Insights Archives - Entreprenante Afrique

Insights

The articles in this category allow the audience to have a better understanding of different topics related to African entrepreneurship: the economic or political context, social issues, etc.

©, copyright Mali Shi

Insights Perspectives Testimonials

In Mali, a company specializing in shea butter sets an example for the continent

©, copyright Mali Shi

Jérémie Malbrancke and Simbala Sylla look back at the story of Mali Shi, a Malian company founded in 2019 and the first industrial shea processor in the country. The story…

Jérémie Malbrancke and Simbala Sylla look back at the story of Mali Shi, a Malian company founded in 2019 and the first industrial shea processor in the country. The story of a committed and determined company, which allows the development of a sector creating thousands of jobs and enhancing local resources.

Mali is slowly regaining its commercial and financial standing in West Africa since the lifting of ECOWAS sanctions in July. Following the seizure of power by Assimi Goïta’s junta, the organization of West African states had imposed, along with its members, the closure of borders, the suspension of commercial and financial exchanges and the freezing of assets at the Central Bank.

In this favorable context, the Mali Shi factory, the first industrial shea nut processing unit in Mali, can resume its development trajectory. Before the installation of this plant, Mali, the world’s second largest producer of shea nuts with 250,000 tons per year, behind Nigeria, was in the absurd situation of having all of its production shipped in raw form to Côte d’Ivoire, Senegal, and Ghana, which in turn export almonds and butter to Europe.

In total, the world market drains between 400,000 and 500,000 tons of butter per year, representing about twice as many raw nuts. More than 85% of shea butter is used in the food industry, mainly to replace part of the cheaper cocoa butter in the manufacture of chocolate. This is a growing market and a real boon for Mali for a number of reasons.

First, because this activity relies primarily on women. In southern Mali, they are the ones who harvest the shea nuts at the end of the rainy season. After two years of activity, Mali Shi is working with about sixty cooperatives and already 26,000 women in the regions of Kayes, Koulikoro, Ségou and Sikasso. The goal is to eventually work with 120,000 women at full capacity. The factory, which employs 97 people, has purchased 1,600 tons of nuts in 2020, and 7,700 tons in 2021, and is targeting 30,000 tons within two years.

A windfall also because Mali Shi’s activities have resulted in a large number of positive social impacts. The factory has financed the establishment of unions, in partnership with the World Bank, UN Women and the Global Shea Alliance. These bodies have made it possible to organize the constitutive assemblies of the cooperatives in the villages, to accompany the organizations in the procedures of legal formalization with the authorities, to disseminate good practices of collection, production and storage… but also to train leaders in accounting management, marketing and commercial negotiation. In some areas, this support has enabled a seven-fold increase in the volume of nuts harvested from one year to the next.

For Mali Shi, the challenge now is to ensure the continuity of supply in quantity and quality, in close cooperation with the communities. Mali Shi has a dedicated supply team, consisting of area managers and field agents who work closely with the women and their organizations. To secure the supply chain, contracts are signed with all partner production organizations, agreeing on fixed quantities and prices. This is often the only sustainable source of income for the women partners of the factory. Finally, Mali Shi maintains links with its suppliers even outside of purchasing campaigns, through training on good practices for collecting and preserving the nuts, for example, or awareness-raising activities on the maintenance of the shea tree park.

The positive effects are also due to the recycling of production waste. In the transformation process, the nuts are heated and pressed. On the one hand, vegetable oil – commonly known as shea butter because it is solid at room temperature – is obtained. On the other side, the residues of the nuts, the oil cakes, are obtained. This useful “waste” is reused in the factory’s boiler and distributed to the women as fuel for post-collection processing. Nothing is lost, everything is transformed!

The story of Mali Shi demonstrates the emergence of a new economic reality in Africa: determined local entrepreneurs can overcome huge obstacles to develop industries that contribute to creating thousands of jobs by valorizing locally available resources. The funding required, in the order of a few million euros – compared to the budget of certain programs run by international development institutions – proves that small amounts of money, well invested, can have a considerable impact over the long term.

There is no shortage of opportunities in Africa, including in landlocked countries with a reputation for instability like Mali. As everywhere else, to succeed it is necessary to be pragmatic in the approach and vision of the projects undertaken and to surround oneself with the right skills. Let’s hope that Mali Shi inspires other entrepreneurial success stories elsewhere on the continent!

