Share Article

The African continent is widely regarded as the next frontier in terms of small business development. Small and medium enterprises (SMEs) currently account for up to 90% of businesses in Sub-Saharan Africa. Entrepreneurs play a vital role in social upliftment, economic empowerment, and global competitiveness. Within the SME ecosystems of countries such as Kenya, Rwanda, and Mauritius lie invaluable lessons for young African entrepreneurs on how to harness the potential of human ingenuity, resilience, and technological innovation.

This is according to Matthew Cumming, Business Partners International Chief Investment Officer, who says that one of the unique qualities of proudly African entrepreneurship is its ability to address problems that exist at a grassroots level. “Nigerian digital bank, Kuda, proudly referred to as the ‘bank of the free,’ has made phenomenal inroads into making banking and financial management more accessible to everyday Nigerians. There are many examples just like these throughout the continent, including Uganda’s SafeBoda – a start-up that aims to revolutionize the way motorcycle taxi drivers are viewed by the public and make a living. Far beyond the economic benefit of building a thriving small business community, African SMEs represent immense potential for impact – to change lives, families, and communities.

All eyes should be on Africa right now for the small businesses of the future, who will have the capabilities to set the continent up on the global stage but also provide important solutions to pressing issues,” says Cumming.

Tech can level the playing field

To this point, there is much that young African entrepreneurs can learn from some of Africa’s key small business territories. Kenyan SMEs, for example, have led the pack in terms of how technology can be harnessed to leapfrog countries in the developed world. In the past, a lack of financial resources and global clout have put African countries on the backfoot. However, several Kenyan small businesses have succeeded in leveraging digital technology to overcome these challenges and get a proverbial foot in the door.

The vibrant start-up scene in Kenya as well as the relatively large volume of tech disruptors emerging from the region has earned it the fond nickname of: Silicon Savannah. M-Pesa and M-Kopa are just two of the names that stand out as leaders in the Kenyan tech arena.

“What these and other start-ups have harnessed is the ubiquity of technology – the same technology that is created for Kenyans and used by them can be used by people in other global territories. This affords these kinds of innovators the ability to scale exponentially,” says Cumming.

Ease of doing business should be top priority

Rwanda also stands out as an African country with a booming small business environment – and for good reason. The country is known for the ease of doing business – a factor that can be attributed to a concerted effort by the Rwandan government to reduce bureaucracy, creating an enabling environment for business and using statutory instruments to make the start-up ecosystem more open to newcomers.

Registering a business in Rwanda, for example, is relatively hassle-free and streamlined compared to other countries. Its fast turnaround process for business registration is one of the factors that earned Rwanda the title of second easiest place to do business on the continent, according to the 2020 World Bank ‘Doing Business’ report.

In many African countries, as Cumming asserts, this is one of the key lessons that needs to be applied to the way small businesses get off the ground. “In spite of efforts to reduce red tape and banks offering quick company registrations, entrepreneurs are currently facing some level of red tape and often struggle to get past the initial stages of turning their idea into a fully-fledged venture. Continued efforts to streamline processes will hopefully bear more positive fruits for SMEs in the near future,” he says.

Leapfrogging through local production

Mauritius stands out as an African leader in terms of the rapid growth and expansion of its small business base. Although its travel and tourism sector has always been one of its major and most recognizable drawcards for aspiring businesspeople, Mauritius has also succeeded in diversifying its economy.

The country was once known almost exclusively for its agricultural value and the production of sugar cane. However, for the past few decades, the state and the private sector have been hard at work expanding the country’s production capacities into other sectors including textiles, apparel, and pharmaceuticals. Doing this has allowed it to diversify both in terms of revenue and risk.

African countries can – and should – follow suit, in Cumming’s opinion, “especially given that many are rich in natural resources. If we can succeed in creating a more enabling environment for aspiring production facilities and small businesses, we have the potential to outshine other leading territories and set our countries up as global producers. Not only will this reap remarkable dividends for the economy, but it will also go a long way in addressing serious challenges such as unemployment,” says Cumming.

About the Author: Matthew Cumming

Chief Investment Officers
Matthew Cumming is the Chief Investment Officer – Business Partners International Africa and is experienced in development finance, risk finance and impact investment. Matthew is our spokesperson for all things business finance, support and growth within the African content.