Six major African challenges with exponential opportunities for brave entrepreneurs

Six major African challenges with exponential opportunities for brave entrepreneurs

The following are the major challenges in Africa which provide exponential opportunities for entrepreneurs.

Affordable, nutritious food for 1 billion people in Africa:

To feed its growing population, Africa needs to increase its food production by 60 to 70%. Despite its vast agriculture potential Africa spends around USD 30 to USD 50 billion on food imports annually. Lack of self-sufficiency in food production coupled with abject poverty explains the high incidence of malnutrition in the continent. The number of undernourished people in Sub-Saharan Africa (SSA) was estimated at about 218 million in 2014-16. Traditional approaches to increase food production will not be sufficient for achieving food and nutrition security and eradicate hunger. The focus needs to shift from simply ‘growing food’ and increasing smallholder productivity to ‘creating food’. Creating food calls for harnessing the power of technologies to advance alternative solutions like farming on water, vertical urban farming, automated kitchen gardens and lab-based food production. Simultaneously, technology also needs to be leveraged to arrest diversion of food towards biofuel production and the enormous wastage of food.

Low carbon energy security and combatting climate change:

Poor access to electricity and dependence on biomass for fuel is undermining Africa’s efforts to reduce poverty and exacerbating the threat of climate change. Two out of every three people on the continent lack access to electricity. This costs Africa 2-4% of its GDP by undermining economic activities, job creation and investments. Estimates suggest that it will take Africa until 2080 to achieve universal access to electricity and till sometime after the middle of the 22nd century for access to energy for clean cooking. The threat of climate change and Africa’s transition to a low carbon development pathway demands economy-wide de-carbonization to create a resilient climate system which is compatible with climate goals. This calls for leveraging technologies to accelerate adoption of renewable energies, advance low-carbon solutions like carbon capture and storage (CCS) and alternative fuel vehicles and scale efficient energy storage solutions like battery storage, compressed air energy storage and flywheels.

Managing competing usage of water and the interplay between water, energy and food security:

About 66% of Africa is arid or semi-arid and about 40% of people in Sub-Saharan Africa live in a water-scarce environment. Estimates suggest that by 2030, water scarcity can displace up to 700 million people in the continent. Climate change and competing uses of water for agriculture and industry could reduce water availability in cities by as much as two thirds by 2050. With agriculture accounting for over 80% of water consumption in Africa and 95% of the agriculture in Sub-Saharan Africa being rain-fed, the continent needs to urgently manage competing water requirements from various sectors. The continent needs to shift towards adopting solutions that help conserve as well as replenish water supplies. This new lens entails embracing technology-enabled solutions like integrated water management systems, smart agriculture, large-scale desalination powered by renewable energy and capturing atmospheric water. These new age technology driven solutions will help Africa build a ‘circular’ water economy, in which water is increasingly viewed as a renewable resource.

Shifting focus from reactive treatment responses to building holistic healthcare ecosystems:

Africa lags behind the rest of the world on all healthcare indicators. Global life expectancy at birth in 2015 was over 71 years while in Africa it was 60 years. Despite having the world’s largest disease burden, Africa is expected to have a shortage of 6 million health workers by 2030. African health systems face numerous challenges including meagre government spending, deep out-of-pocket expenditures, heavy donor dependence and low penetration of private sector healthcare. These factors coupled with systemic poverty has limited emergence of private healthcare initiatives to only a small number of big cities. Africa has thus far focused only on targeted disease-focused healthcare interventions, which account for only 20% of health care outcomes. Horizontal strategies for improving the capacity of broader health systems to affordably diagnose, prevent and treat health problems are critical for Africa. These strategies should focus on how to best fund healthcare and factor in linkages between healthcare and quality drinking water, waste disposal, access to nutritious food and health awareness levels.

Creating a future-ready workforce in a time of changing skill requirements:

Globally out of 67 million children who are out of school, 43% live in Africa. Shortage of trained teachers, poor quality of education and high dropout rates driven by poor economic conditions accentuate the perilous state of education in Africa. The World Economic Forum predicts that over a third of today’s key workplace skills will change over the next five years. 85% and 67% of jobs in Ethiopia and South Africa are at risk of being replaced by automation. Technology is changing the way people will work in the future as digitization continues to create a shift towards greater specialization and horizontal collaboration. This will translate to newer and changing demand on education as we know it today. Every year 50% of new graduates coming out of universities in Africa, equivalent to 5 million youth, do not get jobs. With Africa’s population projected to double by 2050, the pressure of unemployment will increase manifold. Education systems in Africa therefore, need to urgently factor in early access to tools and skills focusing on collaboration, communication, creativity and critical thinking to equip and empower students of today to enter the workforce for tomorrow.

Expanding choices for the BoP and reducing their vulnerabilities via financial inclusion:

African nations significantly lag behind other emerging economies in terms of financial inclusion. Only 23% of adults in Africa have a bank account. Although SSA’s average ratio of private sector credit to GDP has increased by almost 10 percentage points since 1995 to about 21% in 2014, the figure is still only half the size of that in the Middle East and North Africa. A key hindrance to financial inclusion has been the overdependence on branch expansion for driving banking penetration. This approach has failed due to high transaction costs associated with reaching highly dispersed populations and this has, in turn, stifled innovation. African countries need to trigger a virtuous cycle of savings, investments, incomes and expenditures. For achieving this, the focus needs to shift to a holistic approach that encompasses better segmentation of customers, expansion of choices provided to them through customization, enhancing affordability and deepening penetration via an innovative distribution channels mix.

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