Category: Articles

Namibia Comes out Top of African Countries in Global Entrepreneurship Index

The Ashish J Thakkar Global Entrepreneurship Index of 85 countries ranks Singapore as the best environment for entrepreneurs.

Of the African nations, Namibia scores highest and comes 42nd overall ‘ ahead of other prominent African markets, such as Nigeria, Kenya and South Africa.

The research, conducted by Mara Foundation and Opinium Research, examines the state of entrepreneurship around the world.

Inaugural index features special ‘Focus on Africa’ section, with a deeper look at ‘women in the workplace’ and ‘youth unemployment’.

Singapore has topped an in-depth study of the world’s nations as offering the best environment for entrepreneurs, according to an Index developed by Mara Foundation (www.Mara-Foundation.org) and Opinium Research.

The inaugural Ashish J Thakkar Global Entrepreneurship Index measures entrepreneurial environments around the world and assesses each of its 85 countries against a set of criteria that spans policy, infrastructure, education, entrepreneurial environment and finance.

Top scoring African nations by pillar: http://APO.af/8GSxCV

Of the African nations, Namibia ranks 42nd overall, Rwanda ranks 43rd, Botswana ranks 44th and South Africa ranks 46th ‘ all of which perform well on the ‘Policy’ pillar but have some way to go to improve on their infrastructure and education in particular. 

Of the top three African countries in the Index, Namibia and Botswana are stronger on the education pillar because of comparatively higher levels of literacy and quality in education. Both countries have made education central to their development.

Rwanda scores highly on the Policy and Finance Pillars driven by government initiatives to increase the ease of doing business. Credit is easily available and business transparency is high.

Zambia scores particularly well on the Finance Pillar (72). Primarily because of the availability of credit and a low total tax rate.

Zambia, South Africa and Rwanda, the top 3 countries in Africa on the Finance pillar, stand head and shoulders above their peers, with scores of 72, 66 and 65 respectively. This places Zambia in the top 10 of all countries globally on the Finance Pillar, just behind the USA (78).

Significant challenges exist in terms of Africa’s political stability, underdeveloped infrastructure, poor education and under-diversified economies. Comparatively lower scores for infrastructure are primarily driven by a lack of electrical access and the technology that comes with reliable access to energy, such as telecommunications and internet access.

Lower scores for education are due to the overall quality of education and lower literacy rates. Boosting opportunities for a quality education is imperative for increasing the region’s quality of entrepreneurs and start-ups and providing a suitable workforce.

Overall scores and Pillar scores: http://APO.af/6aerfA

Ashish J Thakkar Global Entrepreneurship Index 2016 score [Full scores available in Full Report: http://APO.af/cV2YTt]

While much of Western Europe does well overall in the Index, Greece and Spain rank relatively low (34th and 50th respectively). Both nations are continuing to reel from the after-effects of the financial crisis, which have been exacerbated by poor levels of entrepreneurial opportunities.

Rona Kotecha, Executive Director, Mara Foundation said: The Ashish J. Thakkar Global Entrepreneurship Index offers a powerful insight into various elements that impact entrepreneurship globally. Whilst Mara Mentor enables and empowers entrepreneurs, the Index and its 20 policy recommendations are designed to provide a starting point for changes that can be implemented to create more effective entrepreneurial environments. This, in turn, will lead to job creation and a positive impact on economies around the world.’

The Ashish J Thakkar Global Entrepreneurship Index 2016 is the brainchild of serial entrepreneur, Ashish J Thakkar, who started his first business at the age of 15. The Index is a Mara Foundation initiative that has been developed with support from independent research consultancy, Opinium, to create a wide-ranging and thorough analysis of the state of entrepreneurship globally.

Ashish J Thakkar, Founder, Mara Group & Mara Foundation said: ‘Through the work of Mara Group over the past 20 years, I have come to recognise the immense contribution that entrepreneurs make to economies and societies around the world ‘ particularly in relation to job creation. In recent years, however, it has become more and more apparent that governments and the private sector are simply not doing enough to support entrepreneurs in their endeavours. With the creation of this Index, we hope to provide some solid policy recommendations that will help guide discussions and improve entrepreneurial environments globally.’

