- February 19, 2014
- Posted by: Diekola Onaolapo
- Category: Eczellon Talks
Steve Jobs and Steve Wozniak developed the finest computer and built the world’s once most valuable company, from the garage of their father’s house. Ellon Musk, CEO of Tesla is currently thinking of “Hyper-Loop”, a technology of transportation that will move you at double the speed of a jet. Possibly take you from California to New York in less than an hour. Mark Zuckerberg brought Facebook and ever since, information, communication and even marketing have all taken a new dimension.
Africa would love to join in these technological revolutions. It’s just that for the many young kids, who would have built advanced computers, their fathers do not own a home, let alone a garage. For the entrepreneur, who requires solutions to transportation issues, Hyperloop is a concept for aliens and clearing needless traffic jams would suffice as “the solution for the moment”. And for the whiz-kid who could have brought a social-network breakthrough, there is no electricity with which his ideas would be tested, and the noise of power generators pretty much drowns the whispering voice of inspired idea generation.
Africa really is a place of dreams. But how many of the dreams in these lands will ever become reality?
With the present level of (under)development across the continent, every idea has the potential to be a great hit. In 1999, GSM telecommunication was introduced in Nigeria and contrary to analyst opinions of firms like Vodacom who opined that Nigeria was too poor and its people would not be able to afford the mobile telecommunication services. According to J Paye & Associates, “In 10 years, MTN grossed a total of 2.988 trillion Naira in revenues between March 2001 and December 2010, and posted profits after tax amounting to 857.655 billion Naira during the same period. The company also grew its subscriber base to 52 percent of the market share by June 2011” (http://jpaye.com/africanbusinessquarterly/?p=764).
Africa has been described by many as the final frontier for global economic growth. The question then is: why is the continent not any better for it?
The right idea is as important as the right structure and environment for its growth.
A measure of the development of Africa will come from the emergence of real entrepreneurship and the sustainability of their businesses as economic going concerns. Currently, entrepreneurial endeavors do not survive for long in these markets. Businesses, which usually start at subsistent levels, do not live beyond the first generation.
A clear factor is the lack of access to the right business and financial education for the entrepreneurs, which will expand their perspectives and prevent the businesses from failure.
Already plagued by adverse market factors such as non-existent infrastructure to support production and distribution of products and services, corruption in governance which creates unnecessary hindrance to free and fair markets, and other unfavourable business environment dynamics; entrepreneurs need to equip their businesses with the right tools to aid long term market positioning.
A crucial tool for entrepreneurship success is access to the right financing. For every business, irrespective of location, whether small enterprises or large corporations and even governments, it is always important to match all investment decisions with the right financing options i.e. not just any financing, but in what form and what size. It is this access (to financing), however, that most entrepreneurs fail to attract.
Much as the richer western world and the nouveau-riche Asian financial powers are looking at Africa for investment because of much higher yields, there is still a high level of skepticism in these foreign investors about coming really deep into the core of opportunities in the market. The skepticism is premised, not on lack of investment merit, but on lack of structure which heightens long term sustainability risks.
Indigenous entities, whether at SME-level or large corporates, are really not yet attractive, as business structures are weak, proper governance is just coming into discussions, and many entrepreneurs seem to be more interested in building their personal riches and egos – acquiring the next private jet – than building their businesses; with many believing in only the right “connection” to the corridor of power as the ultimate success factor required.
With the reforms in Nigeria in sectors like oil and gas, power, financial services and others, many opportunities have sprung up in those spaces. Many indigenous firms may however not be able to attract the required financing to fully harness those opportunities presented.
As these opportunities emerge, the call is to finance professionals to take up the role expected of them – to assist businesses in building the right structures and enhance sustainable attractiveness to investment.
Although the development of Africa is largely dependent on governance, development is not the sole responsibility of governments. Professionals will have to step up with the right ideas, and resolve to actively contribute towards the development of the emerging markets of Africa. Then, will the continent begin to realize the latent dreams for her people.
Some of the oldest and most successful businesses in the world started with an initial small step. Even nations begin from somewhere too. Look at the UAE. What is important is vision and access to the right tools to pursue the vision.
image credit: http://www.bloggersafrica.com/