The Africans who go it alone to cut risk, not increase it

When the most powerful person in the world attends a start up conference in east Africa you know that entrepreneurship has become a potent source of soft power.

This is what will happen this weekend when President Barack Obama appears at the Global Entrepreneurship Summit in Nairobi, joining Steve Case, the co-founder of AOL, and 3,000 others committed to the power of start-ups — in energy, agriculture, health and the creative arts.

The visit follows a speech the US leader gave in May in which he praised entrepreneurship for breaking down barriers between cultures and faiths, “at a time when we need more than ever the capacity to understand and work across borders”.

Yet entrepreneurship in east Africa is a paradoxical thing. On the one hand it is what everyone does. On the other, the market is unused to risk capital.

This month I spent a week in Uganda. The country is astonishingly young, with half its population aged under 15, but it suffers from a high rate of youth unemployment. Around 40,000 Ugandans graduate each year and compete for about 8,000 jobs.

I asked person after person if they were an entrepreneur. Overwhelmingly, the answer was “no”. Yet they told me about the companies they’d started and those they ran alongside their “formal economy” jobs.

The formal economy is deemed so profoundly risky that virtually everyone has a start-up alongside, to offset the risk of their jobs disappearing. Almost everyone also has some kind of smallholding or agricultural venture.

In other words, entrepreneurship is a type of risk avoidance. Unlike in Europe or the US where it is celebrated as the embracing of risk, in east Africa it is a way to reduce risk. And it is not considered elective, or brave.

So where does this leave those doing venture backed or technology focused start-ups? The Nairobi summit illustrates how far these have developed locally.

Ten years ago in Kenya there was no tech hub, no incubation for young companies, and no support network for engineers and developers. Last year Erik Hersman’s Nairobi-based white African blog listed 23 seed investments, eight follow-on investments, and two exits.

From a base of nothing, Nairobi’s iHub tech hub has grown to more than 3,000 developers, designers and entrepreneurs. Steve Case will have people to talk to.

He might seek out, in particular, the Ugandan founders of music booking company, Fezah. Namakajjo used to run Google’s Kampala office (as establishment a role in the formal economy as it’s possible to imagine) before starting their company. They wanted to be part of the nascent tech start-up scene and show no signs of regretting their decision.

They sound like founders anywhere — struggling to find and keep developers, struggling to raise money. They have no doubt that what they are doing is important and worthwhile.

Mr Case might also seek out Richard Zulu, founder of Outbox Uganda, which incubates start-ups in Kampala, or David Kobia and Juliana Rotich of Ushahidi, which is attracting attention all over the world for its crowd-sourced data.

It is a truism that this should be the African century. A combination of demography, natural resources and human inventiveness should increase prosperity and improve public health, education, infrastructure, financial services and communications.

In this context entrepreneurship is a necessity not a choice and listening carefully to entrepreneurs may give us insights into how likely the continent’s hopes can become reality.

The question below the surface in every conversation with every entrepreneur was simple: “Can we realise the promise of the African century despite the manifest weakness of our infrastructure and institutions?”

The answers I heard were pragmatic: entrepreneurship is about getting done what you can get done until things change.

It is hedging against losing your job, diversifying the risk of political change or lost contracts.

It is not the only answer. Nor is it about ego so much as about creating the conditions for a good life and good society — reaching towards the African century one start-up at a time.

The author is chairman of the Skoll Centre for Social Entrepreneurship at the Saïd Business School, University of Oxford.