No Bootstraps: Why African entrepreneurs are the most resilient.

Photo by Mehmet Turgut Kirkgoz

It is almost very common nowadays to read glamorous articles on Techstars or TechCabal describing how an African startup raised millions of Venture capital dollars in funding rounds. The Ideology that the African market possesses an untapped potential for unprecedented returns has succeeded fairly well in swaying the hearts of Western investors, However, the goal of this article is not to Ctrl + C and paste the stats of the industry. Rather, it is to highlight the unfounded uniqueness of the African entrepreneurship landscape. 

To delve deeper into the context of our discussion, you will require a basic understanding of Economics; starting with the concept of ‘social mobility’. As a layman, which you are probably not, You might have come across the term called ‘Cycle of Poverty’, but perhaps, you didn’t really grasp the meaning in its entirety, This term is used basically to describe the phenomenon where poor families stay impoverished for at least three generations. Generally speaking, if your grandparents were poor, and your parents were poor, the odds are decent that you, too, will be poor and if you have stayed in Africa, or at least Nigeria, you will agree with me that the generational circle is most likely to lag longer due to obvious, yet shameful factors. 

So how does this concept of ‘Social mobility relate to the ‘Cycle of Poverty’ and why are we talking about this? Isaac Newton wrote, ‘If I have seen further than others, it is by standing upon the shoulders of giants’, I totally agree with you that this quote can be viewed from different perspectives, but for this context, it explains how your foundation as an individual can affect your ability to be progressive and successful in life. Africans and most especially those from the Sub-Saharan region have experienced centuries of wide income inequality gap and high poverty rates spanning down from the influence of colonialism and corrupt government practices. These historical trends have laid low a huge percentage of the population far below the average Socio-Economic class, thereby hampering not just their ability to start ventures but also their confidence to approach and demonstrate their creative ideas. Evidently, this problem isn’t limited to just Africans, but no doubt, we absorb the largest chunk of the heat. 

The Second Factor is the High rate of unemployment and poor Job Transition Opportunities. According to Business Insider, A healthy economy maintains an unemployment rate that hovers between 3% and 5%. While this might be quite unrealistic to attain given prevailing economic realities, it will interest you to know that Nigeria’s Unemployment rate is over 41% according to KPMG forecast for 2023, to make the matter more spicy like Jollof, many Nigerians will argue with you that this figure is grossly under-reported. In a similar vein, there have been popular statistics highlighting the fact (Subject to Confirmation) that 90% of startups fail. If this is true, Imagine what the fate of an average African would be if they spent 5 years in the university, graduating to start a business that will end up failing. Yeah! I know that you might want to argue that businesses generally require risk-taking, Well, I wouldn’t mind that much of a risk if I could easily get a Job as an attendant at McDonald’s or Nando Chicken and earn a living wage just like our counterparts in more advanced economies. To give more picture to context, imagine transitioning to a very saturated and already populated job market after being away for 3-5 years working on your venture. Also, imagine the amount of Africans who will be willing to build businesses if they have some level of Security as to the amount of risk they can take by starting a venture within the continent. It takes great determination to do all these in a continent where the ropes and hopes to hold onto are just as thin as your sewing thread.

Now, Let’s talk about Funding or Capital Generation. At the start of this article, I sarcastically highlighted how African Entrepreneurs rake millions of dollars in Venture Capital funding; well, while this might be true, what is more important to ask is, are these funds enough? Obviously, we all know resources are scarce and Africa is one of the few continents with an abundance of scarce resources yet to be explored, why then are we still raising the littlest of funds compared to all other continents of similar or smaller size? From a ‘normatively idealistic’ perspective, we should be raising higher funding, because it is widely believed that we are the least developed continent with more problems to be solved than any other continent. Not to bore you with too many questions, the idea of raising millions or billions of dollars is sadly not a realistic depiction of the prevalent funding deficits across the continent. Raising capital for venture building in Africa is almost like finding the lamp that will make you an Aladdin. No wonder a lot of African entrepreneurs focus too much energy on preparing for funding rather than building scalable and solution-based ventures.

It is in the face of all of these challenges and more such as a lack of a good welfare benefits system, Insecurity, Geopolitical instability,  Infrastructural deficits, and regulatory impediments that we see a lot of indigenous African ventures and entrepreneurs from humble beginnings making waves across the globe, dismantling the negative stereotypes associated with the continent’s population. Wes Hall, titled his book ‘No Bootstraps when you are barefooted”. I think that is a very Nice title, but if I were asked to rename the book, it would be “No Bootstrap when you are an African Entrepreneur”. This just goes to say that whenever you meet with any African founder on the global stage, Give them a firm handshake, but be careful not to throw them off their feet too, for they might just be barefooted.

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