By : Simballa Sylla and Jérémie Malbrancke

No Comments

Les déchets plastiques en Afrique : de la fatalité aux opportunités ?

Insights Perspectives

Plastic waste in Africa: from fatality to opportunities?

Les déchets plastiques en Afrique : de la fatalité aux opportunités ?

While the regulatory battle against plastic bags has seen notable successes in Africa, where 34 out of 54 countries have banned their use, these victories should not be the tree…

While the regulatory battle against plastic bags has seen notable successes in Africa, where 34 out of 54 countries have banned their use, these victories should not be the tree that hides the forest. Plastic bags are certainly the most visible form of plastic pollution, but they are far from being the only source. It is also important to be realistic: plastic use is not about to decrease, nor is its production. Indeed, the production of plastic could triple by 2050, at a time when their harmful effects on health and the environment are the subject of increased vigilance.

The issue is particularly sensitive in Africa, which is becoming one of the outlets for the rest of the world’s plastic waste, not to mention locally generated waste. The difficulty of recycling and recovering plastic waste that accumulates in open dumps should be a priority for policy makers and industry.

As the UN lays the groundwork for a treaty to address the issue of plastic waste, it is urgent for Africa to find solutions that do not only aim at the total disappearance of plastic packaging but also at developing alternative ways of producing 100% biodegradable or recyclable plastics, as well as collection and recycling services.

Let’s recall that plastic does not only have negative effects. For example, we must distinguish between polluting and recyclable plastics… Among the most obvious advantages, plastic packaging has made it possible to considerably increase the shelf life of fresh food. Without adequate packaging, it would not be possible to transport meat, liquids, and many preparations to the cities and the most remote areas of the continent. Plastic is lighter and stronger than glass, and more malleable than metal. It is an excellent insulator, waterproof, and can be shaped into an infinite number of sizes, thicknesses, and shapes. If this material is so ubiquitous today, it is because it has demonstrated benefits that no other material has.

The question is not so much how to get rid of plastics as how to reason about their use, transform their production and management in order to make them recyclable and, as much as possible, find new sources (other than oil…) to produce them.

Already, many initiatives are emerging on the African continent to recover the plastic waste that can be recycled: reuse of waste to make building bricks or public garbage cans, or individual collection of recyclable waste to sell to factories specializing in their transformation.

But these initiatives will not trigger a mass movement on the scale of African national economies if real circuits of production of 100% recyclable plastics, collection and recycling are not put in place. These circuits exist for glass, nothing prevents us from imagining that the plastic value chain could be inspired by them.

As with metals and glass, the recycling of plastic waste has an economic justification, and technical solutions already exist (PET plastics) or are under development (bioplastics based on algae, fungi, or synthesized by bacteria). The success of each of these methods will depend in particular on their ability to be integrated into a wider cycle of reuse: either to produce biogas, or as an agricultural input, or as a recyclable product in the same form.

The turnaround can be made by bringing together researchers, engineers, public decision-makers, industrialists, users, and all those who, today informally, tomorrow perhaps as employees, make a living from the recovery of plastic waste and have therefore developed expertise in their sorting, collection, marketing, and recovery.

The Moringa Fund is working with its portfolio companies on this project, through the Moringa/ATAF project and the consulting firm The Right Packaging*. The avenues of reflection currently being developed focus on controlling the collection of water bottles and their recycling, and the use of high-pressure decontamination processes in tanks rather than in fruit juice packaging – which makes it possible to use materials other than plastic (cardboard, glass, cans). For dried fruit, the aim is to favor bulk sales as well as the use of single-material flexible packaging allowing for recycling. These avenues are being explored in particular by the Moringa portfolio companies in Mali and Benin.

The market for plastic waste treatment holds huge potential profits, even outside the continent’s borders. Plastic production in Europe is already running out of materials to recycle, and a waste reprocessing industry in Africa could find a secondary market to finance its development. Eventually, plastic could become a coveted raw material…

Bringing together environmental, economic and commercial interests with scientific innovation could finally be the happy and unexpected consequence of solutions to the plastic waste issue in Africa.

By : Jocelyne Ehret

No Comments

E'Sens © Ikari Services - 2021

Insights Perspectives

Financing African agriculture: how to break the deadlock?

