Tuesday, October 19, 2021

Mass entrepreneurship could translate to more jobs

Analyse Africa, a data analysis platform which aggregates macroeconomic data from 42 leading global sources into a single data platform has corroborated the findings of the World Bank on entrepreneurship.

Dubbed the “Entrepreneurship project”, the World Bank report cites the number of new firms in Botswana which it says has significantly increased, averaging a 9 percent increase per year between 2009 and 2014.

Analyse Africa on the other side counts Botswana along with South Africa and Tunisia as countries which demonstrate, in comparison to other countries, a better weaved environment that fosters entrepreneurship.

However it has since been reported that the country is yet to realise value from the significant investment it has made in incentivising entrepreneurship. It has also emerged that with the potential to induce further economic growth, entrepreneurship in Botswana has not provided a solid solution to the growing unemployment rate.

Elsewhere in the world, entrepreneurship has proven successful in providing employment. Analysis of formal enterprises in the World Bank’s Enterprise Surveys shows that small young firms with fewer than 20 employees and less than 5 years of experience account for the largest share of net job creation, at 22 percent. In total, young firms (not older than 5 years) account for one-third of net job creation, compared to 23 percent for 6-10 year-old firms and 29 percent for firms older than 10 years. Small firms face larger growth drawbacks and have less access to formal sources of external finance, which potentially explains the lack of SMEs’ contribution to growth.

The African Economic outlook (AEO) 2015 report explain that 11 percent of the working-age population and 44 percent of all early-stage are engaged in entrepreneurial activity. Yet, they are more common in lower-income sub-Saharan African countries than in the rest of the continent.

Further the report state that Africa has the highest share in the world of adults in the process of starting or running new businesses, as measured by the TEA indicator. The TEA rate for the 18 African countries included in the indicator is 22 percent. That is higher than the equivalent for Latin American countries which is 19 percent and for developing countries in Asia by 13 percent.

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