Starting business is the challenge facing many young entrepreneurs in Africa, but it’s an achievable challenge. Entrepreneurs have to face numerous challenges on the road to success, in particular with regard to access to finance.
All entrepreneurs will at some point, feel overwhelmed with the many responsibilities that fall on their shoulders. This article cover the common challenge facing many young entrepreneurs in Africa such as Overestimating Success, Misplaced Purpose, Negative Mindset, Poor Organizational skills, Jack of All Trades, Employee Motivation, Lack of Support
There are some Indicators for one to be an entrepreneur, someone that is willing to see the problem and take risk to come up with solution, these type of risks could be
- Financial risk
- Career risk
- Family/Social risk
- Economic risk
Other indication elements:
- Business Opportunity
Challenge facing many young entrepreneurs in Africa
The challenge facing many young entrepreneurs in Africa, globally are remarkably similar, and this necessitates investigation into the financial and non-financial support required to enable their success. Schoof (2006) argues that there exist five key constraints and barriers to youth entrepreneurship in general: social and cultural attitude towards youth entrepreneurship, entrepreneurship education, access to finance/start-up financing, administrative and regulatory framework, and business assistance and support. Llisterri et al (2006; 5) also note that lack of experience and resources causes early failure of business.
The following were the important Challenge facing many young entrepreneurs in Africa.
1. Economy challenges
2. Training challenges
3. Government challenges
4. Society challenges
list some examples of the types of companies that you do business with on a regular basis. At one point in time, each of these organizations was nothing more than a business idea that an entrepreneur turned into a business opportunity.
African youth entrepreneurs fail to come up with a good idea of business in the right place to meet the opportunity that feeds needs of beneficiaries, So that become a challenge.
When trying to come up with fresh concepts for business opportunities, it’s a good idea to focus your attention on the types of products and services that people need, yet aren’t able to easily get from reliable sources for good prices. After all, building a successful business is all about identifying an unmet consumer need and coming up with a way to meet that need in an effective manner.
Fear of Risk-Taking in Business
Business is full of risks. Whether you are in business for yourself or working for an employer, taking a risk in doing something different can be scary and this becomes the huge challenge facing young African entrepreneurs. You may fear failure and loss of money, you may fear of not be sure to earning salary per month like an employee /might be afraid of limiting beliefs or perhaps you fear embarrassment or humiliation.
Some fear of risk-taking is healthy willing and will help you evaluate situations more effectively before you jump into unfamiliar territory. With some time and effort, you can overcome the crippling fear that is keeping you from making decisions that could lead to your success.
Lack of Credit Facilities
Potential Africa entrepreneurs go through many hardships when trying to access credit for their businesses. Though there is a wide range of financial institutions that offer business loans, they usually charge high-interest rates deterring aspiring entrepreneurs. For instance, major banks have pegged their lending rates to as much a 28% deterring potential entrepreneurs who are mostly low-income earners. Other obstacles faced by our entrepreneurs include severe collateral conditions set by banks and other lending institutions.
Lack of knowledge
Lack of knowledge can be in finance management, Lack of knowledge can be in growing and skilled enough to lead the business, you might found a young entrepreneur set up his business and has a good idea, but has no understanding of how to manage money or awareness of taxes, so he ends up frustration that his businesses doesn’t ‘ve profits at all and he quit.
Most young entrepreneurs in Africa they facing the challenges of lack thereof with sufficient knowledge when they initiate or develop business, which is solved today by hire someone has the skills you don’t have and learn from.
Businesses get a competitive advantage with the use of technology. In African countries, the use of technology systems is largely limited to university educated people and in the capital cities. Even tough technology is important in today`s business environment, the majority of African’s young entrepreneurs are still computer illiterate.
On the other hand, the rate of computer literacy is higher in other developed countries, although we are not very behind and we do great strides to make sure in promoting technology of African. For example, the Tanzania Government started an ambitious program and is projecting all school teachers to be computer literate by late 2016.20
The Africa entrepreneurs will need to embrace technology in trying to compete with other worldwide businesses.
Innovation & Creativity
Africa countries, entrepreneurs have no great innovations to promote their business or start a new while they had one and this has become a huge challenge to economy develop
It occur a businessman manage and deal with one business for a years without put creativity to another business that could reinforcements for the extra income and also create opportunities for others, example, a typical farmer manage agriculture Sector for a long period of time and has achieved succeed might establish a retarded to give advice to others who are starting or surpassed by giving them the best way to reach or exceed success, by doing this could reinforcements for income and also create opportunities for others to cultivate.
Government regulatory system/ Government support
African entrepreneurs will face political challenges such as the business tax regulations and the lack of government support. The business and tax regulations are very important in stimulating the growth of the private sector and job creation.
In Africa, the average corporate tax rate is high, hampers the development of small businesses. An example in Kenya, the corporate tax rate is 30% for local entrepreneurs and 37.5% for Non-Resident entrepreneurs. Tanzania entrepreneurs will have to pay a higher corporate tax the rate in Kenya, thus decreasing their net business incomes. Although the EAC member countries agreed to establish the EAC harmonized tax system but the process is still in progress.
The use of different tax system is a challenge for all African entrepreneurs and policymakers should quickly reach an agreement on this issue.
Stigma & Religion beliefs
Stigma beliefs become a challenge for a long time the source being culture and social life of African people
I would say it is a depressing situation since many people of Africa have to believe on their own way of doing things and trust, it occurs someone needs do something different in business or society suddenly he/she can’t, why? because of discouraging coming to his/her way from others by saying we don’t do like that or it’s not going to work, so this also the challenge facing many young entrepreneurs in Africa and has become chronic,
Ryan (2003) states that as traditional job-for-life career paths become rarer, youth entrepreneurship is regarded as an additional way of integrating youth into the labor market and overcoming poverty.
Supporting this shift in policy is the fact that in the last decade, most new formal employment has been created in small enterprises or as self-employment.
Empirical evidence indicates that young people get involved in an enterprise to solve socio-economic problems such as lack of employment, income generation and contending with poverty. Youth entrepreneurship reduces crime, poverty, and income inequality. This indirectly induces an environment for national and regional economic growth and development. The drive for youth entrepreneurship in Africa is premised on the need to get young people gainfully employed and contributing economically, despite the inevitable challenges.
The challenges to youth entrepreneurship in Africa were identified and discussed, and possible solutions to these suggested. The type of financial products required by youths was also explored. This article concludes that access to credit alone will not suffice if youth-run enterprises are to succeed in Africa countries, particular attention must be given to customizing available funds and availing ongoing enterprise support at micro, and macro levels.