JOHANNESBURG – I was invited by Helvetas to spend last week in Switzerland, where I delivered a keynote address on the power of the informal sector to drive job creation and ignite entrepreneurship in Africa.
Helvetas, an independent organisation for development, supports poor and disadvantaged women, men and communities in about 30 developing and transition countries in Africa, Asia, Latin America and Eastern Europe.
The address was as follows:
The informal sector remains crucial to drive Africa’s prosperity, given that this sector in sub-Saharan Africa makes up nearly 80 percent of all employment, according to the International Labour Organisation and absorbs many of the continent’s young employment-seekers.
Today, there are various industries igniting the power of the informal economy, such as various blue-collar jobs, farming, stokvels, spaza shops, taverns, au-pairs and many more.
Cash continues to fuel this invisible economy, which limits the productivity, growth and development of other sectors, such as micro and small enterprises. It also makes it difficult to include this economy in any form of official statistics, oversight, taxation and regulation.
Many informal traders also struggle to scale due to their lack of financial records, which ensure that they have credit scores, as well as no business advancement strategy, vital to attract investors. Most of those who lose their jobs in advanced economies could be the largest consumers in the informal economy.
Growing the informal sector must be our priority and here’s a snapshot of how.
We need to make access to capital easier, help to improve their skills and educate/inform them on the various tools available (many are free and online) to ensure they have a proper business system which will allow them to scale.
What’s more, the use of technology and ensuring that infrastructures in which they operate are enabling and empowering is critical.
Informal traders should also be given the opportunity to create their own ecosystems, as opposed to nudging them towards big corporate supply chains.
Allowing them to operate in this way with various support mechanisms means they can retain their informality and still scale successfully.
Secure pride-of-place for these traders is also important. Maybe they receive title deeds or enter into rental contracts with either the city or the landlords. This peace of mind will help them to think strategically and more long-term.
I used the Swiss trip to also explore the entrepreneurship ecosystem in Zurich and Geneva, the Netherlands and Scotland. This included ETH, which is a science, technology, engineering and mathematics institute, as well as the Impact Hub and others. ETH shared some of its successes and collaborations, and how it continue to on-board and support high impact start-ups in Zurich.
Further afield in Aberdeen, Scotland, I learnt more about the power of creating a legacy business, its building processes and systems to ensure its sustainability.
My visit to the Glenfiddich distillery in Aberdeen, where William Grant passionately built what is today a multibillion-dollar company, was a perfect example of this.
My visit to Glenfiddich was an inspiring deep dive into what it took William Grant to build his now five-generation-strong business. It was passion, vision and big picture thinking that took his company beyond borders.
Today, his whisky is consumed in 180 countries and, interestingly, the whisky that will be consumed in the next eight to 10 years has already been made.
Scotland has also learnt perfectly its competitive edge and cherishes the whisky production with pride. The industry contributes more than £4 billion (R74.07bn) to the Scottish economy annually.
So, as Africans, how can we build a legacy that will survive and thrive for many generations? How can our entrepreneurial and business role players create their own legacies? How can our leaders leave their various countries far better off than they were?
Africa has many legacy businesses to be proud of, such as Remgro, Pick n Pay, the Dantata family (Nigeria’s most famous family of wealthy entrepreneurs), the Metl Group (Tanzania’s largest home-grown company) and Nando’s.
We must also remember that most successful businesses across the world never started big. They were born in a backyard, a garage or even written on a serviette… the most important thing is to build processes, systems, traditions and legacies that will ensure the sustainability of these businesses into African brands.
Kizito Okechukwu is the co-chairperson of the Global Entrepreneurship Network (GEN) Africa; 22 on Sloane is Africa’s largest start-up campus.