Startup Funding

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Youth entrepreneurship has the potential of providing the much-needed solution to Africa’s unemployment challenges, and spur economic growth on the continent. Click To Tweet

The road to 2030 – a year set aside by development partners as the deadline for eradicating extreme poverty – looks very much uncertain for many African countries. The confluence of rapid demographic growth, digital transformation, and weak human resource base in recent years presents fresh and critical challenges to Africa’s development dynamics and global competitiveness.

According to the World Economic Forum, Sub-Saharan Africa is home to 13% of the world’s working-age population. By 2030, this number will increase to more than 17%, making many African countries resource-rich, labor-abundant economies. Yet, only about 3 million jobs are created on the continent annually. Many African governments have struggled to translate economic growth into improved sustainable economic opportunity for their citizens. The International Labour Organization records that young people are the most affected segment of people without jobs.

Nevertheless, youth entrepreneurship has the potential of providing the much-needed solution to Africa’s unemployment challenges, and spur economic growth on the continent. Africa’s youth could be in the driving seat of global development in the next decades thereby catalyzing economic growth through entrepreneurship (UNDP).

Historically, entrepreneurship has been a tool for helping people take ownership of their aspirations. Initiatives like Startup India and Make in India helped to spur economic growth and attract Foreign Direct Investment into the Indian economy. According to a study by IDRC Canada, youth entrepreneurship, in particular, is an option to create employment for the youth.

Why?

Youth entrepreneurs are more likely to hire fellow youths, are particularly responsive to new economic opportunities and trends and are active in high growth sectors, amongst others.

In the words of Tony Elumelu, founder of The Tony Elumelu Foundation, entrepreneurship is the cornerstone to African development and the key to local value creation in Africa. If properly harnessed, Africa’s burgeoning youth population could translate into a dividend for the continent through the creation of enterprises that will not only contribute towards economic growth but also create jobs for their fellow youth (OECD).

However, to properly harness and unlock entrepreneurial potentials of Africa’s youth, the following pieces need to be put in place:

  1. Funding for startups. Although there has been a remarkable improvement in venture capital funding in Africa, undercapitalization is still one of the major reasons why many startups fail. The road to startup funding in Africa is a long one, and 9 out of 10 ventures never make it. With an incredibly skewed ecosystem and lack of local funding pipeline in many African countries, the hope for venture capital funding for startups often lies outside the continent. There is, therefore, a need for more financial instruments to provide the pre-seed and seed capital to early-stage businesses.
  2. Access to market. Without the opportunity to access markets, obtain market-based prices and meet demands, business owners cannot capture economic opportunities on the continent. In spite of the tremendous economic prospects of regional integration, intra-Africa trade has remained horrendously low. It is estimated that intra-African trade costs are around 50% higher than in East Asia, and are the highest of intra-regional costs in any developing region. Not only is there a need for trade and market information to entrepreneurs, but there is also a need for inclusivity. We must create systems, processes, and platforms to connect buyers and sellers from across the continent, as well as minimize post-harvest losses for smallholder farmers. Hopefully, initiatives like the inaugural Intra-African Trade Fair will provide the pathways to advancing trade and economic conditions of people across the region. The FAO estimates that on-farm and post-harvest activities account for US$4 billion tons in losses per year. To curb this, the African Development Bank (AfDB) committed to invest US$24 billion in agricultural transformative projects in Africa over the next decade. But that’s not enough, the use of data at the farm and value chain levels could potentially transform African agricultural systems and lead to greater access to markets.
  3. Mentorship and skills development. Despite the media celebration of African business icons like Tony Elumelu, Strive Masiyiwa, Rebecca Enonchong and so on, entrepreneurship on the continent, in practice,  is a long, arduous journey that requires stamina, education, and community support. According to a Venture Capital for Africa survey, of all the different reasons that might cause an African-based business to fail, respondents selected poor execution as chief. This, essentially, means poor entrepreneurship skills. As a Tony Elumelu entrepreneur, I can attest to the transformative power of top-tier mentorship and skills development as prerequisites for entrepreneurial success. Access to entrepreneurship support systems, especially for women and youth in rural areas, could spur more opportunities for innovation on the continent.
  4. A policy with a purpose. Young people often face numerous challenges when trying to establish their businesses. Among these bottlenecks are high banking fees, inadequate youth-friendly products and lack of financial literacy. Governments need to create policies and programs that facilitate an enabling entrepreneurial ecosystem and access to investment stacks to turn ideas into innovations. There is also a need for private sector support in enhancing the capacity of youth development organizations at the local level. And, the financial sector must create special products to serve youth-led startups and provide young people with access to relevant financial services. Rwanda’s Private Sector Driven Agricultural Growth (PSDAG), Ghana’s National Entrepreneurship and Innovation Plan (NEIP), Nigeria’s N-Power and The Tony Elumelu Foundation serve as case studies for some of the answers we need in creating systems and platforms that turn passion to profit.

