Small and medium enterprises ( SMEs) especially those in the informal sector hire about 80 percent of the work force in most African nations and are the backbone of the continent’s economic development.
As of 2019, globally, there are 9.4 million female owned SMEs in over 140 nations, but Africa is the only continent where more women than men are entrepreneurs. Women traders participate in 74% of SME informal transboundary trade in most African nations. Females also comprise more than 50% of the SME work force. Given their high representation in this sector, there is an urgency to strengthen their capacity and access to financial, technical capital and business, trade and other relevant legal knowledge.
SMEs also comprise more than 50% of the services sectors ( in most African nations) but only 8% of the manufacturing sector. Reason for higher labor representation in the services sector than in manufacturing sector is partly because the former does not require high skills than the manufacturing sector. Therefore, most unskilled and uneducated female workers make an honest living in the informal, small and medium enterprise sector through hawking their products on street corners. But the ban on street hawking in most African nations which had good intentions of protecting their human safety and environmental aesthetics also had bad consequences of forcing some of them (e.g. enterprising female hawkers) into unemployment and desperation, including survival tactics of crime and/or sex trade.
Women are not the only ones suffering from immense fragility, but African youth are also having similar experiences. In 2015, Africa’s youth comprised 226 million (about 20%) of Africa’s 1.1 billion population. In 2019, 75% of Africa’s population of 1.3 billion is below age 35. By 2050, 2 of every five children will be born in Africa (World Economic Forum, 2020). The continent has a youth bulge and by 2050, Africa’s youth population (18 to 35 years) is predicted to be more than 800 million. But most of the youth are marginalized and excluded from the employment and economic development process. 60 % of them (youth) are either unemployed or underemployed.
Most African nations also have very high levels of inequality in the world ranging from a GINI coefficient of 0.43 to as high as 0.62. Africa is still the poorest continent in the cosmos with about 250 million families living at less than $2 a day.
COVID19 and lockdown measures have worsened such economic disparities and fragility of “survivalist” SMEs, including businesses owned by young and older females and youth. Protectionist policies and limited medical and food supplies chain has undermined exports to African nations. But these challenges create opportunities for African nations to develop strategies to strengthen the capacity of small and medium enterprises to manufacture and trade in African-value-added goods and services, including medical supplies, agrarian and other goods and services. It also creates an opportunity for private and public sector partnerships to help enable incentivization, formalization and productivity of SMEs.
African nations must also use impactful, inclusive and integrated approaches and move beyond long-term untargeted and unaccountable financial aid dependency to develop trade and investment relations based on mutual interest and equal partnerships across national boundaries.
In post COVID 19 era, SMEs, including African entrepreneurs should formalize, form joint trade and investment partnerships, have adequate access to technical and financial capital, expand, scale up and operate across their national boundaries. Countries should capitalize on the goals of the 2019 African Continental Free Trade Area (AfCTA) which came into effect in May 2019 and was to be operational in July 2020. But COVID 19 delayed the starting date until January 2021. The goal of the AfCTA is to create a single market worth $2.5 trillion for 1.2 billion African people to engage in intra-African trade in goods and service
The purpose of Afrocosmo Development Impact, LLC is to provide quality, impactful and innovative advice and solutions to trade, investment and economic development problems of small medium enterprises and public institutions in African nations, including AFCTA member nations.
CEO / Co-Founder
Valentina or Prof. OB has over 15 years of high-level advisory & work experience in economic development, business, trade, water and gender sectors, she is the CEO & Founder of Afrocosmo Development Impact, LLC.
RoseAnn M. Rotandaro, an impact investor, international philanthropist and corporate attorney in Silicon Valley, advises social entrepreneurs and nonprofit program leaders on local and global initiatives.
Frank Samolis has substantial legal, policy and procedural expertise in bilateral/regional trade agreements, having represented several sovereign entities in free trade agreement (FTA) negotiations with the US.
Robert Madsen is a macroeconomist who advises financial institutions, corporations, and governments on international developments. He speaks frequently on international affairs at Stanford University and other fora.