THE EDIT | by Melanie Hawken, founder and editor-in-chief of Lionesses of Africa
The much-anticipated 2015 edition of the Global Entrepreneurship Index has just been published by the GEDI Institute, to coincide with Global Entrepreneurship Week. For sub-Saharan Africa, there is both good news and bad news in this year’s report.
The Global Entrepreneurship Index measures the entrepreneurial ecosystem in 130 countries based on 14 key pillars of entrepreneurship, each one providing an unprecedented insight into entrepreneurial attitudes, abilities, and aspirations in each country, and ranking their performance globally. These 14 pillars examine entrepreneurial opportunity perception, start-up skills, risk acceptance, networking, cultural support, opportunity start-up, technology absorption, human capital, competition, product innovation, process innovation, high growth, internationalisation, and risk capital - all key factors in creating an entrepreneurial environment.
Not surprisingly, the USA still tops the global list of the most entrepreneurial countries in 2015, followed by Canada, Australia, UK, Sweden, Denmark, Iceland, Taiwan, Switzerland and Singapore all in the top 10. Interestingly this year, a number of new sub-Saharan Africa countries were added to the list, with South Africa the top performing entrepreneurial country in the regional rankings and placing 52nd in the world overall. The reason being that it the country is performing well in such areas as Competition, Opportunity Startup, Product and Process Innovation, High Growth Potential, and Internationalisation. Unfortunately, South Africa is the only sub-Saharan African country in the top 50 percent on the index. In fact, 22 out of the 29 sub-Saharan countries are ranked in the bottom quartile of the index, with Malawi and Uganda ranking 128th and 129th out of 130 countries on the list respectively. The top five entrepreneurial countries ranked in the sub-Saharan Africa section of the index as a whole, are South Africa (52nd), Botswana (66th), Namibia (69th), Nigeria (84th) and Kenya (86th).
One of the key challenges for the sub-Saharan African countries, including its top performers, seems to be lack-lustre attitude towards entrepreneurship, with the continent performing poorly in such indicators as Opportunity Perception, Cultural Support, Networking and Risk Acceptance, compared to the global average. In addition, a lack of critical startup skills is also a key barrier to entrepreneurship success, which is odd given that these countries also have some of the highest rates of self-employment in the world. The issue seems to be that whilst starting out on the self-employment route out of necessity is relatively easy in Africa, building a sophisticated startup business that can compete and thrive, is difficult in this part of the world. At the heart of the problem lies a lack of education, a key component of the startup skills pillar of entrepreneurship. Enrolment in tertiary education in sub-Saharan Africa is amongst the lowest of all the global regions. Other key challenges identified in this year’s Index include weaknesses in attitudes towards entrepreneurship in Africa, combined with poor institutional conditions for entrepreneurship in the region.
On a more positive note, sub-Saharan Africa ranks above the world’s average when it comes to the ability to absorb and leverage new technology in startups, particularly in the specialist tech sectors - good news for all those tech hubs beginning to spring up around the region. This points to substantial market opportunities for startups on the continent for new technologies in particular. Other areas where sub-Saharan Africa performs well in comparison to global averages in the Index, and in particular South Africa, are in Product Innovation, Process Innovation, Competition, and High Growth Potential.
Research reports such as the Global Entrepreneurship Index point to the fact that entrepreneurship is an increasingly important mechanism in driving economic development, generating employment opportunities, creating new businesses with growth potential, and stimulating innovation. Yet, particularly in the case of sub-Saharan Africa, more needs to be done to create the right support structures and a positive socio-economic environment to allow entrepreneurship to thrive.
The 2015 Global Entrepreneurship Index ranked 28 sub-Saharan Africa countries in total, these included (in alphabetical order):
Angola (111), Benin (102), Botswana (66), Burkina Faso (114), Burundi (124), Cameroon (115), Chad (126), Cote d’Ivoire (107), Ethiopia (125), Gabon (93), Gambia (101), Ghana (105), Kenya (86), Liberia (103), Madagascar (116), Malawi (128), Mali (113), Mauritania (119), Mozambique (106), Namibia (69), Nigeria (84), Rwanda (99), Senegal (96), Sierra Leone (117), South Africa (52), Swaziland (118) Tanzania (108), Uganda (129), and Zambia (110).