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The Aspen Network of Development Entrepreneurs (ANDE) recently published their 2016 State of the Small & Growing Business Sector Report. Within it, they look at the current state of the small business sector and the organizations supporting entrepreneurs in emerging markets. Similar to RENEW and the Impact Angel Network, ANDE believes in small and growing businesses (SGBs) ability to pull countries out of poverty.
In the report, ANDE argues that the most sustainable way to achieve development objectives is by support entrepreneurs. Businesses create jobs and can help communities create their own story. Throughout the report a strong correlation is made between thriving SGBs and achieving the Sustainable Development Goals (SDGs). (pg. 5). SDGs are 17 global goals that have 169 targets covering very broad sustainable development issues. They address topics such as gender inequality, climate change, and education.
ANDE then goes on to focus on key challenges of the SGB sector, including: capacity development, corporate engagement, acceleration and talent. They note that aside from access to finance, talent is a key challenge for entrepreneurs globally, but it becomes increasingly difficult in emerging markets. ANDE points out the correlation between human capital and financial capital and the importance of having a strong middle management in place in these businesses.
The report also outlines several investment trends over the past decade by comparing investment vehicles that were launched between 2012-2016, compared to the previous five years. Between 2012 and 2016, there was a noticeable shift towards Asia. Vehicles launched in South Asia have increased to 35%, whereas those in Sub-Saharan Africa now only make up 25% of vehicles, compared to 37% from the previous five years. They also noticed a large shift towards health and financial services, as well as a shit towards agriculture in the past five years.
The report lastly touches on 6 main emerging markets: Brazil, Central America & Mexico, East Africa, India, South Africa, and West Africa.
We focused on the section on East Africa, due to RENEW’s current location in Ethiopia. Below are the statistics from the report, along with key entrepreneurial trends outlined for East Africa.
Key Entrepreneurial Trends:
- One key sector in East Africa for 2016 was Fintech. There was a growing interest in solar energy and the off-grid sector. Logistics and distribution were also becoming an emerging interest.
- Early stage ventures in the region improved in quality throughout 2016. They noted that entrepreneurs are better able to cope with the challenges than in prior years.
- There is an increase in the number of investors supporting early-stage ventures. This has allowed increased options for businesses and entrepreneurs in the region.
- Companies within East Africa are beginning to look past Kenya and are looking to alternative countries and cities.
- Lastly, they see that 2017 will be a challenging year for SGBs to have access to further finance (pg 29).
Read the full
State of the Small & Growing Business Sector Impact Report by ANDE
to get a deeper understanding of the other emerging markets mentioned.Be sure to also check out RENEW’s Second Annual Impact Report. The report gives key insights in the IAN’s vision, the portfolio in Ethiopia and the IAN itself
