Small businesses are the mainstay of modern economies across the planet. The World Bank has stated that small enterprises represent about 90% of businesses and create more than 50% of employment worldwide.
Formal small and medium-sized enterprises (SMEs) contribute up to 40% of national income (GDP) in emerging economies, and informal businesses add a lot more.
However, the African continent remains poor. Per-capita gross national income in sub-Saharan Africa has been estimated around $1,500 in 2020, compared to $7, 000 in the USA and $45,000 in the United Kingdom, according to the World Bank.
Small businesses alone are not the solution to the development challenges of the world’s emerging economies. The key lies in small businesses being able to grow, to scale up, and to transcend their immediate environment. To do this, they need finance.
Investment: Fuelling the quantum leap
Organic growth is always positive, but for a small business to make the quantum leap from start-up to an organisation that can also make a material impact on the economy, requires investment.
That investment can come from loans, grants, venture capital, or equity stakes, but first, business owners must be able to convince potential funders to take a risk and invest. Not enough owners and founders are able to do this, meaning that many businesses do not realise their full potential. Often, funding, when it comes, has to be provided from the savings of founders and their families, which limits the growth that can realistically be achieved.
The finance gap facing micro, small and medium enterprises (MSMEs) is enormous. The International Finance Corporation has estimated that the finance gap faced by formal MSMEs in developing countries is around $5.2 trillion – 19% of the gross domestic product (GDP) of the 128 countries studied. This represents 1.4 times the current level of MSME lending in these countries. Investor funding does not come spontaneously – it flows from a thorough pitching and due-diligence process. Unfortunately, many small-business founders lack the network and the skills to navigate this process.
The challenge is twofold – MSMEs need to be able to access new sources of funding, and then to be able to speak the language of potential investors and convince them of the benefits of investing in a new opportunity.
The process often boils down to “pitching opportunities” and “pitching skills”.
Training to make the big pitch
With this in mind, enterprise development initiatives must make pitch training a component of their models. Providing development funding is a noble and necessary endeavour, but helping to impart the skills and the knowledge to be able to get funding is invaluable.
This is the learning that informed the MultiChoice Africa Accelerator Programme, an initiative aimed at developing and connecting established African start-ups and then scaling those businesses with the help of global investors to unlock business opportunities.
Cognisant of the critical importance of the pitch in securing investment funding, MultiChoice partnered with Dubai-based business training and enterprise-development specialists Companies Creating Change (C3) to design a programme that finds the continent’s most promising start-ups, then empowers them with the skills they need to address – and convince – potential investors at pitch stage.
MultiChoice has also partnered with ECOWAS bank, African Development Bank, Canal +, Newzroom Afrika and EOH, a tech services company who will bring their expertise to the table especially in terms of tech advisory, development sprint and technical support.
The culmination of the programme sees the most promising start-ups – after a thorough training process – getting the opportunity to pitch to a group of serious investors.
Whether these pitches are successful is not the sole point of the process – the start-up founders are empowered with a set of skills that will serve them well throughout their business career. After all, pitching for funding – be it investment, a loan or a partnership – is a part of modern business.
Enterprise development should avoid the “rich saviour” understanding of investment funding. While funding remains a significant barrier for entrepreneurs, it is of far more value for founders to learn the format and methodologies of securing funding than to simply provide a once-off investment.
It is also a sine qua non of any investment partnership that both parties must benefit from an agreement.
In this context, many global investors – particularly in the technology space – are eyeing Africa as a new growth region. The International Monetary Fund (IMF) forecast for 2022 is that developed economies will see a combined growth rate of around 3.7%, while the so-called “advanced economies” are expected to achieve growth of 2.4%.
Africa has endured centuries of underdevelopment. Now, thanks to the opportunities provided by the digital economy, it has an opportunity to bridge the development gap within a matter of decades.
Digital is already booming on the continent. A recent report by Endeavor Africa estimated the size of Africa’s digital economy at $115bn and projected that it will grow to $712bn by 2050, on the back of strong underlying fundamentals and an impetus from Covid-19.