E'Sens © Ikari Services - 2021

Agriculture is at the heart of the issues of economic growth, political stability, and the fight against climate change in Africa, is an observation which is widely recognized. However, even…

Agriculture is at the heart of the issues of economic growth, political stability, and the fight against climate change in Africa, is an observation which is widely recognized. However, even today, the funds mobilized by African governments for food and agriculture fall short of the targets set. While the FAO estimates that 10% of African national budgets should be dedicated to these sectors in order to achieve economic and social development, in reality these sectors’ budgets are generally too low, poorly spent, and inefficient (FAO, 2021). The fact that such an essential sector remains a victim of chronic under-investment demonstrates the extreme complexity of the challenge facing Africa. The urgency of improving financing for African agriculture is widely recognized, but implementation has been stubbornly lacking.

So, the sector is still marked by the failure of the various state banks created in many African countries to finance the development of the agricultural sector. As for traditional banks, they are often reluctant to direct their financing products towards agricultural actors which are perceived as too risky, too informal, and too fragmented.

Yet, banks have an essential role to play in the future of African agriculture. How can we learn from the mistakes of the past and propose solutions adapted to the financing of African agriculture?

Participating in a learning and exchange process

The analysis of agricultural value chains makes it possible to understand the sectors in their entirety. Each flow can be analyzed at the different stages of the chain: production, collection, processing, transport, distribution, equipment, supply, etc, thus breaking the misconception that financing the agricultural sector means financing only the producers.

This value chain analysis approach is linked to necessary on-site visits to meet agricultural entrepreneurs, and deconstruct preconceived ideas. For example, one of the commonly accepted assumptions was that the main criterion for choosing a loan was its cost (price sensitivity of agricultural entrepreneurs). In interviews with entrepreneurs in the agricultural sector in Senegal, it was found that the main criterion for them was the responsiveness of the banking institution, rather than the interest rate, mainly because of seasonality constraints.

The importance of proximity and dedicated human resources

The first risk management lever is the training of human resources (business managers and credit managers): this involves putting the credit manager at the heart of the process of identifying the risks related to a sector or an actor.

In addition to this training, there must be closer geographic proximity to the agricultural production areas. A commercial presence in direct contact with the ecosystem of a sector allows a better assessment of the risks. For example, Cofina decided to open a branch in the Niayes region of Senegal in order to be close to the market gardening area: this allows both a better marketing approach and a better knowledge of the risks linked to the crops in the area.

Targeting actors better to “secure” funding

In order to manage risk, a financing institution may favor actors with the best quality image in the value chain. These are generally larger and more formal players: aggregators, traders, processors, etc. A bank can also “move down or up” the value chain towards actors perceived as riskier (less risky ??).

The bank can also identify financing instruments where the quality image of a dominant player acts as a security for the bank’ in order to finance the downstream or upstream part of the chain: for example via an advance on an invoice. In this “entry point approach,” risk management is embedded in different time phases: my customer’s business partners today are my customers tomorrow.

Finally, the mobilization of African banks towards the financing of local agriculture will be possible as long as they have access to long-term liquidity. In this context, international donors or impact funds have a key role to play in giving local banks the means to effectively finance agricultural sectors via “earmarked funds” for agriculture.

In addition to this catalytic role, donors can partly address the risks posed by weak collateral and poor-quality assets that characterize some actors in the agricultural value chains. This is made possible by mobilizing risk-sharing funds, concessional financing, or guarantee funds.

Through targeted grants, development agencies can also facilitate the process of analyzing value chains, identifying potential targets, and creating attractive pipelines.

Learning, proximity, and risk management

The hundreds of billions missing for the financing of African agriculture can be seen in two different ways: either it is a symptom of a sector that cannot be financed by banks, leaving this function to public programs, international donors or a few microfinance institutions… or it is a sign that there is a huge field of unexplored opportunities.

As committed supporters of the growth of African SMEs, Cofina and classM fully subscribe to the second option. We are convinced that an approach based on learning from past mistakes, proximity to the actors, and better risk management will allow the development of the potential of African agriculture.

By : Serge Massamba Ndombele and Jérémie Malbrancke

No Comments

Insights Perspectives Testimonials

Innovative Investments Empower Women

This article was co-written by Ksapa and Investisseurs & Partenaires, and is also published on their website. The gender question is at the heart of the international debate. The eradication…

This article was co-written by Ksapa and Investisseurs & Partenaires, and is also published on their website.

