South Africa, Botswana and Namibia Trump Nigeria and Kenya On 2015 Global Entrepreneurship Index

South Africa, Botswana and Namibia Trump Nigeria and Kenya On 2015 Global Entrepreneurship Index

Enough of making uneducated guesses about entrepreneurial activities in Africa, facts and figures serve better for identifying the right policies and programs to accelerate growth and job creation. Entrepreneurial success does not take place in a vacuum; and entrepreneurs are defined by a mix of attitudes, resources, and infrastructure, which all make up their entrepreneurship ‘ecosystem’.

Enough of making uneducated guesses about entrepreneurial activities in Africa, facts and figures serve better for identifying the right policies and programs to accelerate growth and job creation. Entrepreneurial success does not take place in a vacuum; and entrepreneurs are defined by a mix of attitudes, resources, and infrastructure, which all make up their entrepreneurship ‘ecosystem’.

Likewise, the Global Entrepreneurship Index (GEI) is a tool that measures the health of the entrepreneurship ecosystems in each of 120 countries annually. The GEI basically describes entrepreneurial ecosystems in terms of three major factors – the entrepreneurial attitudes, entrepreneurial abilities, and entrepreneurial aspirations in the different countries.

The Figures

According to the GEI 2015 ratings, South Africa is the only sub-Saharan African country in the top 50 percent. SA leads African entrepreneurship with a GEI score of 40.0, which puts it at 52nd in the global GEI rankings. Botswana follows with a GEI score of 30.0, putting it at 66th position in global GEI ranking. Next comes Namibia with a GEI score of 31.9 and 69th position globally. Nigeria comes in 4th with a GEI score of 28.9 and 84th position globally, while Kenya follows closely with GEI score 28.5 and ranks 86th globally.

The Analysis

The 2015 GEI contains great revelations about the true condition of entrepreneurship in Sub-Saharan Africa, among other regions measured:

  • Firstly, in spite of encouraging strides made in recent years, Africa still remains the least developed continent. It is however worthy of note that Africa comes close to the world average in Technology Absorption capacity, a measure that combines countries’ institutional capacity to absorb technology with start-up activity in the technology sectors.
  • Africa is seen to suffer from a bottleneck in start-up skills. While this may appear inconsistent with the popular fact that African countries exhibit some of the highest self-employment rates in the world, the measure actually indicates a quality problem – “most African self-employment activity is of poor quality. While starting a need-driven self-employment activity is easy, building a sophisticated start-up is difficult.”
  • Africa’s most serious handicap according to the report, is in its tertiary education, which ranks lowest of all regions. This factor can be blamed for the dearth of sophisticated business execution.
  • African entrepreneurs score really low in the Attitudes measure – risk acceptance, networking, cultural support, and opportunity perception. The continent’s strength is primarily in Ability.
  • The economic standing of African countries directly impacts their entrepreneurship. The GEI also explained why poor individuals and poor countries are limited in entrepreneurial pursuits.

GEI Rank

Country GEI
52 South Africa 40.0
66 Botswana 33.0
69 Namibia 31.9
84 Nigeria 28.9
86 Kenya 28.5
93 Gabon 27.7
96 Senegal 27.3
99 Rwanda 26.2
101 Gambia 25.6
102 Benin 25.6

Table: 2015 GEI ranking of top 10 Sub-Saharan African countries. Courtesy: GEDI

Overall, entrepreneurship in Africa is held back by institutional factors, a pattern typical in developing countries; the continent scores better on individual-level factors. Thus, to exploit their entrepreneurial potential more effectively, African countries need to improve their institutional provisions for entrepreneurship.

A comparison of three African countries was carried out by the institute – South Africa, the leading country in terms of entrepreneurship, Nigeria not far behind at 4th position, and Uganda that ranks last of the 28 countries analyzed:

The profiles of the three countries are quite different. South Africa clearly stands apart from Nigeria and Uganda on some of its Ability variables (notably, Competition and Opportunity Start-up) and many of its Aspiration variables (notably, Competition, Product Innovation, Process Innovation, High Growth, and Internationalization). This signals that better institutional conditions should enable aspirational entrepreneurial activity to flourish. In terms of Start-up Skills, however, South Africa is on a par with Nigeria and Uganda.

Nigeria stands out in terms of Opportunity Perception and Networking, but it is held back by poor aspirations. Nigeria lags behind South Africa and even Uganda in terms of Risk Acceptance, which reflects a high level of Business Risk due to the country’s significant corruption and poor contractual enforcement.

Uganda is at the bottom of the African countries, which perhaps reflects its recent internal instability. Although it enjoys relative bright spots in Networking, Cultural Support, and Competition, Uganda has considerable work to do to improve its institutions and introduce internal stability, both of which currently hold back its entrepreneurial potential.

All three countries’ profiles are highly uneven, a pattern typical of developing economies. The uneven profiles suggest that there are bottlenecks holding back entrepreneurial performance, which is even true of the leading country in the region. However, the positive news is that, by focusing on alleviating bottlenecks, these countries could make significant progress relative to the effort expended. This differs from countries with rounder profiles, where opportunities for “quick wins” tend to be fewer.

The GEI is powered by the Global Entrepreneurship and Development Institute (GEDI), a body in tune with the the Global Entrepreneurship Network. The GEN in turn is a community that has arisen from Global Entrepreneurship Week, an annual celebration of entrepreneurs now in more than 150 countries.

Lara Sanni
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