There remains an enormous upside for growth in Africa, given the scope for enhanced digital connectivity, which will bring millions more digitally-savvy young people into the economy. The United Nations Population Division projects that by 2050 Africa will be home to around 2.5bn people – a quarter of the world’s population.
Of those 2.5bn people, around half will be under 24 years of age.
According to the International Telecommunications Union only 14.3% of African households were connected to the internet in 2019, compared to more than 80% of Europeans. However, 39.6% of Africans aged 15-24 were accessing the internet.
This points to a digitally engaged youth, who will embrace the opportunities of connectivity as they become able to access it. Understanding this, the African Union, with support from the World Bank, has committed to connecting every African to the internet by 2030.
Whether this ambitious goal is realised or not, the infrastructure work is proceeding apace.
The upshot is an exponentially-expanding range of digital opportunities for African start-ups. This is the motivation for the MultiChoice Africa Accelerator Programme – to equip African small businesses in the digital sphere with the skills and the connections to convert these opportunities into thriving businesses for the good of Africa’s people.
The Programme is aimed at established small businesses operating in specific technology-driven fields – healthtech, agritech, fintech, edutech, the circular economy and the creative industries. These are not simply growth sectors in the financial sense, but industries that promise to help solve Africa’s most pressing human challenges.
From an initial field of nominees, 29 are chosen to attend a series of virtual training workshops hosted by C3, where they learn everything from business planning and sector analysis to niche marketing, media liaison and investor relations.
From here, the field of entrepreneurs is narrowed down to a smaller group of finalists, which is prepared for the pitch phase in Dubai, where they get to present their business proposals to a group of investors.
This year’s programme takes place in nine African territories – Ivory Coast, Senegal, Nigeria, Ghana, Kenya, Zambia, Angola, Ethiopia and South Africa – and follows on from the success of last year’s event, which saw the Accelerator finalists securing $16m worth of investment funding and support.
The MultiChoice Africa Accelerator Programme is an initiative of the MultiChoice Innovation Fund, in collaboration with C3, which gives entrepreneurs access to the tools, skills and financial support to bring business ideas to life.
The programme is part of a long-term commitment by MultiChoice – as Africa’s leading entertainment company – to growing and multiplying Africa’s vast potential in sectors that will be critical to our continent’s future growth.
We believe SMEs in the technology, sustainability and creative sectors will be fundamental to the next phase of Africa’s development. The MultiChoice Africa Accelerator is geared to finding the most promising start-ups, and empowering them to play this critical role.
Ultimately, it is African entrepreneurs who will help Africa realise its almost limitless potential. This will happen by engaging major business players in the rest of the world and enlightening them about the exciting opportunities emerging on the continent.
These young entrepreneurs are ambitious, innovative and motivated to make a difference for their people. All they require to take the next step onto the international stage is some global connections and some brave and willing investment partners.
As the world wakes up to Africa’s enormous prospects, those partners will become even easier to find.
The MultiChoice Accelerator
An enterprise development programme providing real-world skills
The MultiChoice Africa Accelerator Programme is open to established start-ups and small businesses operating in the technology growth fields of healthtech, agritech, fintech, edutech, the circular economy and the creative industries.
At the start of the programme, public- and private-sector partners in the nine participating African countries nominate start-ups or entrepreneurs to take part.
From the nominated business, 29 are selected to embark on an intensive entrepreneurship virtual training course. The course takes place over several weeks, teaching start-up owners’ media skills, how best to market their businesses to investors and how to create attractive business plans.
All training takes place with an eye to outlining what potential investors are looking for in a new partner.
Later, the 29 entrepreneurs come together at a finals event, where 11 start-ups are selected for the final pitch phase. These finalists then attend a dedicated C3 boot camp, where they learn how to shape their story for international investors, and to get “pitch ready” before their big presentations.
Last year, the six MultiChoice Accelerator finalists secured S16m in funding, and a network of global connections that will last them for life.