The gender question is at the heart of the international debate. The eradication of discrimination against women and girls, the women’s empowerment and the parity between women and men are considered as key factors of development, respect of human rights, peace and world security. The Sustainable Development Goals have reaffirmed the key role of women’s empowerment in the democratic process, in order to take the necessary decisions on all aspects of sustainable development.

As such, Ksapa approached Investisseurs & Partenaires, a specialist in impact investing across the African continent, to discuss the implications of gender empowerment for the private sector. Together, we examine key figures on the challenges of gender empowerment, demonstrating its prevalence in rural areas of the African continent. Under the current conditions, how they can businesses and investors embed a solid gender perspective as part of their impact strategies to better address the challenges of the gender empowerment. Based on different initiatives led by Ksapa and I&P, we infer practical recommendations for mobilizing capital in favor of gender empowerment.

1. Key Issues in Gender Empowerment

Gender empowerment implies, in essence, the equitable distribution of resources between men and women – as well as girls and boys. That is, in principle. In practice, gender empowerment may clash with deeply entrenched social attitudes – themselves translating into equally structural social, economic and cultural decisions.

Structural Disparities Between Men And Women

Men and women just like boys and girls are indeed not equal in the face of poverty and in their access to opportunities. Even less so in the context of interwoven climate, health and socioeconomic crises. Women account for less than a third of available human capital wealth in low and lower-middle-income countries. In South Asia, losses due to gender inequality are estimated at $9.1 trillion, compared to $6.7 trillion in Latin America and the Caribbean and $3.1 trillion in the Middle East and North Africa. In sub-Saharan Africa, they amount to $2.5 trillion. As such, the OECD publishes the social institutions and gender equality index, designed to measure, discrimination against women in social institutions at the international level. For example, in 2019, this index was 37.0 in Senegal, 42.8 in Côte d’Ivoire and 34.5 in Ghana.

Socio-Economic Impacts of Gender Empowerment

Despite heavy stigma, women now control 32% of the world’s wealth and generate an additional $5 trillion each year – at a much faster rate than in the past. In addition, for every dollar of investment raised, women-owned startups generate $0.78 in revenue, compared to $0.31 for male-led companies. As a result, gender parity in the workforce could generate a 26% increase in annual global GDP by 2025.

Zeroing in on Women in the African Agricultural Sector

Agriculture accounts for nearly 25% of Africa’s gross domestic product. In sub-Saharan Africa in particular, women make up nearly half of the workforce in this sector.

Across the continent, agriculture is the largest employer of women, accounting for 62% of the female workforce. In certain countries like Rwanda, Malawi and Burkina Faso, more than 90% of women work the land.

Female farmers’ work in Africa as elsewhere is subject to critical disparities – notably in terms of the division of labor and prevalence of informal work. In African agriculture, women tend to opt for specific crops and techniques and their work is not equally rewarded. When their work is in fact subject to a formal contract, the latter does not necessarily bear their name, often in favor of their husbands. Similarly, female farmers tend to be involved in local markets and retail trade, where men are generally more involved in wholesale trade, with a region-wide scope.

2. Embedding a Strong Robust Gender Perspective in Impact Investment Strategies

Poverty alleviation and food security depend directly on the development of systematic solutions for gender empowerment. The African agricultural sector’s capacity to nurture stable livelihoods hinges on innovative measures designed to foster farmers’ access to land, capital and means of production – especially where women are concerned.

That is precisely why the World Bank developed a gender strategy for international project developers. The document lists 4 key levers to reduce gender gaps:

Awareness-Raising: Improve gender gaps by reducing access differentials in health, education and social protection (e.g. school/work transitions, gender stereotypes in the workplace, sexual and reproductive health rights…).
Opportunity: Remove barriers to further and better employment, boosting women’s participation, their opportunities to generate their own income and access to productive assets (keeping in mind key considerations of the burden of care, access to mobility and formal employment…).
Empowerment: Strengthen women’s voice and empower them by encouraging men and boys to share decision-making processes around delivering services, reducing gender-based violence and managing potentially conflictual situations.
Property: Remove barriers to women’s ownership and control of property, effectively improving their access to land, housing and technology.

