Ghana and the Next Wave of Entrepreneurship in Africa
Michael Addo, of Kama Ventures, one of Ghana’s top 100 firms, spends some of his free time teaching entrepreneurial thinking to Ghana’s teachers and youth.
Ghana is one the fastest growing economies in Africa, experiencing strong growth over the past decade and forecasted to grow at 6% to 7% annually in the coming year. With a diverse and rich natural resource base, Ghana also has one of the highest levels of per capital GDP in Africa. Entrepreneurship is going to play a key role in Ghana’s future. The number of entrepreneurship education and training programs has proliferated in Ghana over the past decade and a growing number of young people are pursuing entrepreneurship, with hopes of striking it big.
I spoke with fledgling business owners at the Meltwater Entrepreneurial School of Technology (MEST) Incubator, a multiyear program for college graduates who want to start software companies. It starts with two years of studies, which include everything from critical thinking to coding in Java. After their coursework students pitch their business ideas for coveted spots in the MEST incubator, which come with mentoring, continued technical training, and seed funding. The goal of the program is to support the creation of scalable software companies in Ghana that will generate jobs, spur innovation, and serve a global market.
Recently Hub Accra opened, a co-working space offering shared working spaces, dedicated desk spaces, private office space, and conference room rentals. Several young businesses, including the winner of the last Startup Weekend Accra, SliceBiz, have already located their offices there.
It seems like you couldn’t go even a day or two without running into some effort around building the entrepreneurial ecosystem in Ghana. While I was in Accra I attended a two-day bootcamp for agribusiness entrepreneurs, which culminated in a pitch competition. The winner was a young man pitching an online platform linking farmers to investors and building and mining data systems that would allow farmers to better understand the needs of their investors and inform investors about the potential markets, distribution, and pricing of agricultural goods. Stanford’s new Institute for Innovation in Developing Economies is launching in West Africa through the establishment of a regional Hub in Accra this summer. Their mission is to “stimulate the creation of economic opportunities through innovation, entrepreneurship, and the growth of businesses that change the lives of people who live in poverty around the world”.
I spent more than a week conducting interviews and focus groups with successful entrepreneurs, participants in entrepreneurship education and training programs, and managers of these programs in order to better understand what were the challenges and barriers to achieving more high growth entrepreneurship in Ghana and what best practices in these programs were helping to alleviate or overcome these barriers.
Some programs were quite successful in addressing many of the barriers that these entrepreneurs and aspiring entrepreneurs face. Participants explained how they have learned to think more critically, to recognize opportunities, and to respond to business challenges that arise in developing and maintaining a comparative advantage over their competitors. Mentors have provided much needed guidance and expertise as these entrepreneurs have started and scaled their businesses. Seed funding and board members provide much needed financial and human capital in reaching the high growth potential of scalable firms.
Not to imply the picture is perfect. Several serious challenges remain. The World Bank’s Doing Business project ranked Ghana 64th in terms of “ease of doing business”. The Ghana Angel Investor Network (GAIN) has yet to close a deal. Universities are not preparing students for entrepreneurship; they are preparing students for jobs—jobs that don’t exist. The unemployment rate for recent graduates is incredibly high and it often takes more than a year two for a college graduate to find a job (and that job is usually a position that shouldn’t even require a college degree). Most people in Ghana still view entrepreneurship as an inferior outcome—one for people who couldn’t find a job. A lot of these young people pursuing entrepreneurship that I spoke with are facing a lot of opposition from their families and friends, and they worry about the long-term ramifications on their reputations and careers if they fail at their first ventures. Failure is not something that is embraced in Ghana.
Changing the entrepreneurial mindset in Ghana is perhaps as easy as that first wildly successful startup software company whose exit makes multi-millionaires out of some young people in their twenties who then go on to start more firms, hire more talent, create more innovations, invest in other companies, and help build out the entrepreneurial ecosystem. Perhaps then everyone will want to be Ghana’s next Mark Zuckerberg and we’ll see young people embracing the pursuit of entrepreneurship. That is certainly the goal of many of the incubators and programs that I visited. I think it’s more likely that changing the entrepreneurial mindset will take time and will require a stronger entrepreneurial ecosystem. But construction is definitely underway.
I was actually so inspired by the energy and enthusiasm in Accra that I decided to join in. Given the large and visible gender gap in female entrepreneurship in Africa, I offered to sponsor a pitch competition for women entrepreneurs with high growth potential businesses. It will be held in October at Hub Accra and the winners will receive free co-working space for a year, mentorship by local and international entrepreneurs, and the opportunity to pitch angel investors for seed capital. Interested in joining the effort—though mentoring, investing, or sponsorship? Contact me at nextwaveafrica.com. Hopefully Accra is just the beginning of the next wave of entrepreneurship in Africa.
Alicia Robb is a senior fellow with the Ewing Marion Kauffman Foundation and the principal investigator on the Kauffman Firm Survey.
She is also a research associate at the University of California, Santa Cruz, and a visiting scholar at the Federal Reserve Bank of Atlanta and the Centre for European Economic Research (ZEW-Zentrum für Europäische Wirtschaftsforschung GmbH).
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