Building businesses and creating livelihoods
"These businesses are a catalyst for change across Africa."
Commentary by The Rt Hon The Lord Boateng PC DL, The African Enterprise Challenge Fund, Nairobi, Kenya
“There is always something new out of Africa,” said Pliny, The Elder in reference to the exotic products of the African and trans-Saharan trade routes. Today the same might be said of the growth of small and medium-sized enterprises (SMEs) in Africa. They are serving not just global demand but also a continent that benefits from a growing middle class. These businesses provide exciting opportunities for Africa and its trading partners. Chief amongst these partners are the UK and the City of London.
These opportunities are showcased in this important report. As the grandson of a Ghanaian cocoa farmer and a London print worker, I have lived and worked in Africa and London. I know that the links that exist between us, when properly developed, can provide a basis for sustainable growth and mutual benefit in a rapidly changing world.
The African Enterprise Challenge Fund (AECF), which I chair, is a pan-African, multi-donor challenge fund based in Nairobi, focused on the agribusiness and renewable energy sectors. It has worked with some of the most forward looking and innovative entrepreneurs on the continent. Their businesses have helped create livelihoods in rural communities in some of the most challenging parts of Africa and linked them to global markets. They have taken the African producer up the value chain.
These businesses are a catalyst for change across Africa. Today, on a continent where youth make up almost half of all long-term unemployment, SMEs create vital jobs and provide opportunities that reduce the need to migrate in search of a better life. With higher incomes, people can build up savings and assets that help them manage risks, secure essential healthcare and education, and invest in commercial activities.
One of the key barriers for SMEs is the limited access to financing. Some estimates put the funding gap at more than $140bn. Since 2008, the AECF has sought to bridge this gap by making catalytic investments in more than 255 projects in 23 African countries. We are proud of the many thousands of jobs and $470m in additional benefits that these projects have helped to create.
There is still more to be done. An SME funding gap remains and a lack of information about African markets often holds back potential investments. This makes the Companies to Inspire Africa initiative a welcome and important contribution.
In challenging times, we need to reinforce the spirit of enterprise and the value of enduring relationships, and recall that our best hope lies in building value chains from rural Africa to the City of London. As l learnt to say in my days in South Africa: Vukuzenzele, which means wake up and go for it!