Like all sub-Saharan countries, Mozambique is rich in natural resources, yet the young democratic nation is facing a number of economic hurdles: Its GDP growth rate has decelerated due to lower commodity prices and decreased foreign direct investment, rising food costs and the metical depreciation have fuelled inflation, and political instability is further driving away investors and established companies.
One solution to Mozambique’s economic challenges is entrepreneurship: The success of independent SMEs is critical to a country’s economic growth, according to the Global Entrepreneurship and Development Institute (GEDI). Without it, there can be little innovation, productivity and job creation.
But prosperous SMEs cannot exist in a vacuum; a country’s ‘entrepreneurship ecosystem’ (i.e. attitudes, resources and infrastructure) greatly influence start-up success. Unfortunately, the GEDI shows that Mozambique’s ‘ecosystem’ is also struggling: Currently, the coastal country is ranked 116 out of 132 countries on the Global Entrepreneurial Index.
It’s clear that governments and private institutions with an interest in Mozambique and sub-Saharan Africa need to stimulate entrepreneurial development. To do this, they must offer assistance in the following areas:
Funding: The Anzisha Entrepreneur Survey 2016 found that the biggest impediment to business growth is lack of funding, causing many to stagnate at the idea, product development or expansion stage.
Digitalisation: Pervasive digitalisation enabled by the Web 2.0 internet is a major driver of entrepreneurial opportunities. The global trend, says the GEDI, reduces the initial investment needed to start a business and the cost of experimentation. In Africa, aspirant entrepreneurs need access to the technology and infrastructure to take full advantage of this trend.
Mentoring: A 2011 Gallup survey that included 83 countries showed that access to mentor support can boost the rate of new business creation. This is likely because mentors help develop small businesses by sharing their experience, expertise and social capital.
With the ultimate goal of stimulating Africa’s economies and so bringing prosperity to all, many NGO- and company-lead business accelerators have been established on or are networking throughout the continent. One of the most notable is the Standard Bank Incubator. Barely a year old, it has provided more than 100 South African start-ups with support in the form of training, mentoring and access to technology etc.
Having gained international recognition, Standard Bank hopes to expand the Incubator programme into the rest of the continent.