The Tony Elumelu Foundation has started a Pan-Africa entrepreneurship programme for a total of 10,000 start-ups. Many of them work in agriculture and strive to modernise the sector with technology-based solutions.
In December 2015, shortly after Nigerian billionaire businessman and philanthropist Tony Elumelu CON publicly committed US$100 million to empower African entrepreneurs, commendations poured in from world leaders, technocrats and African business owners. The Tony Elumelu Foundation Entrepreneurship Programme is rooted in the inclusive philosophy of Africapitalism – the belief that a vibrant African-led private sector with significant participation from entrepreneurs, is the key to unlocking Africa’s economic and social potential.
The Entrepreneurship Programme is now in its second year of a decade-long commitment to grow 10,000 African start-ups and businesses capable of collectively creating at least one million new jobs and contributing up to US$10 billion in revenues across Africa. Studies reveal that 60% of small and medium-size enterprises collapse within a few months of launching in Kenya, while 95% of SMEs die within twelve months in Nigeria, due to constraints that vary from insufficient financing to a lack of access to mentorship, networks, and markets, amongst others
To combat these sober statistics, there has been a flurry of entrepreneurship competitions and accelerator programmes in the local start-up scene. As Mariéme Jamme, CEO-Entrepreneur and Curator of Africa Gathering and member of the Selection Committee of the Tony Elumelu Foundation Entrepreneurship Programme, observes in the Huffington Post, these initiatives have had little success in supporting entrepreneurs due to the short-term nature and an over-focus on a single aspect of the entrepreneurship value chain at the detriment of other areas the entrepreneur needs crucial support in.
The entrepreneurship programme of the Tony Elumelu Foundation addresses these sustainability challenges that have afflicted many past SME-support initiatives. The programme is deliberately holistic with seven core pillars: start-up business skills training, expert mentoring, seed capital funding, access to an online resource library, membership in the Africa-wide alumni network of the Tony Elumelu Foundation, frequent meetups with stakeholders (including top policy-makers), and participation in Africa’s biggest annual entrepreneurship networking Forum.
Building enterprises that last
The programme actively addresses the diverse needs of young African businesses, from funding to mentoring to training and focused networking. By doing so it ensures that the start-ups are built to last. The business training (a favourite for many entrepreneurs currently enrolled) covers several topics including: scoping market opportunity; defining, developing, pricing and marketing products; building and structuring the core team; managing and raising money; and building useful networks. Throughout the task-based business training exercise, each entrepreneur is guided by a mentor with relevant sector experience. At the end of this learning period, the young entrepreneurs are fully equipped to create sound business plans after which they receive the first non-refundable tranche seed capital of US$5,000. The second US$5,000 investment is only eligible to entrepreneurs who have demonstrated consistent progress and is given in the form of either a loan or equity.
Since 1 January 2015 65,000 applications have been received from all over the continent. During the first two years 2,000 entrepreneurs have made the final cut to become Tony Elumelu Entrepreneurs based on their scores on five factors: feasibility, market opportunity, financial understanding, scalability, leadership potential and entrepreneurial skills. The other 63,000 candidates remain as members engaged in the Tony Elumelu Foundation Entrepreneurship Network where they receive non-financial support and access to diverse opportunities for their business ideas.
Young entrepreneurs in agriculture
Amongst these start-ups, agriculture is by far the most popular sector. The data suggests that contrary to mainstream belief, Africa’s youth are aggressively identifying opportunities in agriculture, and where possible, leveraging innovation and technology tools to build sustainable and profitable agri-businesses. Over 20,000 of entrepreneurs in the network are engaged in ventures along the agriculture value chain and at least 600 of the 2,000 finalists are involved in agri-business.
The trend of utilising technology to increase transparency and efficiency in agriculture is widespread in Africa. In 2013, for example, the Nigerian Agriculture Minister at the time, Akin Adesina, who is now President of the African Development Bank, introduced the e-wallet system to tackle the rampant national fertiliser scam where middlemen benefited massively from government subsidies at the expense of poor farmers who ended up paying high sums for bags of fertiliser. The e-wallet system eliminated the need for such middlemen and the artificial scarcities they created, giving farmers direct access to the government fertiliser scheme. The Tony Elumelu entrepreneurs are looking for similar solutions by employing ICT and a range of technology platforms to drive development in the sector. (See examples in the box).
The 2015 class of over 300 Tony Elumelu agricultural entrepreneurs recently reported that they have created over 15,000 casual and fulltime jobs. The potential that a modernised agriculture sector offers to Africa in terms of utilising the demographic dividend for significant gain is enormous. Indeed, transforming agriculture will unlock jobs at a time when forty million young people are out of work on the continent. Over 30% of the Tony Elumelu agriculture entrepreneurs have joined local cooperatives to share the training they have received from the programme and provide support to other farmers. Others have become inspired to return to school to earn advanced degrees in agriculture.
The majority have built businesses in the more advanced end of the value chain including processing, cold rooms, storage, distribution and increased reliance on ICT. They are utilising innovative techniques that enhance the competitiveness of the sector, resulting in standardised produce and products that are eligible for export overseas.
Entrepreneurs do not exist in isolation. In order for entrepreneurs to succeed, they must operate in economies with SME-friendly policies in place that allow them to thrive, generate income and create employment for others. Essentially, to succeed, they need the public sector to create an enabling environment for their businesses. In line with this, the Foundation produces evidence-based reports to support policymakers in addressing key issues in finance, access to markets and information, high operating costs, scarce inputs and equipment, obsolete land laws, and high taxes that affect start-ups. In May, the Foundation released the “Unleashing Africa’s Agricultural Entrepreneurs” publication at the 2016 World Economic Forum on Africa in Rwanda.
The report’s insights come from case studies and experiences of Tony Elumelu agricultural entrepreneurs, as well as input from established stakeholders, practitioners and investors across the value chain. Eleven key recommendations are included for decision-makers in the private and public sectors to improve the agriculture value and supply chains: cheaper and more reliable access to finance, insurance, and inputs such as fertiliser, seeds, livestock vaccination, pesticides; more formal degrees of training and extension services; improved storage and warehousing to mend the fractured value chain; agri-friendly financial products, like warehouse receipts to enable borrowing from banks; reduced taxes or tax breaks and provision of infrastructure to support and engender productivity rather than hinder entrepreneurial investment in the long term.
The Tony Elumelu Foundation strongly believes that transforming agriculture will transform Africa. The youth of Africa are ready, let’s support the current tide!
Tony Elumelu Foundation’s publication “Unleashing Africa’s Agricultural Entrepreneurs”.