Combined with these financing challenges, small enterprises struggle with the same issues of infrastructure and staffing as large businesses, but without scale the costs can be far more acutely felt. On aggregate, starting a business in sub-Saharan Africa costs 56.2% of income per capita, compared with 14.6% in South Asia and 27.7% in East Asia and the Pacific, according to the World Bank’s 2014 Doing Business ranking.
Part of Elumelu’s mission will be to work with – and lobby – governments to try to improve the environment for start-ups, he says.
“We’re also thinking of engaging with the African Union to create cluster cities where we can have an ICT cluster. We could have a farm and agri cluster,” he says. “People with great ideas could go to these clusters where everything is provided.”
There have, however, been several major changes that give African entrepreneurs starting businesses now an opportunity to get to scale.
“I think if you look at my case – we started in Nigeria, today we’re operating in 19 African countries. The African market is not as fragmented as it was before,” Elumelu says. “The economic zones and unions are becoming more active and more supportive of business. African leaders and governments are beginning to open up their brains.
It took several years for UBA to obtain a licence to operate in Ghana, Elumelu recalls. Now, integration across the Economic Community of West African States (Ecowas), means that businesses are able to move and scale cross-border with a degree of ease.
“There is a kind of liberalism growing on the continent now, and a genuine willingness to support African businesses to do well. Before, people looked at businesses with suspicion. But that is changing. As you go, people begin to see that you are adding value to their countries, and they will help you, so scale is achieved,” he says.
“So for the upcoming entrepreneurs, I think they will not have a problem… they will just follow the terrain, the path, and adapt.”
Applications to the entrepreneurship programme, which came from 52 countries, have given the foundation an unprecedented view of what is driving – and slowing – entrepreneurs on the continent. Understanding the environment and determinants for success in African contexts is an important aspect of his strategy for building a sustainable cohort of businesses, Elumelu says.
The power of American and European business schools in setting the terms of debate on how to succeed as an entrepreneur – and how private and public institutions can support them – has often skewed the priorities that start-ups set themselves.
Building a wealth of information and training specific to the environments that African entrepreneurs will face will be critical to moving beyond time- and capital-limited programs, like his own, and building self-sustaining momentum.
Click here for the first part of the interview series.