August 3, 2021

“We must support very young African companies which have started to prove their worth”

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Summit on the financing of African economies in Paris, May 18, 2021.

Tribune. During the summit on the financing of African economies held in Paris on May 18, for the first time, heads of state and heads of international organizations made support for the African economy a top priority. African entrepreneurship as an engine for stronger and more inclusive growth.

Actors on the ground in Africa, as company founder and investor respectively, we are delighted with this recognition at the highest level. In order for these declarations to lead to concrete support for young African companies, we propose that the alliance for entrepreneurship in Africa, announced at the end of the summit, be supplemented by the establishment of a fund to finance priming.

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Indeed, any entrepreneurial project is initiated by a form of financing that the entrepreneur brings together quickly to bring his business to life. It is generally his own money, that of his relatives or, in mature economies, that which comes from actors dedicated to these very early phases of the life of the company (business angels, incubator grants, etc.).

Because of the maturity stage of African economies, these seed resources are lacking, which explains the stagnation of many viable projects that could have given rise to prosperous businesses that create lasting jobs. This is why we are calling for the creation of a fund to support very young companies which have started to prove themselves and to demonstrate their potential, even if they are still very risky.

Public utility

It is difficult to overstate the multiple benefits of the African entrepreneurial revolution. For twenty years, a whole generation of start-ups, VSEs and SMEs has emerged which have demonstrated their public utility. A large number of these companies, because they meet the essential needs of their customers (food, accommodation, treatment, training, etc.), contribute to the resolution of social or societal issues.

Whether it is agrifood units structuring supply chains with farmers and running small factories to bring processed local products to urban customers (yoghurts, bread, rice, fruit juices, etc.), private clinics , companies offering access to electricity in rural areas, construction companies or private schools, these companies, while pursuing their commercial objectives, create jobs, opportunities for their suppliers and a supply of reliable local products.

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In addition, entrepreneurs play an essential role in the great African transformation underway, this long cycle of economic progress, sometimes chaotic, and demographic transition, often atypical, which gives rise to the emergence of a working middle class. The African entrepreneurial revolution is a long-term phenomenon, on which heads of state are right to bet.

Of course, African and international public actors did not wait for this summit to implement measures to support African entrepreneurship, on essential levels: vocational training policy, investment in infrastructure, facilitation and digitization of procedures. administrative …

A unique opportunity

But much remains to be done, including the fight against fiscal arbitrariness and against late payments … from the administrations themselves. For the past ten years, the public authorities have also provided support for private initiatives to finance African SMEs.

The alliance for entrepreneurship in Africa represents a unique opportunity to go further, particularly in terms of business financing, a brake constantly cited by entrepreneurs. In particular, the seed financing fund that we are calling for would be inspired by the successful experience of a few actors in the field and would set itself the objective of financing, in five years, 500 companies in at least 20 African countries. (including fragile countries that are often neglected, especially in the Sahel), for amounts per company of between 20,000 and 100,000 euros.

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This fund would target both technological start-ups and more “traditional” companies in the upstream phase (agrifood processing, services to individuals and companies, transport, training, medical practices, light manufacturing, pharmacy, etc. .).

It would also affect many talented women entrepreneurs, as it is true that, unfortunately, they are seldom found in the small circle of large companies. Funding could take the form of honor loans.

Business leaders would be selected and supported by specialized teams independent of public administrations, ill-equipped to interact with very small structures. Over a three-year horizon, we can expect that half of the companies supported will have reached an initial maturity, which can then be part of a long-term development trajectory, and use other financing and development tools. support such as the SME funds already mentioned.

The economic upheavals linked to the pandemic invite us to reinvent our development support strategies. On paper, political and economic leaders have taken the measure of the urgency to support entrepreneurs. Solutions are known, all that remains is to bring them to life, on a large scale.

Bagore Bathily is founder and CEO of Laiterie du berger (Senegalese SME in the fresh dairy products sector) and president of Enablis Senegal (network of entrepreneurs).

Jérémy Hajdenberg is DGA of Investisseurs et Partenaires (a company specializing in the financing and support of African entrepreneurs) and author, with Jean-Michel Severino, ofEntrepreneurial Africa (ed. Odile Jacob, 2016).