Based on this strategy, investors – and development teams in particular – are encouraged to consider the means to engage with their potentially impacted stakeholders. That way, they may indeed better identify and assess concrete gender gaps; a series of efforts ultimately encompassed in a gender action plan.

3. Practical Examples of Capital Mobilization in Favour of Gender Empowerment

Introducing 3 Agricultural Businesses Supported By I&P

For the last two decades, Investisseurs & Partenaires has committed to financing and supporting the emergence of African entrepreneurship champions. As an impact investor, I&P seeks a positive social and/or environmental return in addition to a significant financial performance, the impact of which is measured through a continuous evaluation process.

This approach is applied both in selecting potential investees and in the support afforded to the selected companies. It is also characterized by the Group’s emphasis on measuring investees’ social and/or environmental impact, based on priority objectives and progress monitoring methods against the projected positive impacts.

As part of its gender strategy in particular, I&P actively seeks to develop a pipeline of small and medium enterprises, either managed by women or with a major impact for women. I&P therefore systematically includes gender-specific action plans in its portfolio companies’ ESG action plans (with increase targets on the number of female employees, access to management positions, specific training, etc.). As such, 33% of the companies supported by I&P are managed by women.

Similarly, 79% of I&P’s portfolio meets at least one of the criteria of the 2X Challenge, an initiative of development banks to define what would be considered a women-friendly investment.

Within the I&P portfolio, the three following companies illustrate how a gender perspective can be developed and adapted to the agriculture sector:

- Soafiary (Madagascar): Founded in 2006 by Malagasy promoter Malala Rabenoro, Soafiary specializes in the collection, processing and sale of cereals (corn, rice) and legumes (beans, cape peas, lentils, soybeans) on the local and international market.
- Citrine (Côte d’Ivoire): Citrine Corporation processes and transforms cassava into fresh attiéké (cassava semolina) and placali (cassava paste) in southern Côte d’Ivoire and more specifically in Grand-Bassam.
- Rose Eclat (Burkina Faso): Rose Eclat is a family business launched in 1999 by Rosemonde Touré. A fruit and vegetable processing company, the company markets nationally and internationally processed and/or dried fruits and vegetables. It produces mainly mango but also bananas, okra, strawberries and onions – which are certified organic and comply with the food safety management system (HACCP).

Commonalities and specificities of I&P Investees

Emblematic of I&P’s work on gender empowerment in the agriculture sector, all three companies are committed gender equality and empowerment. Soafiary in particular translated this policy into a roadmap that encapsulates its commitments to gender equality and empowerment. This written document indeed outlines the company’s gender policy, as a concrete tool to monitor– both internally and externally – progress made and measures implemented by the company to foster gender equality.

All three companies prioritize the recruitment of women for seasonal jobs and do not apply any form of gender discrimination in recruiting for permanent jobs. Women are also involved in the corporate decision-making processes and hold various positions of responsibility. As a result, men and women have equal opportunities for career advancement, either by tapping into permanent or seasonal employment – all of this with comparable pay. Women also benefit from on-the-job training. Rose Eclat additionally gives women the opportunity to train outside the company for career advancement or to become self-employed.

The three companies also emphasize women’s physical and moral integrity in and outside of the workplace, ensuring they can access healthcare and social protection. Soafiary also set up a financial inclusion and banking system specific to women. Access to financial products and services allows women to anticipate the financing of their long and medium-term goals or to face unexpected events. Moreover, savings begets credit and vice versa.

Shared Perspectives with Ksapa’s SUTTI Initiative

Echoing I&P’s focus on training, Ksapa launched the Scale-up Training, Traceability, Impact initiative (SUTTI) for the development of responsible agricultural supply chains. Through this new platform, smallholders can access technical and operational training and education. The goal is optimize their crop and agricultural economic production, improve the quality of their livelihoods by increasing their income, diversifying activities and reducing poverty. Not only does this foster gender parity, it is also key to retain young farmers in rural areas.

Through the development of our own digital application, we combine analysis and evaluation, coalition structuring and pilot calibration, program implementation and impact monitoring. That is indeed how Ksapa measures SUTTI impacts and its contributions to gender empowerment in particular, in the form of their inclusion into the program. Through training, SUTTI supports gender empowerment, opening up the conventional division of labor and women’s potential to sell and manage the product of their labor and operate diversified income activities.

