The potential of digital entrepreneurship in Africa is of great significance, presenting the opportunity to create employment and generate wealth. Statistics indicate that for every $1 invested in information and communication technology (ICT), there is a $20 increase in Gross Domestic Product (GDP). Despite these promising prospects, local investors and governments are not providing sufficient investment in indigenous technology startups. Shockingly, in 2019, approximately 80% of venture capital funding for African early-stage businesses and start-ups came from overseas, with North America leading at 42%, followed by Europe at 23%, and the Middle East and Asian Pacific regions at 14%.
It is imperative for the continent to nurture and safeguard its native enterprises. This can be accomplished by investing in early-stage startups and providing support for enterprise support organizations such as incubators and accelerators. These organizations are focused on delivering high-quality services to emerging enterprises while aiding their growth and innovation potential.
To tackle this issue, the African Development Bank (AfDB) has launched several projects aimed at catalysing the digital entrepreneurship and innovation ecosystem. Through the provision of grants and sovereign and non-sovereign investments, the Bank aims to strengthen governments, fund managers, and venture capital. Furthermore, these projects have facilitated the development of inclusive policies and capacity building programs to empower key stakeholders in the entrepreneurship ecosystem.
Some of the notable projects implemented by the bank include the Rwanda Innovation Fund, the Nigeria – Investment in Digital and Creative Enterprises (I-DICE) Program, and the Partech Africa Fund. These initiatives have been instrumental in facilitating direct investment in early-stage businesses and have contributed to the formulation of relevant policies to support the startup ecosystem.
In addition to digital entrepreneurship, the African Development Bank is dedicated to scaling up digital skills across the continent. It is projected that by 2030, approximately 230 million jobs in Africa will require some level of digital skills due to the fourth industrial revolution and subsequent technological disruption. However, at present, only 10% of Africans are employed in high-skill digital jobs, the lowest share globally. In sub-Saharan Africa, the gross tertiary education enrollment ratio is a mere 9.4% compared to 80% in Europe, with only 2% of African graduates holding a degree in STEM.
Recognising the urgency of the situation, the Bank’s interventions in digital skills extend beyond academic institutions and young people, encompassing businesses, government, SMEs, and NGOs as well. Through a partnership approach with the private sector, the Bank has successfully integrated digital skills in its ICT operations, resulting in increased impact, scale, and quality of digital skill interventions. This comprehensive approach, combined with the appropriate mix of hard infrastructure and enabling policies, has been instrumental in achieving optimal results.
In conclusion, the African Development Bank’s initiatives in digital entrepreneurship and skills represent significant progress towards unleashing Africa’s economic growth and job opportunities. By investing in indigenous enterprises and enhancing digital skills, the Bank is playing a crucial role in ensuring that Africa is well-prepared to harness the power of digital innovation for its future prosperity.