President Akinwumi Adesina, President of the African Development Bank said: ‘I commend Ashish J. Thakkar and the Mara Foundation for creating this timely index. It provides useful insights on how Africa can unlock the potential of its youth and boost entrepreneurship. As populations are aging rapidly in much of the rest of the world, Africa can reap the economic dividends of its growing labor force. Africa is poised to become the next center for entrepreneurship, but we must provide Africa’s youth with the required skills and create an environment that will enable them to become the business leaders of tomorrow.’

Mo Ibrahim, Founding Chairman of Satya Capital Limited, Founder and Chair of the Mo Ibrahim Foundation said: ‘Entrepreneurs are a great engine for development. In Africa, you need to encourage and create the right environment for their success. I really wish to congratulate The Mara Foundation for developing its important index which is a useful tool for all of us.’

Richard Branson, Virgin Group Founder said: ‘The Mara Foundation has done some great work supporting entrepreneurs all over the world. I’m delighted to see their new entrepreneurship index that will help identify opportunities for business, not-for-profits and Government to work together to create the right environment for entrepreneurs to thrive and to create jobs.’

How Do High Interest Rates Impact Small Businesses in East Africa?

Small & Medium Businesses in East Africa should be looking at ways to maximise their efficiency and improve debt management to navigate the risks that high interest rates pose for their businesses.

That’s the word from Billy Owino (https://Twitter.com/OwinoBill), Regional Director for Sage East Africa (www.Sage.com), the market leader for integrated accounting, payroll, and payment systems. He says that business builders feel the pressure of rising interest rates more severely than their larger counterparts. Big business and government policymakers should look at ways of helping smaller businesses manage the challenges they face as a result of high interest rates.

Owino notes that Small & Medium Businesses are central to the region’s economy, generating a large proportion of income, tax revenues and jobs. In Kenya, for example, Small & Medium Businesses are estimated to account for more than 80% of job opportunities (http://APO.af/jRqAou). A vibrant Small & Medium Business sector creates inclusive growth and tax revenue ‘ which is why governments in the region see small business as a priority.

Defending East African currencies

Though interest rates have started to ease somewhat across East Africa, they remain relatively high in countries such as Uganda and Kenya after central banks acted in the past two years to protect currencies from depreciation. For many Small & Medium Businesses, this has been a handbrake on growth, says Owino.

On the one hand, higher interest rates mean that many consumers have less money to spend, particularly on luxury goods. On the other, it means that many small businesses are paying more to service overdrafts, car loans, commercial mortgage repayments and credit card debt.

Unlike large businesses, many small businesses need access to credit to fund growth or bridge temporary blockages in their cash flow because they don’t have big cash reserves, says Owino. High interest repayments might affect the sustainability of those who are already operating on tight margins’raising the risk of default, foreclosure and even bankruptcy.

Interventions from government and big business

Governments in the region have taken some steps to counteract the effects of high interest rates on consumers and small businesses. The Kenyan government, for example, introduced a law capping bank interest rates at 4 percentage points above the central bank’s benchmark rate.

Though this has helped to contain interest rates banks charge their customers, there is a danger of unintended consequences such as banks charging other fees to make up for the income they lose, says Owino. Another idea with potential to make a difference is government helping to fund small businesses through small business funds.

‘By supporting business builders with loans at low interest rates, governments can help create jobs and tax revenues for tomorrow,’ says Owino. ‘Many development banks run by government and international multilateral institutions such as the International Finance Corporation are making a difference, but access to finance is still low among East African Small & Medium Businesses.’

If you are running a Small & Medium Business in East Africa, high interest rates are likely to be part of the landscape for a while to come. But there are some ways to improve your debt management to minimise the impact on your business:

Cut costs: Look for ways to reduce wastage and inefficiency in the business so that you can service debt faster or avoid taking a loan in the first place. A robust accounting system can help you better understand your expenses so that you can find ways to cut costs.

Speak to your suppliers: Sit down with your major suppliers and try to negotiate favourable credit terms. If you can get 30 days to pay for stock, interest-free, that’s preferable to using an overdraft.

Stay in touch with your creditors: Rather let your lenders know immediately when you are struggling to make your repayments. This will give you an opportunity to negotiate new terms rather than incurring massive penalty interest and harming your relationship with the bank or suppliers.

Prioritise: Pay off the debt with the highest interest rates first.

Be proactive in the management of your own debtors: Make sure your own credit control and collection processes are sound