The view on sub-Saharan Africa is changing. No longer do stories of tribal wars, starving children and endemic diseases dominate the updates from the region. A new, more hopeful and optimistic picture is emerging; a reality of solid GDP-growth, more widely practiced reasonably free and fair elections, and a wealth of natural resources that range from oil and gas to diamonds and rare minerals.
Everywhere people talk about sub-Saharan Africa as a great investment opportunity. Indeed, money, venture capitalists and entrepreneurs pour into the region to grab a share of its seemingly endless potential.
There are mind-blowing commercial success stories like the one of Kenya’s M-Pesa, also referred to as Africa’s “mobile money revolution”. M-Pesa allows people to make monetary transactions using only their mobile phone, no bank account, and this has revolutionalised the lives of many. In fact, around 20% of the country’s GDP moves through M-Pesa, with over $20 million per day in transactions.
Things are definitely changing for the better and many of the countries south of Sahara hold great potential. Yet, there is a reason to be cautiously optimistic. Africa is rising, but there will still be quite a while before she can walk. Just because many countries are becoming richer, it does not necessarily mean that everyone is better off.
From the time I have spent in the region, primarily in Kenya, Rwanda, Uganda and Malawi, meeting thousands of people from different backgrounds and parts of society, there are, in my humble opinion, three main challenges that, unless resolved, can easily pinch a hole on the rosy bubble.
It is important to note that these challenges should not be generalized across all of Africa. The continent has 55 countries, all with different leadership challenges and business climates, not only obvious extremes like Mali and South Africa but also in neighbouring countries like Zimbabwe and Zambia.
1) Corruption and its impact on youth
Many countries in sub-Saharan Africa, like Kenya, Uganda, Burundi and Nigeria, are still among the most corrupt in the world. Needless to say, this stifles growth and creates huge, systemic inefficiency. This is a well-known problem, and every organisation involved in the region has to decide how to play this game.
Less is said about how this leadership style affects the youth, or the next generation of leaders in those countries. Many of the young Africans I have met are obsessed with the thought of money, and how they can get more of it. In their view, money equals happiness. You hear stories about Nigerian girls who break up with their boyfriends because he can’t afford to buy her the right smartphone.
Their role models, people of authority or celebrities, all drive around in the most luxurious cars, enjoy entertainment accounts vastly exceeding the salary of a New York investment banker, and live in houses larger than university buildings. Every day you can read in the newspaper about the latest corruption scandal (at least there is freedom of speech!) and people just shrug and laugh. They are powerless.
It is clear that many citizens do not believe in, nor respect, the country’s leadership. This tone from the top creates a mentality where people only look after themselves, and act in ways that only benefit them. As people progress on the career ladder, they carry this mindset, creating a vicious circle.
Responsible leadership exists to benefit others. Until these countries get this right, sustainable growth and development in the name of all African people will remain challenging.
2) The challenge of distribution channels and networks
Many entrepreneurs have developed incredibly clever products that meet the needs of the poorest people in Africa. Solar lamps, water purifiers and mosquito nets, to name a few. Designed to improve the lives of the vulnerable and offered at competitive prices. Surprisingly enough, in Rwanda, where 85% of the population lives off the electricity grid (8.5 million people), only approx. 200.000 people own a solar lamp. How can this be?
Reaching the customers can be incredibly challenging. Once the entrepreneur has managed to work her way through the government levels to obtain the necessary licenses to sell her product in the country, finding the customers can be ever so difficult.
Even my house, located in central Kigali, does not have an address. The street I live on does not even have a name. To send a post card from Sweden to Kigali can take up to three months. Then imagine how difficult it is to locate a potential customer, living in a rural village, somewhere in a forest, perhaps two hours off the beaten track. There is no such thing as GPS or even a traditional map.
I went to visit Peruth, a borrower of a Rwandan micro-financing institution; her house was located a three hour mototaxi ride off the main road. Finding her house took 15 phone calls and for her husband to come and meet me halfway on his bike to guide the motodriver and me to the house. I now realize why micro-financing organisations sometimes charge incredibly high interest rates for their loans. In addition to the default risk, the administrative burden of paying weekly visits to your customers to collect repayments is enormous.
Investing more in infrastructure is key, enabling products and services to effectively reach the vast majority of the people, still living far away from urban areas. Building roads and connecting people to electricity and water grids will literally lay the foundation for future growth.
3) Empower the youth through job creation
Young people aged between 15 and 25 represent more than 60% of the region’s total population. Unlike other developing regions, sub-Saharan Africa’s population is becoming more youthful, with youth projected to be over 75% of total population by 2015.
More than 50% of youth are still illiterate, and approx. 20% is unemployed. There are simply not enough jobs, and even worse, many young people have little or no skills and are therefore largely excluded from productive economic and social life.
Many people are forced to become micro-entrepreneurs without having any business acumen or financial literacy, simply because they do not have any other options. This poses a great risk, as many people sadly don’t know what it means to run a business successfully.
Obviously the region needs to create an attractive environment for trade and investment, supporting companies and creating opportunities for growth, but it is also important to realise that the responsibility to prepare youth for employability and a working life also sits with the schools.
I was teaching leadership to secondary school students in Salima, on the shores of Lake Malawi. When asking them about their hopes and dreams for the future, 80% of the girls ambitiously said they wanted to be nurses or lawyers, and the majority of the boys dreamt of becoming journalists or doctors. When I asked one of the boys what he was good at in school that would make him a successful journalist, his answer was not English (as I had expected) but chemistry. Unfortunately, there is a material disconnect between what the children hope for and what the harsh reality actually looks like. At this time in Malawi, there were two jobs available for journalists in the entire country.
The schools have to take greater responsibility in preparing the students for a working life, guiding them in choosing a realistic and effective career path and teaching them the basic entrepreneurship principles and vocational skills required to start their own businesses, in case they don’t reach their dream positions.
Leaders are not people who sit around and wait. More investment is required in fostering responsible leadership amongst youth. Until the private and public sectors have caught up, at least the young should have the opportunity to take their future in their own hands, and shape their own destiny by becoming entrepreneurs.
Once the leaders south of Sahara have figured out how to deal with these challenges, I am more likely to join the group of pundits who believe that unprecedented prosperity can be within reach.