Africa should look to entrepreneurship to address the income gap

from Business Day..

April 29, 2013, By NONSO NDUMANYA

Africa can look to entrepreneurship to address the income gap on the continent, according to a recent Entrepreneurship in Africa 2013 report by the Omidyar Network in partnership with Monitor Group.

This would enable the continent to evolve beyond its current state of necessity-based informality into one that is vibrant and robust enough to promote sustained economic growth and generate long-term, viable livelihoods across the continent.

Income levels on the continent still lag behind the rest of the world, with all seven lowest income countries in the world located in Africa.

While enjoying some of the fastest economic growth rates, many sub-Saharan Africa countries still face high levels of inequality and unemployment. Forecasts show that seven of the top ten economies by GDP growth from 2011 to 2015 will be African, yet the ten lowest-ranked economies by GDP per capita are also African.

Africa’s highest income/capitalised country, Equatorial Guinea, is seven times lower than world’s highest income (Qatar), and three times lower than the World’s number ten country (Austria), with the continent’s average income/capitalisation, five times lower than the world average.

‘‘Despite increased prices and demand for natural resources, Africa’s income levels still lag behind the rest of the world. Natural resources are helpful but not the answer,’’ said Omidyar Network Africa’s managing director, Malik Fal, Tuesday, on the sidelines of Accelerating Entrepreneurship in Africa Forum in Lagos.

Nigeria realized 7.2 percent GDP growth in 2011, driven by Nigeria’s wealth of natural resources – oil. Yet, economic growth has had a very limited impact on the majority of Nigerians, with 60 percent living below the poverty line and over 21 percent unemployed  (versus 17 percent in Africa and 8 percent globally).

‘‘Entrepreneurship which helps in diversifying the economy, creating jobs and providing income, is critical,’’ Fal further said.  According to him, the future of entrepreneurship in Africa is promising, if the right choice(s) are made now.

The greatest challenge facing entrepreneurs across Africa is the state of entrepreneurial assets: financing, skills and talent, infrastructure, the report said. It notes that vibrant entrepreneurship requires a well-functioning four-part ecosystem which consists of entrepreneurial assets, business support, motivations & mindset, policy accelerators.

A culture of entrepreneurship is seen to be rising in Nigeria.

Nigeria ranks top on the Motivations Composite Indicator chart with 3.25, above its sub-Saharan Africa peers (3.11) and global peers (3.14), according to the report.

However, despite these positive signs, the business landscape in sub-Saharan Africa provides a number of challenges that prospective entrepreneurs must transcend.

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