How to Nurture Entrepreneurs in Africa

Entrepreneurship is the next big thing in Africa. Many young graduates are opting to run startups rather than seek traditional employment. This may not be news to some observers. But what is news is that African society has started to accept this new class of entrepreneurs. The well-worn path of getting a college degree and going to work for banks, mines or giant corporations is making way for one where graduates can pursue their own passions.

Many of these young entrepreneurs are inspired by Silicon Valley more than what’s going on in their own neighborhoods. The social media sector in Africa can be divided into three groups: The first works to copy innovations, like Facebook and Twitter, that already exist; the second develops useful technologies and offers them for free; and the third belongs to the core entrepreneurial class offering new and viable business ideas.

Unfortunately, the last group isn’t getting much help. The reason has to do with a simple lack of funding. Most rich Africans, who tend to be politicians or military generals, have little familiarity with funding since investing isn’t the source of their wealth. And Africa’s immature intellectual property-rights environment continues to stifle invention.

So how can we best nurture African entrepreneurs?

FUNDING: While it is good for Americans and Europeans to run workshops on entrepreneurship in Africa, what matters most is funding. There are many local nongovernmental organizations running these programs, but unless someone has money to invest in the best entrepreneurial ideas, nothing substantial will happen.

MONETISATION: Young entrepreneurs need to learn that giving away their products for free may not be the best idea. Rather, they should figure out how to monetize their ideas and use that revenue for growth.

THINK LOCAL: While building a Facebook clone may be exciting, it doesn’t offer many prospects for long-term success. Most people won’t leave Facebook for the local version.

SEGREGATE WEBSITES: It’s important for startups to think about their exit strategy from day one. If a business is hoping to be acquired in the future, it may make sense for it to build a different website for each of its products or services. That will help the startup sell each unit independently. When one site hosts all these products together, untangling them during an acquisition can be difficult.

(Ndubuisi Ekekwe is the founder of the nonprofit African Institution of Technology. He recently edited “Nanotechnology and Microelectronics: Global Diffusion, Economics and Policy.”)

© 2011 Harvard Business Publishing