How To Turn Africa’s Entrepreneurial Spirit Into Real Economic Growth

Africa is the world’s most entrepreneurial continent. According to the African Development Bank, more than 1 in 5 working-age Africans are starting businesses. For women, it’s more than 1 in 4. Unfortunately, these entrepreneurs are likely to have been forced into entrepreneurship by necessity rather than an opportunity. They are also more likely to go out of business and less likely to create employment than their peers on other continents. Very few businesses grow to the point where they can efficiently deliver products and services, employ others, and create wealth. Amma Gyampo wants to change that. Based in Accra, Ghana she has come at this problem from several angles over the years as a founder of AmDeCo, which supports SMEs and investors, and as a Founding Member of the Lady Angel Network and Impact Investing Ghana. 

Gyampo is not the first to highlight the importance of small-and-medium enterprises (SMEs) to the socio-economic development of Africa, but it is safe to say that the traditional approach has not been successful. Gyampo attributes this failure to the short-term focus of many of the interventions. It is exacerbated by the fact that support is concentrated at the early stage rather than the growth stage. “There is a lot of attention and resources available for startup and ideation stage of SMEs but very little dedicated to getting more of our SMEs to cross the finish line of growth and maturity, where the real economic development and jobs are,” she said. Her program, Scale Up Africa, is filling that gap by “addressing one of the most significant barriers to scalable growth of our SMEs to become large companies; sustained support and management expertise.”

The program will select 10 high-growth potential SMEs and support them for intensively for 2 years. Gyampo stresses that the focus is on quality, and not quantity. This same focus holds for their corporate and other ecosystem partners who will support the program and its business owners. Right now, Gyampo is working with these partners to identify businesses to support in agriculture, technology, or that are women-led with at least two years of operations. Using an approach specifically designed for the realities of the African market, Gyampo believes that these companies will, for example, be in a position to take advantage of the trillion-dollar market for African agriculture.

When it comes to investment into these businesses, Gyampo is wary of getting put into the “impact investment” category. “It’s almost a case of don’t say the ‘I word’, and let’s stick to the metrics. Profit and purpose are not mutually exclusive, but it’s part of our job as ecosystem builders to convey specific success stories and relay those to mainstream investors and stakeholders,” she said.

Regardless of if the money comes from an impact investor or a more conventional one, a small business needs to be ready to take on that capital. They not only need to have the systems in place to manage the money but the operational processes that will turn each dollar input into more than a dollar of output. Small businesses need support getting to that stage. “For now, our focus is not on investment for our cohort SMEs, but rather clearly demonstrate a path to revenue, profits and scale. Once we’ve achieved that with our first cohort, we will invite our investor colleagues to come in at that latter stage,” said Gyampo. 

If Gyampo can figure out a model that reliably turns small, early-stage businesses into ones that can become sustainable, profitable, and growing then the entrepreneurial spirit on the continent can finally be harnessed to power real economic growth. That’s something worth investing in.