities that plague the entrepreneurial landscape in Africa. While African women are among the most entrepreneurial in the world, they face significant challenges that limit their success.
Despite high levels of participation in the labour force, women are often confined to low-income, informal sectors, where opportunities for growth and innovation are scarce.
For instance, in North Africa, where over 50% of university graduates are women, only 9% manage to break into middle management or leadership roles as reported in the Global Gender Gap Report 2023 by the World Economic Forum. This isn’t just a barrier to individual success, it’s a loss of potential that could drive economic growth and innovation across the continent.
When it comes to accessing capital, the story is even more disheartening. In 2021, only 2.5% of venture capital in Africa went to women-led start-ups, as reported by the Avca Venture Capital in Africa Report.
This stark gap underscores the systemic challenges women face, from discriminatory lending practices to limited access to networks that could help them scale their businesses. The $42 billion (R753bn) financing gap for women-owned SMEs, according to an Adam Smith International and LSE Gender Funding Gap Study, is not just a number; it represents a massive loss of entrepreneurial potential that Africa cannot afford to ignore.
Highlighting and celebrating successful women entrepreneurs and youth-led ventures can inspire others and demonstrate what is possible with the right support and resources. For instance, Nigeria's Ifeoma Fafunwa, a playwright turned tech entrepreneur, has successfully blended creativity with digital solutions, showing that with the right backing, African women can lead in innovative sectors.
While some gender equality initiatives have seen success, such as increasing the number of women in leadership roles, these have not translated into broad-based shifts in power dynamics or economic inclusion. The glass ceilings that hinder women’s career progression are mirrored in digital and financial inclusion gaps, with a 15% gender gap in mobile phone ownership and inadequate digital skills training for young women, limiting their participation in high-growth sectors, as reported by the Mobile Gender Gap Report 2021.
The migration of skilled African professionals is draining the continent’s labour capital, exacerbating unemployment, gender inequality, and skill shortages. Nearly 70% of African migrants are under 35, with an increasing number being highly educated women according to the International Organisation for Migration. This trend, driven by the search for better career opportunities and improved living conditions, intensifies the skills gap in sectors like STEM, healthcare, and education.
Economic struggles, high living costs, and inflation are significant drivers of this migration trend. In South Africa, for example, inflation rates nearing 6% have made it increasingly difficult for middle-income earners to maintain their livelihoods, pushing talented youth abroad. Government responses to migration have often been restrictive and inconsistent, deterring skilled professionals from staying or returning. This contrasts with more progressive immigration policies in countries like Canada, which actively seek to attract skilled talent.
The exodus of talent is not just about lost labour, it also contributes to the cost to innovation. Africa’s startup ecosystem is thriving, with record-breaking investments and a growing number of young entrepreneurs leading the charge. However, the departure of skilled professionals means we are losing out on the very people who could drive the next wave of innovation, solve pressing challenges, and create jobs. If this trend is to be reversed, an environment that nurtures and retains talent is imperative, making Africa a place where innovation thrives and is supported to be sustainable.
The challenges facing entrepreneurship in Africa also have a profound impact on the labour market. As entrepreneurs struggle to access the resources they need to grow, they are unable to create the jobs that are so desperately needed. This is particularly true in sectors that have the potential to transform Africa’s economy, such as technology, agriculture, and manufacturing. Without a thriving entrepreneurial ecosystem, we cannot hope to address the continent’s high unemployment rates or provide meaningful opportunities for our youth.
Furthermore, the lack of support for entrepreneurship stifles innovation, limiting the ability of African businesses to compete on a global scale. This not only affects the labour market but also undermines Africa’s ability to contribute to and benefit from the global knowledge economy. We must recognize that supporting entrepreneurship is not just about creating jobs, rather it’s about fostering a culture of innovation that can drive long-term economic growth and development.
While there are developments that are commendable in the entrepreneurship ecosystem, they also highlight a critical gap in Africa’s entrepreneurial landscape. There is a pressing need for a deeper understanding and application of true entrepreneurship principles. Much of the current entrepreneurial activity is driven by the hustle culture, where individuals start businesses out of necessity rather than opportunity. This often leads to the creation of businesses that struggle to scale or sustain themselves in the long term.
To build a sustainable entrepreneurial ecosystem, it is essential to move beyond the hustle mentality and focus on educating entrepreneurs about the fundamentals of business. This includes understanding market dynamics, building strong business models, managing finances effectively, and leveraging technology for growth. By equipping entrepreneurs with these skills, Africa can cultivate businesses that are not only resilient but also capable of scaling and creating jobs.
Achieving true gender parity requires an intersectional approach that addresses the specific challenges women face. Expanding microfinance, crowdfunding platforms, and financial literacy programs can help bridge the financing gap for women-owned SMEs. Additionally, targeted digital literacy programs and affordable digital access initiatives are crucial for enhancing women’s participation in the digital economy. This effort must be intentional and equitable, ensuring that all segments of society, are empowered to participate fully in the entrepreneurial ecosystem.
By focusing on teaching true principles of entrepreneurship, supporting investor networks, and creating enabling environments, Africa can move from a hustle-driven economy to one characterized by sustainable, scalable businesses. This shift will not only create jobs but also drive innovation and economic growth across the continent. Africa’s future lies in the hands of its entrepreneurs, and by nurturing their potential, the continent can unlock unprecedented opportunities for development and prosperity.
Africa's future growth is intrinsically linked to the empowerment of its youth and women. By implementing inclusive, data-driven policies and leveraging technology, Africa can address its gender disparities and migration challenges. This strategic shift is crucial for realizing Africa’s full potential and ensuring sustainable, inclusive growth.
Ruth Maposa is a Programme Analyst at 22 On Sloane
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