The blunt assertion by an article published by The Economist that "Africa has too many businesses, too little business," lands like a stone in a still pond, sending ripples of unease.
It suggests a market saturation problem, where numerous businesses are struggling to find enough customers to be profitable, and paints a picture of a continent buzzing with entrepreneurial energy, yet somehow failing to convert that dynamism into substantial, large-scale economic triumphs.
However, to simply shrug it off as "market saturation" feels like a pat diagnosis for a far deeper ailment...for how can a landmass consistently heralded as the "next growth frontier" simultaneously wrestle with an oversupply of struggling ventures?
Indeed, the prevailing narrative around Africa's economic future is bright, almost blindingly so. We're constantly reminded of economies on the rise, a youthful population explosion, and the immense promise of future global clout. Yet, a stark dose of reality arrives in the form of glaring absences.
Not a single African enterprise graces the hallowed halls of the Forbes Global 2000, nor does any homegrown champion feature in the legendary Fortune 500.
While regional titans like Kenya's Safaricom, Equity Group and KCB command respect within East Africa, their reach doesn't yet extend to these global league tables, even as the very Fortune 500 giants – think Coca-Cola, GE – flourish on African soil. This sparks a critical question: what unseen currents are holding Africa back? Is it a drought of talent or ambition? Surely, the answer is no.
The well-worn script of African policymakers often spotlights the pivotal role of Micro, Small, and Medium Enterprises (MSMEs) and SMEs.
From Rwanda's President Paul Kagame, who hails them as the "backbone of Africa's economy," to the African Development Bank's Akinwumi Adesina, urging youth to leap beyond job-seeking into the realm of entrepreneurship, the message rings clear.
In Kenya, President William Ruto's "Hustler Fund" echoes this sentiment, with Sh60 billion reportedly set aside to empower small-scale endeavors. Across the continent, budget blueprints consistently declare MSMEs and SMEs as the bedrock of economic advancement.
This ingrained narrative has, regrettably, cultivated a mindset that often struggles to envision horizons beyond the familiar landscape of small-scale operations.
Academic circles and budding entrepreneurs alike have largely internalised this focus without much interrogation.
However, the uncomfortable truth is that Africa needs to extend beyond a mere proliferation of small businesses; it urgently requires the emergence of more substantial enterprises.
The relentless emphasis on MSMEs and SMEs, while politically expedient, has inadvertently fueled a shrinking formal sector alongside an expanding informal one. Consider the sobering arithmetic of pension contributions: the departure of a single formal sector retiree might necessitate the contributions of a thousand informal sector workers to bridge the gap.
Large corporations are the true dynamos of productivity. They inject vital capital, spark innovation through the cross-pollination of ideas and technology, and establish a robust circulatory system for money within the economy. To nurture these economic powerhouses, African small businesses must undergo a metamorphosis.
Firstly, they must cultivate a deep understanding of market demands and venture into businesses with inherent scalability and significant growth trajectories. Secondly, they need to craft sophisticated marketing blueprints encompassing market penetration, expansion, diversification, and product evolution. Thirdly, securing access to finance is non-negotiable.
This demands fortifying financial foundations, constructing persuasive business narratives, and showcasing financial acumen and robust risk mitigation strategies to attract investors.
However, the headwinds extend far beyond the grasp of individual entrepreneurs. African businesses also contend with macro-economic challenges that necessitate bold governmental action.
The debilitating impact of power outages, which siphons off an average of 25 days of economic activity annually, severely impedes large-scale production, where the losses amplify with the sheer size of the operation.
Furthermore, African heads of state must proactively define and weave their national interests into the very fabric of their economic, fiscal, and foreign policies.
The existing global financial architecture, conceived in 1945 when the vast majority of African nations were still under colonial rule, inherently lacks African perspectives and priorities.
This has resulted in artificially inflated capital costs and an exaggerated perception of risk, making Africa the continent where securing investment comes at the highest price.
Yet, this is not a tale of utter powerlessness. While individual nations may face limitations, the collective might of Africa remains undeniable. The time has come to pivot away from passively awaiting external saviors – be it international governments or donor agencies – and from the often lopsided bilateral agreements inked during state visits to Western capitals.
The agency for change resides within Africa itself. Can the continent cultivate genuine trust, embrace pan-African collaboration, shed the shackles of national ego, and together, finally disprove The Economist's sobering assessment?
The opportunity is tantalisingly present, shimmering like a heat haze across a vast plain. The critical question is whether Africa can finally seize it and transform potential into tangible, widespread prosperity.
The writer is the Deputy Vice-Chancellor Resource Mobilisation and Enterprise Development at Uzima University
