Why SMEs can take Africa to infinity and beyond

FACT: Africa is the second largest continent by geographic area and the second most populous continent in the world, with an area of approximately 30 million km² and a population of 1.2 billion people 
FACT: The African continent’s population is set to double by 2050 to 2.4 billion
FACT: Small business has the potential to create more jobs than so called big business
FACT: Africa’s under-18 population, already nearing 60% of the continent’s total, could increase by two thirds to reach almost 1 billion by the mid-21st century
FACT: The cornerstone of most economies are SMEs, which account for about half of global gross domestic product (GDP) and 60% – 70% of employment

Nearly half of Africa’s population is already urbanised to some extent. By mid-century there will be a huge urban population who will need shelter and food, but more importantly, they will need jobs to sustain themselves and their families. While the delivery by various governments of health, housing and education will always be of paramount importance, the creation of a space in which anyone can make an income, is by far the greatest challenge.

While figures vary due to lack of research, small business could contribute up to 45% of the labour force in South Africa, with a GDP contribution of up to 20%. Imagine if we could double the number of small businesses in our country. Imagine the effect it would have on our unemployment rates. By 2050 there will be three-quarters more under 25’s in Africa than over 30’s, a depressed, poor and unemployed block of the population ripe for ferment and revolution: this is an inner-city and geographic time bomb.

It is critical for African countries to post higher economic growth rates than their population growth rate to boost employment opportunities, reduce poverty and ultimately, avert social crises. Creating an environment that enables the growth of small business with few impediments in this impending era of the 4th Industrial Revolution is therefore essential for promoting and boosting sustainable and inclusive economic growth, generating employment, nurturing innovation and reducing inequality across the continent.

The irony of job creation in Africa is that in most countries, small business is constrained by hurdles and impediments, and a lack of strategic resources. They are limited by lack of access to finance, networks and markets, poor education and training, and legislative frameworks that are not only restrictive but, in many cases, uncompetitive. Not to mention corruption, nepotism lack of service delivery.

Contrary to popular belief, Africans are hard-working and innovate if given a chance. I am always amazed at the problem-solving capabilities of my countrymen. Mostly they just don’t get given a chance, or we just don’t credit “uneducated” workers with innovative abilities.

New start-ups in Africa are becoming globally competitive, but we need an environment fit for business, that governments need to help roll out. All this is happening, when it happens, in a space of high risk, political uncertainty and sluggishness.

My New Year’s resolution for 2020 is to find and nurture or grow or mentor one new business a month, not for recompense, but to save our continent. We don’t need to be mentors or business coaches, we can help our business neighbours, we can help the gogo on the corner who grows and sells veggies, we can buy local, we can use local shops instead of Chinese junk shops. Just think if we all did that in our day-to-day life, 12 new business to the square of infinity*.

*Infinity is not a number. It’s just a value that is huge. Apologies to Buzz Lightyear.


About the author

Simon Kerr is an accredited, qualified chef. He has run his own award-winning restaurants and guest houses since 1985. As a Fetola mentor, Simon brings years of experience in people management, brand building and systems to the team, and is our hospitality and tourism specialist.