The startup ecosystem of Africa is not like other regions of the world. In Africa, most startups aren’t even able to pass the initial years because of the challenges faced by entrepreneurs in the region. These challenges are hampering the growth of startups due to which most of the startups are unsuccessful. Read on below to find out what those challenges are:
1. Lack Of Access To FinanceThe first major challenge faced by entrepreneurs in Africa is the lack of access to finance. In many parts of the world, there is a proper startup ecosystem, where all the young entrepreneurs with their promising ideas are supported by investors but that is not the case in Africa. In Africa, entrepreneurs who come up with promising ideas don’t have the financial resources to fund their efforts by themselves and there is not a proper ecosystem to receive funding from investors.
A huge number of the small businesses and startups that are founded in Africa aren’t able to survive for long because of a lack of capital. Along with all of this, banks and other lenders aren’t very cooperative in this case and they resist lending capital to young entrepreneurs because they consider this a risky investment. Although a greater part of this challenge can be resolved by approaching banks and investors with proper documentation to impress them, still there is a culture of conservatism in the region.
2. Minimal InnovationThere is another challenge of minimal innovation in the region. If a startup or business is able to bring a new innovation then it can grow quicker than those that aren’t able to bring innovation. However, in Africa, many people found startups and businesses as an alternative to unemployment and not as a way of bringing something innovative such as the PDF to Word Converter into the market.
Because of this lack of innovation and this culture in the region, there isn’t much research and development in the country due to which entrepreneurs aren’t able to grow their businesses to their full potential. In recent years, we have seen a change in this trend and many startups were founded across Africa that showed tremendous innovation and were able to secure capital for themselves but still, this culture of lack of innovation exists in many parts of the region.
3. Infrastructure IssuesInfrastructure issues are causing problems for entrepreneurs in Africa. In most areas of the world, businesses are able to grow and sustain themselves because they have reliable access to electricity, water, communication services, roads, and affordable, safe public transport, all of which are imperative for the growth of a business but here in Africa, these basic necessities aren’t easily accessible.
For starters, most small business owners and entrepreneurs start working from their homes instead of having proper offices. Because of working from home, they aren’t able to conduct their business as efficiently as they can from an office. In addition, there is a lack of important internet resources, services, and products like Excel Converter, Word to PDF Converter, PDF Editor, etc due to which it is difficult to work with official documents & communicate with clients/business partners. There is also a lack of business services such as accounting and legal services in the region, which also further make it difficult for the entrepreneurs in Africa.
4. Manpower IssuesFinding skilled and talented workers across different industries is also another challenge. Many entrepreneurs face difficulties in finding affordable and skilled workers in different fields such as finance, marketing, accounting, ICT, etc. Young entrepreneurs that are on a tight budget are the most vulnerable ones to being affected by this challenge because they can’t afford to keep skilled workers around for long because of high salaries & wages.
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When entrepreneurs try to cope with this challenge by hiring inexperienced and skilled people then they end up damaging their business, which further hampers the growth instead of promoting it.
5. Limited Access To Professional NetworkIf we talk about other countries then new and young entrepreneurs have access to professional networks that consist of business graduates and business owners, however, in Africa young entrepreneurs don’t have access to a professional network and professional people.
This means that in the African region, entrepreneurs aren’t able to get advice from professionals, get access to mentors, enter new markets and gather funding. Such a kind of environment is hard and challenging for entrepreneurs who have to do everything on their own for the survival of their startup/business.
These were the common problems faced by entrepreneurs in Africa. Most of these are the problems that can be solved by having a proper startup ecosystem, proper research, proper funding, and awareness.
