To Rise, Africa needs more Entrepreneurs than Small Business Owners

The weakest link in Africa’s economy is that it has more informal small business owners per capita than any part of the world. To rise, Africa needs more entrepreneurs than the largely un-scalable informal small business owners.

IF ANYTHING explains the poverty in many parts of sub-Saharan Africa, it is not an unwillingness to work hard—most of the continent’s people still sweat to survive tilling fields with medieval tools. Nor is it because of a lack of enterprise and optimism: on the permanently traffic-jammed streets of Lagos, Nigeria’s main commercial city, hawkers gingerly ease their way between cars trying to sell almost anything from snacks to books, pirated DVDs and even toilet seats. Africans are far more likely to be self-employed than people in richer parts of the world, for the simple reason that without social safety nets, many of them must hustle or starve

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Yet for all Africans’ energy and ingenuity, the region struggles to produce enough of the productive and profitable small businesses it needs to lift hundreds of millions of people out of poverty. The World Bank reckons that sub-Saharan Africa has only a quarter as many small businesses as Asia, relative to its population. Members of the OECD, a club of mostly rich countries, have about eight times as many formal small businesses per person

Entrepreneurs build startups – A Startup in this content means going to create something of value with transformational impacts in the market. It is different from small business which could be “barbing salon” [Nigerian slang for barbershop], selling corn along the roads, etc that rarely scales. While a barbing salon [small business] could have competitors on a street, a barbing entrepreneur who runs many salons across Nigeria, will not collapse because of many salons, at the moment. Rather, the entrepreneur will likely go down because of poor execution. Nigeria has not attained parity on the number of barbing salons it needs at the moment; we have more rooms to grow nationwide, but that has to be done optimally and profitably. The competitive elements remain low.

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