START-UP AFRICA PARTNERSHIP
The Africa Islamic Economic Foundation recognises the importance of entrepreneurship and small and medium-sized enterprises (SMEs) as the basis for establishing a modern and dynamic economy. The experience among a number of developed countries clearly demonstrates that entrepreneurship and small enterprises can make a substantial contribution to economic growth, employment opportunities and exports. SMEs can also respond flexibly to competitive pressures and adapt quickly to emerging opportunities.
Yet these twin engines of growth and development have faced many insurmountable challenges, ranging from lack of access to finance, data, incentives and capacity development, poor policies and regulatory frameworks. Consequently, the share of people preferring self-employment and entrepreneurship to being an employee has significantly declined in African countries.
The level of entrepreneurship and its nature vary widely between African countries, and the reasons for low enthusiasm for an entrepreneurial career are therefore diverse. Some countries with higher levels of entrepreneurship are less successful than others at helping new and small business to grow. Generally would-be entrepreneurs in Europe find themselves in a tough environment: education does not offer the right foundation for an entrepreneurial career, difficult access to credits and markets, difficulty in transferring businesses, the fear of punitive sanctions in case of failure, and burdensome administrative procedures. Furthermore, support measures for SMEs remain unbalanced, with a substantial number of African countries still neglecting to take into account the characteristics of small businesses, in particular micro-businesses, when designing legislation or not facilitating a second chance for honest failed entrepreneurs.
Partnership for the Development of SMEs and Entrepreneurship in Africa
The Africa Islamic Economic Foundation has therefore launched an initiative, the Start-up Africa Partnership, as a decisive collective effort to unleash Africa’s entrepreneurial and small enterprise potential, to remove existing obstacles and to revolutionise the culture of entrepreneurship in Africa. The Initiative aims to contribute to the diversification of African economies and the sustainability of growth, and to develop and strengthen the overall legal and institutional framework for promoting entrepreneurship and high-potential SMEs in Africa.
The Initiative provides a clear roadmap for entrepreneurial education and training to support growth and development of SMEs as well as enhancing the capacity of core agencies responsible for enterprise and entrepreneurial development and a wide range of public sector activities – from tax incentives over infrastructure to education and employment policies. It is firmly nestled within a range of different economic development policies and harmonised with tangentially related policies and programs, such as infrastructure planning. In particular, the Initiative is closely integrated with policies and strategies on investment, as both Foreign Direct Investment (FDI) and enterprise policies are needed to develop new, productive sectors with a potential to gain a comparative advantage and, eventually, contribute to the export baskets of African countries.
The Initiative also contributes towards employment generation, in particular among the youth, women and other vulnerable groups. While efforts to stimulate start-ups and high growth enterprises with high degrees of capital accumulation and technology usage are at the forefront, SMEs in services and light manufacturing, geared largely to the domestic and regional market, are also needed to create the number of jobs necessary in Africa today. Even so, the Initiative provides a roadmap for ensuring that these companies also increase their productivity, either by improving and branding their products, or streamlining the production, or both.
The Initiative enhances economic governance by setting clear priorities for the services and public inputs (laws, regulation, and oversight) that the public sector should provide to SMEs – in particular through State Enterprise Development Agencies, but also through education, infrastructure, and taxation structure. It complements specific country plans to set up Special Economic Zones and incubators, providing guidance on how they could provide fair, targeted, and effective assistance.
Implementation of the Initiative would make a substantial contribution to overall competitiveness of African economies, as well as to its integration into the rest of the world. Support of high-growth enterprises would lay the foundation for creating net exporting sectors outside of hydrocarbons, while value-chain initiatives would increase productivity and promote integration with multi-national enterprises operating in African countries.
Entrepreneurship in the context of the Initiative covers in the broadest terms and in all forms –Entrepreneurial people in large companies, in the public sector, in the academia, and of course, those who launch and grow new companies.
Small and Medium Enterprises (SMEs) within the context of the Initiative are defined as companies with fewer than 250 employees and which are independent from larger companies. In addition, they have an annual turnover up to 50 million Naira or an annual balance sheet up to 40 million Naira. There are three types of SMEs:
- Micro-enterprises have fewer than 10 employees
- Small enterprises have between 10 and 49 employees
- Medium-sized enterprises have between 50 and 249 employees
ENGAGING LOCAL PARTNERS
To help SMEs live up to their potential, we know they need more than capital alone. Hence, AFRIEF is supporting its Partners to provides tailor made business development services to support entrepreneurism and the growth of SMEs in Africa. We select businesses based on an assessment of their plans and financial potential and on the social impact that they expect to deliver for their community. To ensure businesses deliver on the latter, social impact is monitored consistently from the start and measured over a period of time. We expect entrepreneurs to contribute to the costs of the business development support to some extent. We are always looking to expand our relationship with local consulting and development partners in countries across Africa. We know that local partners bring the different perspectives and deep on-the-ground knowledge that facilitate effective development work.
All potential partners must comply with all the eligibility criteria set out in this section.
Entities eligible to apply for partnership must be established in an African Union member country.
LEGAL STATUS ELIGIBILITY
- Applications must be submitted by a legal entity.
- Corporate bodies must be properly constituted and registered under the law of their home country.
- Any public or private entity whose core activity is in the field of fostering, promoting and/or supporting entrepreneurship and SMEs can apply for partnership. This may include:
- Public Authorities Responsible for or Active in the Fields of Economic Affairs, Entrepreneurship and Enterprise, Business Support or Related Issues;
- Chambers of Commerce, Industry, Mines and Agriculture or similar bodies;
- Consulting firms and Business Support Organizations and Start-up Centers;
- Business Associations and Business Support Networks;