A Time to Pilot, a...

A Time to Pilot, and a Time to Scale Up

Johannesburg was overrun last month with ministers and young entrepreneurs, university professors, and angel investors, all coming together for the 2017 Global Entrepreneurship Congress.

The Premier of the Gauteng Province gives a keynote address to a packed house. Photo Credit: infoDev/World BankThe Premier of the Gauteng Province gives a keynote address to a packed house. Photo Credit: infoDev/World Bank

South Africa’s Minister of Small Business Development, Lindiwe Zulu, spoke on the significance of the event to the African agenda on entrepreneurship as “our 2010,” with reference to South Africa hosting the World Cup for the first time. When Deputy President Cyril Ramaphosa opened the conference, he stated: “We meet here today to share ideas and rekindle hope in a fast-changing world for our people who long for a better tomorrow.” Similarly, the mayor of Johannesburg and founder/CEO of Black Like Me, Herman Mashaba challenged the audience saying: “Our plans [to develop entrepreneurs] must be bold and our implementation must match that boldness.” And indeed, South Africa has set high goals to grow the number of small and medium enterprises by 20% per year, and create 800,000 jobs annually from now until 2030. 

South Africa is not alone in its ambitions. In 2011, infoDev and the World Bank Group launched one of their first start-up incubators, mLab Southern Africa, in Pretoria. At the time, it was one of very few such incubators scattered across the continent. Sitting in a crowded room of African policymakers last month, it became apparent that the appetite for entrepreneur support programs and policies has grown considerably since then. As Doug Rand, former assistant director for entrepreneurship at the White House under President Obama stated, “If you pitch it the right way, advocating for entrepreneurship support programs is like pushing against an open door.”

Over 30 policymakers from across the globe came to discuss entrepreneurship policy. Photo Credit: infoDev/World Bank

Dr. Assane Mayaki, CEO of the New Partnership for Africa’s Development (NEPAD) emphasized a focus on developing African productive capacity to promote industrialization. “Industrialization,” he said, “will not take place without a critical mass of SMEs.” Similarly, the United Nations Conference on Trade and Development (UNCTAD) Secretary General noted that “no nation can realize inclusive development without targeted policies that promote entrepreneurship.”

The consistent trend among African nations is a growing number of pilots running separately. For example, Nigeria maintains 16 separate programs, and in South Africa, there are a number of stakeholders at the local, regional, and national levels piloting their own initiatives.

In each country, the entrepreneurship agenda sits under a wide range of ministries — the Ministry of Economy, Ministry of Industry and Trade, Ministry of Youth and Crafts, Ministry of Business Development — the list goes on. By the end of the ministerial meeting, it becomes apparent that there may have been a time for piloting projects, but now is the time to become more strategic.

Throughout the week, the World Bank Group team shared insights from our program experience and research to help inform these strategic efforts. Sophia Muradyan told an audience that among the over 200 “accelerators” in Africa, very few fit the definition or provided fundamental services. Ellen Olafsen shared that out of every 100 start-ups, only seven would grow after two years. The ones that do are often led by former employees of large firms, who have wide personal networks. If we really want to build scale-ups (and not just start-ups), entrepreneurship programs must find ways to simulate all of that through management training, mentorship, and more.

Adding to the discussion, Natasha Kapil presented some counter-intuitive research on innovation. For many of us, entrepreneurship invokes ideas about increasing competition, disrupting the status quo, and developing new technology. But while innovation in the West is often determined by R&D expenditure, research shows that in developing economies, it is driven by something else.

At the heart of the conference were the challenges of bringing together these insights from entrepreneurship research and leveraging them to inform policy and program design. As one participant lamented during a Q&A, “It’s awesome to hear about everything that’s happening, but we need data. We need to better capture and disseminate results if we really want to drive the [entrepreneurship] agenda forward.”

While researchers and policymakers seek out more data-driven results, investors are also seeking out more success stories with high returns. Thus, during GEC, the World Bank also partnered with the African Business Angel Network for a roundtable discussion with over 20 leading investors from across the continent. With representatives from Ivory Coast to Zambia and a list of countries in between, the trends quickly became clear. Despite the high transaction costs and other risks, there is a growing appetite for investment, and angels are eager to network and share their lessons learned.

At the World Bank Group, we continue to conduct research on the efficacy and impact of entrepreneurship programs and provide analytical guidance on innovation policies. We also realize that this requires seeking out new opportunities to pilot programs that fill market gaps, and can provide new options for our client partners to support their local ecosystems. Over the past few years, we’ve launched several initiatives, and we’ve learned from each experience how to better support entrepreneurship ecosystems. As the global agenda continues to develop and refocus its efforts, we look forward to sharing best practices, policy advice, and practical guidance based on the data and research we’ve collected.

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