Because women bear the brunt of lacking financial inclusion, literacy and digital literacy, the SUTTI solution targets optimal accessibility for women. The program indeed focuses on diversifying smallholders’ income, thereby developing additional leverage for gender empowerment in agricultural areas.

In short, this approach aims to unlock the following 4 key challenges:

CORE ISSUES	RELEVANT SOLUTIONS
Low productivity tied to lacking access to information and services as well as climate change, major weather variability and pest and disease outbreaks	Good Agricultural Practices (GAP) Awareness: Deliver face-to-face and digital sessions to support smallholders’ income generation through crop diversification, water efficiency and perhaps carbon credits. Through a digital application, videos and tutorials can indeed be shared that support practical tests and the direct implementation of GAPs across the farm. Decision support tools: digital apps can include a community chat feature that allows smallholders to share questions and decide how best to implement GAP. A marketplace function offers smallholders the opportunity to share price/volume information and decide just where and when to sell. Overcoming language and digital literacy barriers: Tailoring solutions to the needs of smallholders involves translating content into local languages and perhaps including a text-to-speech feature for the benefit of less literate farmers.
Lack of access to appropriate financial/insurance products	Develop financial solutions for smallholders, paid for example with tokens issued through a carbon offset system.
Women’s lacking access to digital services	Organize women-specific training groups (e.g., recruit 1 all-female cohort for every 3) to identify and meet the particular needs of female farmers. Adapt content accordingly (e.g., including gender perspectives, especially targeting on-farm health and safety training content).
Smallholders lacking access and ability to select markets and sales methods	Structure a supply of inputs to smallholders, paid for instance via carbon offsets and revenue from a gamification tool – encouraging them to regularly fill-out impact monitoring questionnaires. Boost market access by supporting year-round crop diversification outside the production cycle of farmers’ main crop. Strengthen decision support tools – allowing smallholders to identify new marketing channels, track their transactions and identify the best options for buying/selling their crops

Conclusion

At the helm of their respective impact programs, I&P and Ksapa outline the following commonalities in their integration of a robust strong gender perspective as part of the impact investment strategies:

Prioritize gender empowerment in designing agricultural development projects;
Identify the agricultural sector’s direct and indirect contributions to gender dynamics;
Clarify the roles and responsibilities in developing a robust gender perspective;
Allocate specific resources to empowering female farmers;
Develop stakeholder engagement and grievance mechanisms specific to female farmers.

By : Margaux Dillon and Tsiky Rahagalala

No Comments

photo Cogelec ©AD Agency, 2020

Insights

Start-up Business Acceleration Programs: What does the academic literature say?

photo Cogelec ©AD Agency, 2020

For several years now, start-up business acceleration programs have been created all over the world, particularly in Africa. These initiatives are designed to support start-up businesses which have shown that they have a viable model and which want to grow their business. What Does the Academic Literature Say?

By : Léon Florian

No Comments

Insights Perspectives

Investing in the exceptional African creativity

Africa intrigues and inspires the world. Some recent examples prove it: the Gucci Summer 2019 collection; the Dior cruise 2019 collection, inspired by African fashion with some fabrics printed in…

Africa intrigues and inspires the world. Some recent examples prove it: the Gucci Summer 2019 collection; the Dior cruise 2019 collection, inspired by African fashion with some fabrics printed in Côte d’Ivoire; the Milan fashion week 2021 opened by the Fab Five, five designers from Africa. And so on.

By : Kouassi-Olsson Laureen

No Comments

Insights

Acceleration programs: a miracle solution for early-stage companies? (1/2)

Capitalizing on the boom of Africa’s entrepreneurial revolution, official development assistance (ODA) actors are increasingly taking on the challenge of supporting new generations of entrepreneurs willing to contribute to job creation and the emergence of more inclusive growth on the African continent. It is in this context that programs, initiatives and structures claiming to “accelerate” businesses have emerged in recent years.

Note: Part 2 of this article, spotlighting an Ivorian company supported by an acceleration program, will be published next week.

Acceleration: A promising concept for African startups

When it comes to entrepreneurship, acceleration is defined as a service that provides mentoring, networking, and sometimes funding, to growing companies. However, the term is used to refer to a wide variety of very different programs. These include “accelerators” and start-up studios (such as GSMA Kenya and Flat6Labs Egypt), which are often physical or virtual structures that focus on digital economy (1) start-ups and are typically located in English-speaking countries, as well as investment funds that define themselves as booster programs (such as Catalyst Fund and Janngo) and/or that develop a range of acceleration program services to diversify their portfolios.

