Entrepreneurship has become a catch-phrase. It needs lot more focus, an effectively steered supportive framework and lots of financial investments especially in sub-saharan Africa. Entrepreneurial challenges are well known, but governments and their development partners’ commitment and pragmatic will to address the teething issues has always been very limited. The need for SME and entrepreneurship development is especially relevant in Africa, where young and expanding populations require the creation of jobs. Fostering entrepreneurship development especially in the agri-food sector will be key to the economic and social progress and in addressing the bulging youth unemployment challenges in the sub-region.
There is the urgent need for proactively supporting young people in the West African sub-region to identify business opportunities across the agricultural value chain and also re-focusing the mindset of governments, individual and institutional investors to be innovative in their approach to providing financing for young agricultural entrepreneurs.
The bulging African youth population coupled with high youth unemployment rate makes a case of exploring business opportunities across the agricultural value chain highly relevant today. According to the International Food Policy Research Institute (IFPRI), Agriculture contributes one-quarter to one-third of African gross domestic product (GDP) but employs 65-75% of the labour force. According to the World Bank, the value of food on domestic markets in Africa is projected to increase from US$ 313 billion in 2010 to US$1 trillion in 2030. World food prices are high and expected to remain so for at least the medium term. This is a massive opportunity before African producers, and especially for young Africans.
With various research works validating the fact that African agricultural productivity is ready for a massive boom, young Africans in the sub-region, not necessarily having much interest in the production level activities, can also discover that along the agricultural value chain, bounteous businesses can be created. Numerous opportunities are available to be explored across the value chain. These include participating as: Suppliers, Research and Development Service providers (including Knowledge Management services), Financing ( Debt, Equity, Commodity Investments), Agri-input dealership, Processors and Manufacturers, Retailers and Exporters, Agribusiness Incubator management, et al. This list is by no means exhaustive and the target market is vast with attendant high demand for products and services in the sector.
Historical evidence indicates that youth unemployment in Africa is due to, on the one hand, a more than a threefold increase in the youthful population over the last forty years, and on the hand, failure of most African economies to generate sufficient employment outlets. Opportunities for job creation exist for young Africans would not yield any meaningful impact if supportive frameworks are weak or even worse, non-existent and are mere rhetoric.
There is a real need for strategic interventions and approaches by African governments and development partners to face challenges of unemployment and underemployment of the bulging African youth population. Nurturing and impacting employable skills to unskilled youth in rural, peri-urban and urban communities to improve their chances of getting employed and/or becoming entrepreneurs is very essential. However, since majority of non-skilled youth reside in rural communities, they should receive greater focus and support. The demographic needs of young rural people are very challenging and they are prone to migrating to cities for non-available jobs if they are left idle and not supported. Development of a dynamic process of acquiring basic to advanced skills training in both farm and non-farm enterprises and provision of startup grants and loans ( at flexible interest rates and collateral arrangements) will go a long way to address youth unemployment and provide enterprise growth. Availability of mentoring and business development services would further improve the business and managerial skills of young rural entrepreneurs.
Financing has been a major drawback to sustaining entrepreneurial activities. Innovative financing for young entrepreneurs is still at embryonic stages. Access to capital remains a major obstacle to entrepreneurship development in the sub-region. Limited understanding of entrepreneurship activities relative to counterparts in developed nations effectively debilitate the growth of the sector. There is also the reality of high failure rate of new ventures. Although the exact failure rate across the West African sub-region is difficult to establish, estimates point to an average of 40% to 60% of new ventures failing within the first 2 years. This means that few ventures are moving from low-growth micro-enterprises to small, medium sized enterprises (SMEs), creating the so-called “missing middle.” There is the need for Venture Capital firms, Banks, non-bank financial institutions and other investment institutions to step out of their comfortable risk-averse desks and develop highly innovative financing mechanisms for high growth-oriented enterprises owned by young entrepreneurs in West Africa. With specific focus on young rural agribusiness enterprises, such innovative financial mechanisms can leverage on-farm resources such as land, crop insurance, ware-house receipt systems, and communal land ownership, as Guarantee for Collateralization. Financial institutions interested in scaling their client reach should develop tailor-made schemes for young rural entrepreneurs such matching grants, leasing and equity investments. Governments can initiate policies such as meaningful tax breaks for young entrepreneurs to cushion their operations.
This is the time for our leaders and development partners to initiate pragmatic projects to address youth unemployment in both farm and off-farm activities through providing employable skills development and financial intermediation for fledgling youth-run ventures. Youth issues are being discussed globally and we don’t have to disappoint this generation.
The time to think anew and act anew is now!
Solomon Elorm Allavi
Syecomp Ghana Ltd
+233 20 144 21 91