African governments must encourage entrepreneurship in their domestic policies to see stronger economic growth, this is according to the African Economic Outlook (AEO) 2017 which was released on Monday, May 22 2017. The report details Africa's sluggish economic growth in 2015 which fell to 2.2 percent from 3.4 percent because of a decrease in commodity prices and negative weather conditions that had an adverse impact on agriculture productions.
The slow growth in the continent is, however, forecasted to rise to 3.4 percent in 2017 and peak to 4.3 percent in 2018 if commodity prices rebound and domestic macroeconomic reforms are established. African governments must encourage entrepreneurship in their domestic policies to see stronger economic growth, this is according to the African Economic Outlook (AEO) 2017 which was released on Monday, May 22 2017. "Although economic headwinds experienced in the last two years appear to have altered the 'Africa rising' narrative, we firmly believe the continent remains resilient, with non-resource dependent economies sustaining higher growth for a much longer spell.
"With dynamic private sectors, entrepreneurial spirit and vast resources, Africa has the potential to grow even faster and more inclusively," said Abebe Shimeles, Acting Director, Macroeconomic Policy, Forecasting and Research Department, at the African Development Bank. The soil for entrepreneurship in Africa is quite fertile according to the report which shows that in 18 African countries, 11 percent of the population that is able to work has opted to start their own business. The percentage of Africans starting their own businesses is higher than Latin American and Asian entrepreneurs, which are at 8 percent and 5 percent respectively.
However, this enthusiasm in entrepreneurship in Africa hasn't translated to investment in high-growth sectors such as agriculture or construction. African governments must capitalise on this dynamism to accelerate industrialisation by providing access to finance and creating special economic zones. In South Africa, the government has introduced policies that are geared at accelerating industrialisation and boosting entrepreneurship. South Africa's industrialisation and employment-generation strategy aims to encourage entrepreneurship.
The success and execution of these policies has hit a ceiling due to inadequate technical and business management skills; lack of experienced mentoring of entrepreneurs; barriers to business entry, and lack of access to finance. South African economic growth has decelerated to 0.3 percent in 2016 but its forecast to increase to 1.1 percent in 2017. The economic growth will be attributed to strengthening global growth, conducive weather conditions, reliable electricity supply, less volatile labour relations, recovering business and consumer confidence, and stabilising commodity prices.
Unemployment remains a major social challenge in South Africa. Government's social policy has helped with decreasing poverty but service delivery in rural areas and townships must be accelerated. The industrialisation strategy is geared towards promoting entrepreneurship, which will also help to generate employment. Important positives from the report is that women in Africa are twice more likely to start their own business than women anywhere else in the world and 20 percent of new African entrepreneurs are introducing a new product or service into the market.
"The key to successful development in Africa is to nurture the emerging culture of entrepreneurship, to use the famous words of Hernando De Soto, "el otro sendero" (the other path) for development; a path that can unleash high-octane creativity and transform opportunities into phenomenal realisations," said Abdoulaye Mar Dieye, Regional Director for Africa at the United Nations Development Programme.