Entrepreneurship Barriers and Solutions in Africa: Focus on Zimbabwe

As indicated by several reports of high rates of unemployment and other social problems contributing to unstable regimes and slow economic growth, Africa, including Zimbabwe, continues to face a variety of obstacles regarding business potential, particularly amongst its population. Developing entrepreneurship is crucial for attaining sustainable and equitable growth as well as a way to address new economic challenges, provide employment, and combat social and financial disadvantage (OECD 2016). This implies that increased unemployment rates, among other social problems, are a reflection of a country’s poor commercial potential. According to the World Economic Forum, entrepreneurship is essential to combat youth unemployment because it can provide young people with the support they need to establish markets and employment prospects (Matlali 2021). Using the most stringent definition of employment, the Zimbabwe National Statistics Agency estimated that the country’s unemployment rate is currently 19% (ZimStat 2021).

African populations have little commercial options, therefore entrepreneurship development requires complex initiatives. The goal of the article is to examine the barriers to entrepreneurship in Africa and break down potential solutions to improving business possibilities, with a particular focus on Zimbabwe. This paper’s methodology used a mixed research strategy as its foundation. Documentary reviews of books, journals, press releases, media stories, and research papers aim to present the context and statistical information for analysis and synthesis. Thus, the study paints a wide picture and employs a multidisciplinary approach while drawing on the body of previous research and a critical field opinion poll.

Business potential in Africa’s post-COVID environment

The COVID-19 outbreak has uncovered structural flaws within regions and nations as well as fault lines and the continent’s susceptibility. The instability of the international social, political, and economic system makes this worse. These worldwide shifts and the problems in Africa create a brand-new and developing commercial environment.

The COVID-19 pandemic significantly stifled business opportunities in Africa, which negatively impacted economic equality and severely restricted people’s capacity to earn a living and support themselves in the same manner across the continent. The lockdowns in different regions of the world have hindered entrepreneurial activity, leading to the closure of companies even though COVID-19 could offer prospects for entrepreneurs. Small and medium-sized businesses, including restaurants, tour operators, and movie theaters who have been forced to close down as a result of COVID-19, support this viewpoint (Alessa 2021).

Additionally, due to cash shortages or consumers being unable to go to stores to buy essentials, there has been a dramatic decline in consumer demand. However, the pandemic has sped up innovation in all facets of global economies. Almost every facet of entrepreneurial activity has undergone unforeseen changes as a result of COVID-19, including market trends, consumer demand, and control measures put in place to stop the virus from spreading.

Businesses all throughout the world had to respond quickly and forcefully to the pandemic’s difficulties. Now is the moment for businesses in Africa to look for and grab the opportunities appearing in the recovery as we enter the next phase. According to a PwC study, this entails carrying out an after-action analysis to gather information and insights on the pandemic’s lessons learned, and then using them to prioritize steps to increase corporate value today and create strategic resilience for the future (PwC 2022).

Business opportunities in Zimbabwe

For numerous economic sectors, the government has implemented policies and incentives to entice international investment. Zimbabwe has signed bilateral protection agreements to safeguard foreign investors entering the country, including those with the Multilateral Investments Guarantee Agency, the Overseas Private Investment Corporation, the United Nations Convention on International Trade Law, and the New York Convention on the Enforcement of Foreign Arbitral Awards. Zimbabwe also participates in the General Systems of Preferences, ACP-EU Partnership, Common Market for East and Southern Africa, Southern African Development Coordination Conference, and the World Trade Organization, all of which provide better access to international markets.

However, the commercial chances have not yet reached the optimum business environment because of a variety of difficulties brought on by the political and economic climate of the nation. In Zimbabwe, businesses have a shortage of access to financing from financial institutions. Due to this lack of access to funding from deposit taking institutions, SMEs borrow money from money lenders, whose monthly interest rates of 30% are too high for any company’s cash flow to support, placing them in needless financial strain.

Politics has also created a highly difficult operating climate for businesses. For businesses that already face considerable operating risk, government meddling in the private sector through politically-motivated legislation has been a heavy burden.

Below is a photo of informal traders in Zimbabwe who lack the financial support to venture into lucrative entrepreneurship.

entrepreneurship.

Photo by Mercy Marwenze.

How can business opportunities in Africa be improved?

Policymakers must consequently identify measures to advance industrialization, boost manufacturing productivity, and raise corporate competitiveness in order to increase business possibilities. This will lessen the reliance of African nations on the export of fundamental raw commodities. African countries are subject to erratic commodity markets and changes in the global economy as a result of this dependence. For this reason, economic diversification is a top priority for African nations, particularly in industries with the potential to generate employment and high-value products.

To improve business chances in Africa, diversified digital transformation is another workable strategy. The COVID-19 pandemic has had an impact on every industry in the world (Wilson 2020). The ability to pivot and ride the waves of change, upheaval, and uncertainty brought on by the pandemic allowed certain firms that had already adopted digital technologies to succeed. Technological advancements have the potential to increase employment opportunities and drive the diversification of related industries such as payments, infrastructure, and logistics, which would benefit the information and financial economies. The people of Africa must be equipped with the required digital skills if the continent is to realize its full potential. Africans require access to digital tools and technologies, while working within a legal framework that safeguards everyone’s interests and safety.

The availability of support services has always been necessary to increase business chances in Africa. These involve gathering and equipping a huge number of organizations that are ready to help new and aspiring businesses. Various training programs that offer small companies resources and tools have been funded by governments in many African nations. Limited lending schemes have existed in several countries to assist people in starting their businesses without having to worry about money.

Building ties between academia and business is also necessary. In most nations, the foundation of economic activity is made up of universities, research facilities, and knowledge-based SMEs. These players are essential to the transformation of African economies and the improvement of their level of international competitiveness. It is essential that businesses innovate and develop cutting-edge technologies and expertise to increase Africa’s capacity to meet more of its demands, to create and export high-value goods and services, and to position the continent as a major player in the world economy.