Blueprint says make the most of African enterprise

A plan to promote entrepreneurship in Africa by linking universities with industry, teaching young people business skills and freeing up credit for small ventures was unveiled last week (6 May).

It is the brainchild of the Africa Commission, a group set up by the Danish government last year that comprises several African presidents as well as representatives from the donor community, the private sector and civil society.

The document says that the key to Africa’s development is private sector growth driven by the continent’s youth — who are being held back by a lack of financing and training, it says.

"Africa’s young people deserve a fair chance to break free from poverty by becoming entrepreneurs and creators of jobs," says Lars Løkke Rasmussen, Denmark’s prime minister and chairman of the commission, in the report’s foreword.

Its recommendations include a US$500 million African Guarantee Fund to back loans for small and medium-sized enterprises (SMEs). The fund could mobilise up to US$3 billion in loans, opening up US$20 billion in investments, says Donald Kaberuka, president of the African Development Bank, who plans to host the fund.

The commission also suggests ways of boosting entrepreneurship training and technology transfer in universities, focusing on agriculture. This includes giving 3–5 year grants of up to US$2 million for a handful of universities to fund projects such as revising curricula, engaging local farmers in research projects or funding PhD fellowships relevant to the needs of the rural poor.

The Danish government has committed US$36 million towards the implementation of the report’s recommendations in 2009 and expects to commit more funding in 2010.

But the lion’s share of the cost is expected to come from donors, African governments and the private sector.

Morten Elkjær, chief technical advisor of the commission’s secretariat, says he is "confident" that the money could be raised by the end of this year or early 2010.

"It will be the most innovative initiative launched in Africa in decades, and we are convinced that it will create millions of productive and decent jobs," says Kaberuka.

The commission’s focus on private sector development has been welcomed as a breath of fresh air by academics and entrepreneurs.

"This is a great initiative that couldn’t have come at a better time," says Thomas Egwang, president of the African Academies of Science.

African countries teem with potential, he says. For example, Uganda and a host of other developing countries showed higher entrepreneurial activity per capita than Sweden and the United States in the 2004 Global Entrepreneurship Monitor.

"If this could only be translated into vibrant SMEs which drive the African economies then Africa could spawn a new breed of economic tigers," says Egwang.

"What is new and significant here is the commitment of financial resources in Africa and the recognition that advisory services and policy reform also have to be part of the equation. Linking tertiary education with business is also very important, and rare in Africa," says Arlen Hastings, executive director of the Science Initiative Group at the Institute for Advanced Study at Princeton University. 

But she warns against putting too much trust in the private sector.