Things are looking tougher for Africa this year. After a decade of exuberant growth, recent GDP data shows that key economies in sub-Saharan Africa (SSA) continue to slow, dragging growth in the region down to a disappointing average 1.1% per annum, its lowest for six years. Add to that global threats, including uncertainty surrounding a Trump administration in the US, and you could start to get quite gloomy about prospects on the continent.
Such pessimism, however, would be misplaced. As businessman and philanthropist Tony Elumelu – champion of the concept of Africans investing in Africa – has pointed out the commercial rewards for investing on the continent are still significant. And done right they can bring significant economic and much needed social benefits.
There is already significant investment interest in the continent both at home and abroad, particularly in the impact investment space, which looks for businesses that deliver social value along with financial returns.
According to Rachel Keeler, writing in the Stanford Social Innovation Review (SSI) recently, Africa has been the top geographic focus for impact investment in the past few years. The only problem is that the number of interested investors far outstrips the number of investable enterprises.
To better position African business to take advantage of this interest, entrepreneurs need to learn to think like investors. This starts with having a clear and articulate vision of what they are trying to achieve and a strong business model for how they plan to do this, along with clear measures in place to track and demonstrate impact.
In short, they need to embody good business principles first and innovative potential second. Innovation is frequently touted as the cure-all for creating new markets, jobs and solutions to age-old development problems, but despite its seductive lure as a quick fix for Africa’s challenges, innovation in and of itself is never going to be a substitute for sound business. It is not – as Christian Seelos and Johanna Mair put it in their article in the SSI – a shortcut to development.
Innovation, they argue, does not magically solve big problems faster. More dangerously, the belief that it does can mean that value created by incremental improvements of the core, routine activities of organisations (which are altogether less glamorous) can be side lined – creating more harm than good.
A recent analysis of KPMG International Development Advisory Services’ (IDAS) investment portfolio across Africa confirmed, perhaps unsurprisingly, that successful businesses also have the most impact. If we want to create impact in Africa, we need to attend therefore to the task of creating successful business – that includes paying more attention to the businesses that fail and understanding why this is, in addition to celebrating the ones that succeed. This will require a coordinated effort from business, government, civil society, media and academia working together to support and build business on the continent. Business schools, of course, have a special role to play here, and collaborations like the African Academic Association on Entrepreneurship (AAAE) too will play a crucial role.
An institution like the GSB, which is a founding member of the AAAE and rated as the top business school on the continent, has a duty to facilitate and promote the growth of business on the continent. We can do this not only by making sure business leaders and entrepreneurs are equipped with the right skills and attitudes to build successful and profitable businesses that also move society forward, but also by convening spaces to enable the necessary conversations and connecting the right people.
If we don’t do this, we risk the tragedy of exciting new ideas – no matter how good they are – burning brightly and briefly before crashing to the ground never to be seen again because they do not have the right business infrastructure in place to support them.
When it comes to the development challenges facing this continent, we don’t just need bright flares and dazzling innovations – we need slow burning and sustainable fires that bring about systemic changes – and the GSB is positioning itself to ignite these .