Entrepreneurship is no substitute for development

Despite the buzz, Africa is the world’s most difficult environment for startups.


You have to get used to failure. If you can’t, then how can you win?

This was the advice Jack Ma, the founder of e-commerce giant Alibaba and Asia’s richest man, gave to budding startups in Kenya during a recent visit, part of his first trip to Africa.

Ma’s visit triggered a media frenzy, more akin to the reception of a rock star than the owner of an an online retailer, with anxious crowds hanging on his every word, desperate for any insight into how to replicate his phenomenal success.

The excitement reflects a growing obsession with entrepreneurship in Africa, fuelled by a global narrative rooted in the success of Silicon Valley’s tech giants. African startups are often portrayed by the media as a virtual panacea for the continent’s development challenges.

Everything from education, unemployment and underdeveloped infrastructure, to financial inclusion and agriculture, it seems, can be fixed with the entrepreneurial mindset. All that is needed is innovation, determination and, usually, an app.

The excitement about entrepreneurship in Africa has even given rise to miniature Silicon Valleys, with Nairobi being dubbed “Silicon Savannah”, while Lagos’s tech hub goes by “Yabacon Valley”. While such terms make for good news stories, this narrative should be treated with care.

Entrepreneurship is indispensable in any successful economy, but it does not take place in a vacuum. The Global Entrepreneurship Index lists 14 pillars of success including education levels, governance, economic complexity and depth of capital markets. Put differently, your odds of success as an entrepreneur are correlated to your country’s level of development.

African nations cluster towards the bottom of the 137-country index. Nigeria and Kenya, widely considered to be the driving forces behind entrepreneurship on the continent, come in at 100 and 107 respectively. Jack Ma’s China is in 48th place.

Despite the buzz, the continent is the world’s most difficult environment for startups. In places like Lagos and Nairobi, while teeming with activity and experimentation, the ecosystem remains highly fragmented, with virtually no startups achieving any meaningful scale.

No guarantee of success

Even if a country’s environment is deemed conducive to entrepreneurship, success is far from guaranteed. In the US, which sits at the top of the index, an estimated 90% of startups fail. Beyond this, entrepreneurship is simply not a thing for most people. It requires a level of focus, ability, determination, resilience and will that few are cut out for.

Stories like those of Jack Ma, Mark Zuckerberg and Elon Musk are inspirational precisely because of how unlikely they are. In reality, and this is true of both developing and developed nations, most people just want a secure job. Successful entrepreneurship is no substitute for development – in many ways it is a product thereof.

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