These programs are mainly funded by international organizations and private donors (e.g., West African Trade Investment, funded by USAID; Orange Corners, funded by the Netherlands Enterprise Agency).

In a globalized context where virtual support is widely available, international accelerators, in the US, Latin America, and Europe, are assisting more and more African startups. Before 2020, the renowned North American Y Combinator had only provided on-site support to 12 African startups—a figure that has tripled in the last two years.

An insufficient offering given the needs of entrepreneurs

This apparent plethora of acceleration programs gives the impression that the needs of African early-stage companies have now been met. This misleading impression is strengthened by the growing numbers of venture capital fundraising exclusively targeting IT startups in a limited number of African countries (Kenya, Nigeria, South Africa, Egypt.

The number of start-ups across the continent that need assistance in the acceleration phase or upstream during the incubation phase is significant; whereas the range of seed financing (pre-seed/seed) is almost nonexistent if we look at the ratio of funds to the number of entrepreneurs. The financial and non-financial support granted must cover both general and specific needs, and therefore requires time, locally rooted expertise and a personalized calibration/analysis of a business’s needs. Accelerating a company’s growth does not mean accelerating the time required for its development.

Unfortunately, most programs funded by ODAs are not properly structured to overcome the gap between the time/support required for each entrepreneur and the number of targeted beneficiaries. Often these programs are unwilling or unable to assume the real cost of coaching each company and therefore take the risk of acting only superficially/provide only superficial assistance. Implementation resources are limited since there are inexhaustible reserves of new entrepreneurs to support whose scaling up problems cannot be solved exclusively by a generalist approach.

The apparent profusion of acceleration programs is misleading: the number of startups that need support across the continent is considerable and the supply of seed funding is still largely insufficient.

Draw inspiration and deploy good practices

Since there is still a lot to do to guarantee the development of African entrepreneurship, the experience accumulated in recent years by acceleration program actors make it possible to identify a few “good practices” that could be deployed on a larger scale:

(1) The segmentation of programs is an added value

Every acceleration program must consider the fact that the term “start-up” includes companies that have nothing in common, either in terms of their business or location, and as such, require differentiated support. Segmentation adds significant value as it allows acceleration/support programs to more quickly identify issues and address challenges common to a particular business/company; a Sahelian SME in the agribusiness sector, for example, will have different support needs than a Nigerian e-commerce startup. Segmentation benefits also to programs that favor a virtual and grouped approach but which have difficulty obtaining the expected results with audiences that are too diverse.

Sectoral programs, such as those dedicated to agribusinesses (e.g., the PCESA financed by Danish cooperation in Burkina Faso) or initiatives focused on gender (Access Bank Nigeria’s W Initiative…) are more likely to identify the particular challenges of businesses and better understand regional equity issues (urban, rural, etc.). In the same way, results are achieved when the support continuum has been well thought out. Incubation in particular is not interchangeable with acceleration, as the needs of companies may differ from one phase to another (2).

(2) Greater impact is achieved by training local intermediary actors essential to the development of entrepreneurs

Entrepreneurship support structures (SAE) in particular, independent experts and consultants be able to find their market beyond punctual aid from donors (3) . It is by contributing to the local skills development of African professionals that a greater number of companies will be able to scale up. In addition to Afric’innov, whose primary mission is in French-speaking African countries, a few financial players have recently attempted to fill this blind spot in their program offerings. Examples include the collaboration between Argidius and Village Capital, who have been working since 2020 to help structure SAEs in Uganda (Uganda Ecosystem Builders), and the work of mentoring and then financing SAEs carried out by Triple Jump and its experts in Sub-Saharan Africa.

(3) Acceleration programs that provide a complementary set of tools are more effective

First, appropriate seed funding tools, which specifically take into account a company’s lack of financial management skills and habits, can take the form of a repayable advance, as currently practiced by I&P Acceleration in the Sahel (IPAS). An advance lays the groundwork for a relationship with a financier and will probably make it possible to financially support more SMEs through the effect of recycling money (4).

