Tony Elumelu Foundation Partners Stanford University in New Research on African Entrepreneurship

Tuesday, May 11,2021 / 10:00 AM / By TEF / Header Image Credit: TEF

The Tony Elumelu Foundation, Africa's leadingphilanthropy, in partnership with Stanford University has released a comprehensive research study centred on Africanentrepreneurs. Thereport revealed amongst others, pertinent cultural factors which influence theentrepreneurial journey of women especially. Women in Africa are overwhelminglyrepresented in entrepreneurship (most entrepreneurs in Africa are women), yettheir businesses are less profitable and experience delayed growth incomparison to their male contemporaries. Women and men also reported dissimilarbusiness motivations and aims, with especially stark differences in how theydiscussed their customers and products. For male entrepreneurs, motivationsrevolved around "profit", "growth" or "capital", while motivation for femaleentrepreneurs learned towards social impact via specific products, services andindustries.

Capital consideration was also a defining aspect formost African entrepreneurs. Using a select pool from the almost 140,000 Africanentrepreneurs that applied to the Tony Elumelu Foundation Entrepreneurship Programmebetween 2015 and 2017, access to capital was identified as not only playing acritical role in running a business, but how it was initially conceptualized - fromsize and scope to design and goals. African entrepreneurs, aware of theirlimitations in raising capital, often restrict their ideas. With increasedaccess to and more opportunities for seed funding, African SMEs will dreambigger, and launch businesses with larger footprint.

The research further investigated the mindset ofentrepreneurs, presenting a unique understanding of the challenges facingAfrican start-ups and the areas for growth across multiple sectors. It provides an opportunityto rethink how entrepreneurship is approached and supported, identifying twocategories of entrepreneurs.

The first set of entrepreneurs - described as the exchange mindset - are grounded in their purpose of providing productsand services, nurturing relationship with employees andcustomers, and providing value to others, while the second set - labelled the organizationmindset - are more concerned about their ability to create, grow and expandtheir company.

The exchange mindset is characterised by amicro-level, 'on-the-ground' view, while the "organizationmindset" entrepreneurs focused on 'being an entrepreneur', characterized by a more macro-level view of themselves and theiractivities. Rather than just orienting themselves around theexchange of products and/or services with customers, organization mindsetentrepreneurs oriented themselves around theirpurpose of creating and growing a company. The study found that individualswith this mindset often discussed growth and performance, managing people andassets, and industry dynamics. Their attention is directed towardthe characteristics of their business and its performance and expansion.

The exchange mindset entrepreneurs show maximum concern about thequality of product and services. In close contrast, the organization mindsetentrepreneurs arelikely to express internal motivation such as feelings of ownership and control,leading to an individualistic focus.

Both mindsets have varying management style aswell, with the former viewing and describing their employers as equals whoseopinions are valued, and the latter as resources to be managed. Althoughdifferences in entrepreneurial mindsets might exist, African entrepreneurs are fundamentallycharacterized by their zeal to make significant impact one way or other.

These differences were most visible geographically across North, West,East and Central Africa. InWest Africa, entrepreneurs - particularly Nigerians - had motivations embeddedin profit-oriented language while Central Africa and Eastern Africanentrepreneurs seemed to be more oriented towards social justice, and communitydevelopment. North African entrepreneurs were more disposed towards cyclical,project-based work. InEastern and Western Africa, there was a greater emphasis on farming andagriculture. Central African entrepreneurs had a lot of overlap in how theydiscussed why they became entrepreneurs with Eastern Africans.

The research concluded with the need for more Africanentrepreneurs to adopt the organizational mindset which is linked to higherbusiness success. Mostentrepreneurs with the "exchange mindset" were women, highlighting the lessformal level with which women view entrepreneurial enterprises. Womenentrepreneurs must be empowered to think differently. African entrepreneurs mustembrace the language of creation alongside a clear vision for growth, which isachievable through guided and targeted mentorship.

Indeed, true to driving impact, the Tony Elumelu Foundation recently opened its online portal to receive applications from extraordinary individualsacross the continent with a minimum of five years of business or professionalexperience to apply for a chance to mentoryoung African entrepreneurs. No doubt mentorship can be valuable across allbusiness stages and levels of experience, these mentors will be assignedto entrepreneursfrom the programme to provide quality guidance that plays into theirbusiness interests.Mentors are required to participate in 2 hours sessions every month, over a12-month period and are rewarded with certificates of achievements and value-addopportunities.

With a labour force of over 400 million whichwill surge by at least 70 percent before 2035, Africa is at a criticalcrossroad on what to do with such viable manpower. To convert this youngAfrican workforce to creators of prosperity, the Tony Elumelu Foundation (TEF), Africa's leadingphilanthropy empowering young African entrepreneurs, is a strong advocate foryoung men and women's participation in entrepreneurship. Through its flagship EntrepreneurshipProgrammelaunched in 2015, over 9,000 SMEs have been trained, funded, and mentored, bythe Foundation, energising the private sector in the process, and creatinghundreds of thousands of jobs directly and indirectly.

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