Facing Reality

According to the World Bank report Africa Pulse from October 2023, Africa is projected to slightly contract over 2015-2025 (in terms of GDP per capita):

  • Persistently low per capita income
  • High debt burdens
  • Urgent need for job creation

Graph by Ken Opalo, Associate Professor at Georgetown University’s School of Foreign Service. Some conclusions:

  • Recovery from 1995-2005 was mostly due to growth of China - will not repeat now
  • Need to reorient towards job-intensive economic growth
  • Cannot rely on commodity exports with low added value
  • Medium-term projection: only 3 million formal sector jobs will be created
  • BUT: 10 million youth enter the workforce each year

Micro, small and medium Enterprises (MSMEs) drive economic development, innovation, and employment. In Sub-Saharan Africa, MSMEs create 70% of formal employment. BUT: MSMEs struggle to obtain financing. There is a large under-funded and under-acknowledged group of entrepreneurs: too big for micro-finance, too risky for bank loans, who increasingly has been recognized as the “Missing Middle.” Compounding these issues, the expectations of Venture Capital (VC) too often clash with the realities faced by start-ups and SMEs, market size limitations, and general business conditions in emerging markets.