Secondly, we can use skill-building tools that alternate between generalist support (to aim at disseminating entrepreneurial skills as widely as possible) and targeted support (venture building, technical assistance). The technical support provided to a company is just as determinant as the financial support. Y Combinator’s alumni agree that their growth is more due to technical support than to the initial financing, even if the financing gives more weight to the advice given.

Although the scarcity of seed funding is a significant obstacle, support, through skills building and technical assistance, is just as crucial as seed funding.

General skill building (group trainings, bootcamps and workshops, webinars, etc.) is often valued by funders, but technical assistance is largely absent from many acceleration programs. Technical assistance, i.e., contracting with local sector experts (legal, commercial, technological, managerial, etc.), is critical to improving the performance of companies during the absorption of seed financing and the development of traction. Technical assistance is an eminently relevant tool when it is implemented by an investor who wishes to strengthen the enterprise where he perceives risks that would not be detected by other types of actors. Most acceleration programs that include the deployment of technical assistance produce net results: this is the case, for example, with GreenTec Capital’s Boost Digital, which offers technical assistance in business and digital strategy and significantly increases the revenues of its beneficiary startups.

Some traps to avoid

Program funders still face many challenges to increasing the impact of their programs. It will inevitably be necessary to move away from the “all-startup” scheme to support “brick and mortar” SMEs as well and to rethink the establishment of support over time, taking into account that the phases of increasing skills are costly but necessary in order to meet demanding results indicators. It is also important to recognize that high failure rates at the outset are normal given the high initial risks involved, during the time when a company must deploy its offerings, prove itself and find its market. If the company survives, thanks in part to acceleration, then the risks, the need for liquidity and the need for competence (…) all decrease simultaneously.

We must also avoid the model of ephemeral competition and challenges, unless we are clear about their purpose (brand testing, visibility, etc.) and encourage a little more in-depth research work for “nuggets” and summoning patience and local relays in the process of selecting companies outside the circuits known to “serial pitchers”. The implementation of programs designed in Africa, involving African public and private stakeholders, favoring local financial risk-taking (e.g., business angels, African entrepreneurs, especially alumni of acceleration programs wishing to invest) is becoming essential.

In conclusion, we can hope that the enthusiasm of DFIs, international donors and African private actors for acceleration programs will continue and lead to the realization of ambitious aspirations: to strengthen young companies and create intermediary bridges/pathways to capital investment for those with clear development projects. Such a dynamic is inseparable from a broader reflection on the programs that exist further upstream from acceleration (ideation or incubation programs). The quality of our tools must be continually questioned in order to adapt them as closely as possible to the changing issues that growing African companies face.

Notes :

(1) An overview of the so-called gas pedal structures is available on the Afrikan Heroes and CrunchBase websites https://afrikanheroes.com/2021/05/29/a-list-of-startup-accelerators-in-africa/ https://www.crunchbase.com/hub/africa-accelerators and in the Briter Bridges 2020 & 2021 reports

(2) Cf étude AFD-Roland Berger « Innovation en Afrique et dans les pays émergents » https://www.afd.fr/sites/afd/files/2018-05-05-57-55/etude-innovation-numerique-afrique-pays-emergents.pdf

(3) On this subject, see the studies and experiments currently being conducted in Cameroon, Congo-Brazzaville and Chad by actors such as R.M.D.A or the Agro-PME Foundation to implement the use of service vouchers, a useful tool for training and accreditation of consultants, etc. https://www.rmda-group.com/project/tchad-appui-a-la-maitrise-douvrage-du-projet-dappui-a-la-petite-entreprise-phase-2 https://www.adiac-congo.com/content/pme-le-guichet-cheque-services-bientot-operationnel-32125

(4) The repayable advance and its effects will be the subject of an article in this Acceleration file.

By : Vidal Marin Marianne

No Comments

overhead view of african american man working with digital tablet and credit card reader in coffee

Insights Perspectives

Supporting private firms in Africa: Why and how?

overhead view of african american man working with digital tablet and credit card reader in coffee

Beyond the declarations of intent regularly renewed at international summits, we must finally scale up to massively finance SMEs in Africa, to spur private sector development and thus meet the…

Beyond the declarations of intent regularly renewed at international summits, we must finally scale up to massively finance SMEs in Africa, to spur private sector development and thus meet the challenge of better development of the continent.

By : Gravellini Jean-Marc and Léon Florian

No Comments