Shaping Africa’s Growth
Africa’s population is the youngest on earth and the fastest growing. Recent research predicts that in the year 2100, five of the 10 most populous countries on earth will be in Africa. This is an opportunity for the continent and its leaders, but job creation in Africa is not keeping pace with this rapid population growth resulting in a ‘ticking time bomb’.
Fred Swaniker, Founder and CEO of the African Leadership Group, believes you cannot teach leadership, but it can be learnt, and you can create an environment that allows leaders to rise.
“Let me explain what I mean by that,” says Fred when he joined CDC for an Insight event on shaping the future of Africa. “You can take a horse to water, but you can’t force the horse to drink.”
As Africa’s population is the youngest on earth and the fastest growing, Fred is focused on how you create a generation of African leaders to create jobs and continue economic growth on the continent. His work is critical. Research recently published by the Lancet predicts that in the year 2100, five of the 10 most populous countries on earth will be in Africa, and the continent will make up 40% of the world’s population. While it presents an opportunity, job creation in Africa is not keeping pace with this rapid population growth, resulting in a ‘ticking time bomb’.
Fred says entrepreneurs must be at the heart of job creation strategies on the continent. On average, he says, one young entrepreneur they develop creates 16 jobs and what’s more, young business owners hire their peers – employing more young people in their business.
But these future leaders do not act in isolation. Chairing the event, Colin Buckley, CDC’s Head of External Affairs, asked Fred for his thoughts on how the move to a more digital economy will impact this generation of leaders.
“This pandemic has opened up markets for Africa’s youth to work in. Before, if you wanted to go and work somewhere else, you had to go through all kinds of immigration challenges. Now you can sit as an engineer in Tanzania and work for Siemens in Germany. That’s a huge opportunity for African talent enabled by technology. We can export our talent, but without the brain drain.”
Likewise, Fred sees technology as one of the greatest forces for rapid change. Africa, he says, has the potential to develop faster than regions have in the past, using technology to quicken the pace of development. “In Africa we didn’t have to replicate landlines, which would have taken decades and cost trillions of dollars. When the mobile phone was invented, we leapfrogged straight to mobile and within 20 years, 800 million people had access to telephones.”
And this is how CDC views development too, said Managing Director and Head of Africa, Tenbite Ermias, who joined the discussion. CDC views technology as an enabler of jobs and development but Tenbite agrees with Fred that Africa must move faster than developed continents to catch-up.
“If we are just aspiring for 4G network then you know when everyone else is on 7G we’ll be at 5G, so we need to keep pushing,” said Tenbite.
But Fred points out that we must be careful not to “over glorify” technology. It is an enabler of other industries. It is no longer only the domain of Silicon Valley – it is critical for every sector and allows you to solve problems more efficiently and at a lower cost, such as access to services.
And so, to the role for impact investors and development finance institutions such as CDC. What should they do to support Africa’s young leaders and job creators?
First, Fred says, they should use their influence as an outsider to help governments create policies to build entrepreneur-friendly environments which support business growth. Second, they should invest in long term infrastructure to contribute to the enabling environment.
Third, use of capital. Fred suggests that CDC should be prepared to take risk to back the start-ups and entrepreneurs which will be the future of Africa.
“Africa is a greenfield continent – there’s so many things that need to be and to be built from scratch, says Fred.
“And so, finding that venture that’s been going for 30 years and 50 years and giving it a bit of private equity and some financial engineering, it’s really limiting the potential of what CDC could do. So how do you think about getting early stage capital? Do you create a subsidiary venture capital fund of sorts where you’re taking more risk and invest in young entrepreneurs who are starting things from scratch?”
“I challenge you as CDC to really put some of that capital to risk, because the bang for the buck in Africa is much greater than the rest of the world.”
And while Tenbite agrees, he says CDC takes a “toolkit” approach on the continent. He explains that CDC invests into “big ticket” transformational deals, but also provides funding to financial institutions which get credit to where it is needed the most. Increasingly CDC is investing in venture capital, putting money into early-stage businesses, backing young entrepreneurs and their expertise.
“But is the job done and have we pushed every button that could be pushed? No, and I take the challenge from Fred that we should also be thinking about tomorrow’s job creators and the younger entrepreneurs who are on the market. So, challenge accepted and we’ll certainly keep working on it.”