Conclusion

The economic case for unlocking the potentials of young people through entrepreneurship is simple: it is one sure way of actualizing the sustainable development goal of eradicating poverty on the continent by 2030. In other words, the biggest business opportunities on the continent in the coming decade will be created by young innovators. The impact of development institutions like the Tony Elumelu Foundation is proof positive that if governments, institutions, and private sector organizations collaborate in “democratizing luck” and setting young people up for entrepreneurial success, the social and economic dividends are tremendous! The future of Africa lies in youth entrepreneurship. Therefore, investment in youth is not just the right thing to do, it is the smart thing to do – and the time is now!


About the Author

Tom-Chris | #Readyforwork

Tom-Chris Emewulu is the President & Founder of SFAN. He is an education enthusiast, entrepreneurship and career coach, a consultant at Mastercard Foundation, Seedstars Ambassador for Ghana and an aspiring venture capitalist. Follow him on Twitter and LinkedIn.

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The article was first published by Tom-Chris Emewulu on LinkedIn.

As an entrepreneur myself, I understand what it feels like to yearn for a lifeline, to hope for a ‘big break’, to look forward to enjoying some luck. – Tony O. Elumelu (CON)

Many entrepreneurs (and aspiring entrepreneurs) have reached out to me for advice on how to put their stuff together for The Tony Elumelu Foundation Entrepreneurship Program. Consequently, I want to share few tips that answer some frequently asked questions, in hope that it might be useful to a larger audience.

Before we get into it, I want to quickly mention that this is not an attempt to speak for or represent the Elumelu foundation. The tips below are my views on how you might improve your chances of having your business selected.

Again, be aware that the program is competitive. Previous editions have seen about 10% of all applicants selected. This is not to discourage you, however, it is to help you plan to put your best foot forward.

With that in mind, let’s begin, shall we?

Q1: What is The Tony Elumelu Foundation Entrepreneurship Program about?

A1: Launched in 2015, The Tony Elumelu Foundation Entrepreneurship Program is the largest African philanthropic initiative devoted to entrepreneurship and represents a 10-year, $100 million commitment, to identify and empower 10,000 African entrepreneurs, create a million jobs, and add $10 billion in revenues to Africa’s economy.

Q2: Who is qualified to apply?

A2: Anyone above the age of 18 and is a legal resident or citizen of an African country, with a for-profit business that is based in Africa, and is 0-3 years old can apply to the Tony Elumelu Foundation Entrepreneurship Program.

Q3: What’s in it for me if I’m selected?

A3: If you’re selected, the programme provides you with the following tools for your business success:

a) 12 weeks of intensive online training which guides in creating and managing your business

b) Access to mentors to guide you through the early stages of your venture

c) $5,000 in seed capital to prove the concept, with access to further funding

d) Access to a formidable network of other entrepreneurs

Q4: How can I ensure that my application is accepted?

A4: The Foundation has structured the application to test for various key elements:

i. Who you are and the reason behind your decision to be an entrepreneur

Here they want to see who you are and what made you choose entrepreneurship. Who you are do not really mean what you’re called (i.e your name), but what you have achieved before this time. So this is your self-pitch – keep it nice, precise and focused.

ii. Your leadership skills

Business involves leadership – leading your team, leading yourself, managing interests and so on. Ensure to highlight what leadership abilities you have that makes you the person to succeed in this venture.

iii. The story that brought you to this very moment

Every entrepreneur has a story. Maybe you have built something so good that people fell in love with or you have produced services that everyone you know loved, tell it here. Like begets like; if you have achieved something impressive before, chances are, you can replicate that success again.

iv. Your understanding of your business or idea and the market

This is the core aspect of your application. Firstly, you must know your business to describe it in 50 words. The reason is that if you can’t deconstruct whatever complexity that’s involved in building your idea or business, and communicate that in simple, understandable language, you don’t have a business.

Also, you have to understand how the parts (process) of the business/idea work to describe it fully. Paint a picture of how the service starts and ends.

Furthermore, you need to know who your customers are and how to access them, how the business is going to make money, what you are willing to ask for each unit of service or product, and when you expect to break-even (the point at which cost or expenses and revenue are equal). Additionally, be clear about the amount of expenditure you expect to incur each month.

Finally, you must know your competitors and what differentiates your business from theirs.

v. The scalability of your business

They want to see that your business can grow to serve many more people at minimal incremental cost (the increase in total costs resulting from an increase in production or other activity). And so you must be able to show that your business can actually grow in authority to serve clients in other regions or countries. Good market research comes in really handy here.

Suffix: Remember to identify how much money that’s been invested in the business or idea so far, and how much revenue the business/idea has generated in return. Remember also to keep your responses within the given word count. Keep your responses straight to the point. Don’t be in a hurry to hit submit; review and spellcheck/proofread your work before submitting. But ultimately, endeavor to start early so you don’t have to rush. Above all, don’t lie in your application.

Even if you have no entrepreneurship experience, you can still apply for the Tony Elumelu entrepreneurship program. Click To Tweet

Q5: Where can I find the Tony Elumelu Foundation Entrepreneurship Program application?

A5: The application is located at https://tefconnect.com/


Being an alum of the foundation is a great opportunity for me. The lessons from the online training and forum have been fundamental in this new phase of our work at SFAN, and I cherish the network of entrepreneurs I’ve been immersed in. I wish you well in your journey and look forward to seeing you on the alumni platform soon!


Click here to begin your application now.

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