Tony Elumelu Foundation partners with Stanford University

Africa’s leading philanthropy has released a comprehensive research study centered on African entrepreneurs in partnership with Stanford University. The research from the Tony Elumelu Foundation revealed that pertinent cultural factors influence women’s entrepreneurial journeys in the region, among other compelling conclusions.

Women in Africa are well represented in entrepreneurship. Yet, their businesses are less profitable and experience delayed growth in comparison to male-owned enterprises.

The research found that women and men have different business motivations and aims, and there are stark differences in how they discuss their customers and products.

For male entrepreneurs, motivations revolve around “profit,” “growth” and “capital.” In contrast, the motivation for female entrepreneurs is social impact via products, services and industries.

Capital consideration was also a defining aspect for most African entrepreneurs. The research used data compiled from the almost 140,000 African entrepreneurs who applied to the Tony Elumelu Foundation Entrepreneurship Program between 2015 and 2017. Access to capital was identified as playing a critical role in how a business is run and initially conceptualized – from its size and scope to its design and goals.

The researchers also noted that African entrepreneurs, aware of their limitations in raising capital, often restrict their ideas. With increased access to and greater opportunities for seed funding, African SMEs will dream bigger and launch businesses with a larger footprint.

The research further investigated the mindset of entrepreneurs, presenting a unique understanding of the challenges facing African startups and the areas for growth across multiple sectors. It provides an opportunity to rethink how entrepreneurship is approached and supported, identifying two categories of entrepreneurs.

The first set of entrepreneurs – described as the exchange mindset – are grounded in their purpose of providing products and services, nurturing relationships with employees and customers and providing value to others. The second set – labeled the organization mindset – is more concerned about creating, growing and expanding their company.

The exchange mindset is characterized by a micro-level, “on-the-ground” view, while the “organization mindset” entrepreneurs focused on “being an entrepreneur” and were characterized by a more macro-level view of themselves and their activities. Rather than orienting themselves around the exchange of products and services with customers, organization mindset entrepreneurs focused on their purpose behind creating and growing a company. The study found that individuals with this mindset often discussed growth and performance, managing people and assets and industry dynamics. Their attention is directed toward the characteristics of their business and its performance and expansion.

The exchange mindset entrepreneurs show the utmost concern about the quality of products and services. In close contrast, the organization mindset entrepreneurs are likely to express internal motivation such as feelings of ownership and control, leading to an individualistic focus.

Both mindsets have varying management styles. The former view and describe their employees as equals whose opinions are valued and the latter as resources to be managed. Although differences in entrepreneurial mindsets might exist, African entrepreneurs are fundamentally characterized by their zeal to create significant impact in one way or another.

These differences were most visible geographically in North, West, East and Central Africa. In West Africa, entrepreneurs – particularly Nigerians – had motivations embedded in profit-oriented language, while Central Africa and Eastern African entrepreneurs seemed to be more oriented toward social justice and community development. North African entrepreneurs were more disposed toward cyclical, project-based work. In Eastern and Western Africa, there was a greater emphasis on farming and agriculture. Central African entrepreneurs showed a high degree of overlap with Eastern Africans when discussing why they became entrepreneurs.

The research concluded that more African entrepreneurs need to adopt the organizational mindset, which is linked to higher business success. Most entrepreneurs with the “exchange mindset” were women, highlighting the less formal level via which women view entrepreneurial enterprises. Women entrepreneurs must be empowered to think differently. African entrepreneurs must embrace the language of creation alongside a clear vision for growth, achievable through guided and targeted mentorship.

Indeed, true to driving impact, the Tony Elumelu Foundation recently opened its online portal to receive applications from extraordinary individuals across the continent with a minimum of five years of business or professional experience to apply for a chance to mentor young African entrepreneurs. No doubt, mentorship can be valuable across all business stages and levels of experience. These mentors will be assigned to entrepreneurs from the program to provide quality guidance that plays into their business interests. Mentors are required to participate in two-hour sessions every month over a 12-month period and are rewarded with certificates of achievements and value-add opportunities.

With a labor force of more than 400 million, which will surge by at least 70 percent before 2035, Africa is at a critical crossroads as per what to do with such viable manpower. To convert this young African workforce into creators of prosperity, the Tony Elumelu Foundation continues to advocate strongly for young men and women’s participation in entrepreneurship. Through its flagship Entrepreneurship Program launched in 2015, over 9,000 SMEs have been trained, funded and mentored, energizing the private sector in the process and creating hundreds of thousands of jobs directly and indirectly.