The Anzisha Prize, the premier award for Africa’s best young entrepreneurs, recently published the Anzisha Youth Entrepreneurship Survey 2016, which provides a snapshot of the realities facing young entrepreneurs in Africa.
The full document can be downloaded here.
The Survey is based on an emailed questionnaire answered by a selection of young entrepreneurs within the 15 to 25 age group, and located across the continent. The questions focus on five areas of operating a business, namely (1) Growth, (2) Sales and marketing, (3) Human resources, (4) Funding and (5) Support. It is intended that stakeholders such as policy makers, support organisations, and entrepreneurs themselves will benefit from these insights.
“African Leadership Academy is excited to be investing in research such as this,” says Josh Adler, Vice President, Global Programmes at the African Leadership Academy, hosts of the Anzisha Prize. “It is our hope that this and future reports will guide the work of teachers, policy makers and other stakeholders in the youth development sector.”
The Survey’s main findings include:
– Entrepreneurs who participated are confident about the future. More than three quarters are “very positive” (79%), while 21% are “somewhat positive” about the outlook for their ventures. None expressed any negative sentiments.
– Funding is by far the greatest impediment to growth, with 48% of respondents highlighting it as the biggest obstacle to expanding their companies.
– Only 14% of respondents currently do business internationally, indicating an untapped growth opportunity.
Sales and marketing
– When it comes to marketing their businesses, young entrepreneurs invest in paid-for advertisements on social media networks (57%) as well as exhibitions and events (50%). However, word-of-mouth (83%) is by far the most popular marketing medium. Relatively few make use of more expensive channels such as television (10%), outdoor (17%) and radio (18%).
– In terms of human resources, employee cost (43%) is the biggest challenge facing young entrepreneurs, followed by a lack of adequately skilled talent (20%), motivating staff (12%) and attracting talent (10%).
– Young CEOs reward and incentivise their employees in a variety of ways, with training programmes (51%), bonuses (47%) and gifts/days off (43%) being the most popular. A large percentage also allow their employees to participate in the success of the business through profit share (37%) and equity stakes (22%).
– Only 27% of respondents have secured outside funding/investment for their businesses. Family and friends (59%) are the top source of capital, in addition to grants (52%) and crowdfunding (22%). The majority of those who have not secured outside funding said they simply did not know how to find potential backers.
– Over 50% of the entrepreneurs surveyed indicated they do have a partner in the business, and in many cases more than one. The top reason cited for not having a business partner is: “I haven’t been able to find someone suitable” (46%).
– Respondents receive support and advice from a variety of sources, such as networking events (64%), mentors (62%), training programmes (54%) and online resources (52%), to name a few.
– The majority described the level of support available to entrepreneurs in their country as “fair” (43%). However, 24% and 17% labelled the situation as “poor” and “very poor” respectively, suggesting significant work remains to make it easier for young business people to succeed.
– When asked what should be the top priority for government to better support young business owners, the majority said that entrepreneurship should be taught in schools (32%). The second most-popular suggestion was to improve infrastructure (20%), followed by the introduction of tax incentives for young entrepreneurs (14%).