A new report — PwC Africa Business Survey 2019 — paints a realistic picture of the grim situation of the African entrepreneur but it also highlights some of the positives which when viewed from the right perspective, outweighs the challenges for the future of entrepreneurship on the continent. One key area where Africa leads Europe, however, is a focus on digitalization.
The report, which looked at the current situation and the prospects for the future pinned the two main challenges of entrepreneurship facing African entrepreneurship compared to Europe and it came down to infrastructure and finance. For example, the high cost of electricity and frequent blackouts in Africa’s largest economy — Nigeria — means that small and medium-sized businesses find it almost impossible to compete with deep-pocket international companies.
Another mystery of the African narrative was captured in the report — the fact that the continent has the largest youth population, the highest unemployment rate and yet manages to have skills shortages.
“Structural problems including corruption, a lack of infrastructure (including digital infrastructure such as broadband), high unemployment and inadequate education systems continue to undermine growth. Entrepreneurs surveyed also expressed concerns about talent and skills shortages. Despite high unemployment rates across Africa, 79% of those surveyed say they expect losses on revenues due to skills shortages.”
In spite of all the challenges, African businesses are called “resilient” because somehow they have seen very dire market conditions and still manages to survive. This resilience makes the African development Bank optimistic of the prospects of the continent going forward but researchers say optimism is not enough to drive the needed change if Africa is to connect potential to reality.
“Optimism isn’t enough given the serious challenges ahead. Business leaders must act. The key is digitalization and the time to embrace it is now. The World Bank recently highlighted the role of digitalization on Africa’s potential, saying in a report that the digital economy can “unlock new pathways for inclusive growth, innovation, job creation, service delivery, and poverty reduction”. The bank’s chief economist for Africa, Albert Zuefack, called digital transformation a “game-changer”, explaining that it has the potential to increase growth by nearly two percentage points per year on the continent.” the report noted.
The rise of technology
Africa is ahead of Europe when it comes to the push for key technologies such as as the Internet of Things (IoT), blockchain and Artificial Intelligence (AI). The AfDB rightly noted that a focus on the tech of the future is the game-changer for Africa because PwC researchers found out that approximately 73% of African businesses recognize the high relevance of IoT for the future while 45% indicate blockchain will be crucial and another 36% recognizing AI as crucial going forward.
If African businesses build their capacities for these technologies, there’s no telling the place Africa will be when everything is connected from microchip implants to smart fridges and self-driving cars.
In spite of Africa’s prospects in future tech, the number of businesses that have already taken steps to make their business IT prove is still low. However, 55% of businesses have already taken steps to revamp their designs and digital strategy. Hopefully, these numbers will nudge the entire business landscape in Africa to a digital-first future so that the continent can catch up with the rest of the world.
A new breed of graduates
African universities must change course to meet the demands of the businesses on the continent. It has become apparent that the human resource output of the continent does not address this new push for a digital-first future. Schools must begin to take what PwC calls Essential Eight Technologies — 3D Printing, Artificial Intelligence (AI), Augmented Reality (AR), Blockchain, Drones, The Internet of Things (IoT), Robotics, and Virtual Reality — seriously. These eight (8) will determine the future and businesses who want to go into these areas must have the human resources to drive them.
So far, many businesses say they can’t find the needed people to meet the demands of a digital-first future in Africa. They have had to compete with big tech for the few who study these new technologies.