Entrepreneurs are key to unlocking AfCFTA’s potential
At the recent African Entrepreneurship Forum, the importance of brand validation, trust, partnerships and market knowledge were identified as key imperatives for any entrepreneur interested in expanding beyond borders.
The African Continental Free Trade Area (AfCFTA) has been hailed as the economic game changer for the continent, but for this to happen African entrepreneurs, SMEs and SMMES must be engaged, involved and well informed.
To ensure that these information sharing conversations are happening, the Shared Value Africa Initiative (SVAI) recently hosted the third quarterly African Entrepreneurship Forum, using it as a platform to unite leading young voices from business and civil society under the principals of shared value. The forum was co-hosted by the Pan African Chamber of Commerce and Industry (PACCI).
More specifically, the forum provided entrepreneurs with an opportunity to deliberate, explore and better understand how to leverage the AfCFTA to extend their reach and economic contribution beyond borders. The discussion also focused on what is needed for Africa, as a continent, to maximise the benefits of what is now known to be the largest single market in the world.
As an African entrepreneur that does business in a number of different African countries, keynote speaker Bright Simons, President of mPedigree, shared his thoughts on the opportunity AfCFTA presents for entrepreneurs to rethink and shift their mindsets.
He introduced the concept of Nano-Multinationals, according to Simons, is a potential transformative idea around companies that are small, use a lot of remote technology and trust-based networks. It is about SMEs capable of moving beyond the traditional roles they can play in value chains – global or regional value chains. “Forget about value chains, integrated value chains and SMEs providing cutting edge inputs or highly specialized services, or helping with cost control,” said Simons. “Imagine a future where SMEs (small and medium enterprises) can spread their influence using strong trust-based networks, as their founders connect to friends and allies in different parts of the globe who can help them navigate the local business culture on the strength of shared value principles and common entrepreneurial visions.”
Simons is confident that SMEs will become the key enablers of both regional and continental value chains, capable of transforming the economies of many African countries. He referenced countries like Germany and South Korea, as prime examples where the ability of SMEs to integrate into the value chain became critical to the export competitiveness of both those economies.
“In my opinion, the very core and pillar of AfCFTA rests on this notion of cumulation of local content, whereby I could have my developer based in Nigeria built some algorithm, put it in the product that is selling in Tanzania, and then if I’m competing for a tender in South Africa that requires local content, I can accumulate all the work that I did in those other two African countries and use that as evidence that I meet the local content regulations in South Africa. Through AfCFTA, you will be treated as a local entrepreneur in every country with all the benefits that will accrue.
In closing, Simons stressed that for the free trade area to be successful, it is vital that origin determination is sound. In other words, that buyers know where the product comes from and have access to good information about the quality of those items that are coming into the country.
“AfCFTA will enhance trade, but that can only work properly if, as a buyer, I know for sure that what I’m buying across the border is of the requisite quality and, given national sovereignty issues, I also need to be assured that the regulator in the other country is doing their work well.”
During the forum, our panel of entrepreneurs from across Africa participated in a lively discussion on the AfCFTA and the opportunity for business, which was chaired by Andrews Akoto-Addo, Investment Associate as the Ghana Tech Lab.
Several opportunities were identified by the panel, including digitalisation and servicification of trade. The importance of brand validation, partnerships and market knowledge were also seen as key tools of the trade for every entrepreneur interested in expanding beyond borders.
In terms of the legalities of doing business across the continent, Patrick Ache, African Business Advisor and Investor, cautioned that it is important to go in there with your eyes open. “For me, a key success factor for entrepreneurs looking at opportunities across the continent is partnering with the right people, whether it’s distribution and sales partners or regulatory partners, and from there truly being able to leverage local knowledge. I don’t think that will change.”
Building the right relationships with the right kind of people is something that Ikechukwu Okoye, founder and CEO of the Good Drone Company, also identified as a key differentiator. “There is an African proverb that says that it takes a village to raise a child. So that tells you that Africa thrives on relationships.”
Chibunna Ogbonna identified the need for partnerships amongst entrepreneurs themselves as equally important. “For example, entrepreneurs in South Africa should be collaborating with entrepreneurs in Nigeria, Rwanda, Kenya and other countries in Africa to see how we can add value. After all, we are building to develop our continent, not just our own countries or individual businesses. We need to have the mindset of developing Africa.”
Everyone acknowledged that considerable work remains to be done across the continent for businesses to get themselves ready for the operationalisation of the AfCFTA, but knowledge is power and that should be the starting point for entrepreneurs.
As Yavi Madurai, Founder of the Pan African Business Women Association (PABWA) noted, information about the AfCFTA is severely lacking across the continent but the onus is on the entrepreneur to start by understanding, first of all, the AfCFTA formation document itself. ”Put yourself through it, go through the document as a small business owner, as a person that is interested in commercializing the benefits of the AFCFTA for yourself. You do not need a legal degree to understand it. Then, be part of conversations like this forum and empower yourself.”
Ms. Madurai further added that shifting of mindsets also dominated a large part the discussion, not only for entrepreneurs but for every person on the content and aptly noted: “We have to first develop a value system around African products. The opportunity for Africa to rise up and build back better is to be Proudly African.”
Ntsiki Biyela, Winemaker, Entrepreneur and founder of Aslina Wines aptly summarized that we as Africans tend to wait for the world to validate us. She added that her wine will be bought by international clients first before being bought by local clients.
Akoto-Addo concluded: “We need to brand Africa and get African businesses to market both themselves and each other. Therein lies the purpose of the Shared Value Africa Initiative namely to promote shared value, to connect the dots together and build businesses that can create both economic and social value.”
The session proceedings were succinctly wrapped up by co-host Kebour Ghenna, Executive Director of PACCI, when he observed that the African entrepreneurial spirit can only develop and grow if Africa’s economy continues to grow on a sustainable basis.
USEFUL LINKS FOR ENTREPRENEURS
The African Continental Free Trade Area
INTERNATIONAL TRADE CENTRE:
A Business Guide to the African Continental Free Trade Area Agreement