As CEO of Africa’s leading philanthropic organisation, Parminder Vir, oversees the strategic development and implementation of its key programmes © Tony Elumelu Foundation
What is the story behind the launch of the TEF Entrepreneurship Programme?
We need to first understand the vision and mission of TEF because what inspired me to leave my home in London and come and live in Lagos was Mr Elumelu’s vision to support 10,000 entrepreneurs from Africa’s 54 countries through a commitment of €81 million (US$100 million) over the next 10 years. His view is that it is African entrepreneurs who will create jobs and generate revenues for the economic development of Africa. Mr Elumelu invited me to help operationalise this vision and it was an opportunity, a challenge, I could not refuse! So, I found myself sitting behind the desk in April 2014, looking at this extraordinary vision and thinking: what framework do we need to put in place to enable the institutionalisation and democratisation of support for entrepreneurs?
The framework that emerged is the seven pillars of the TEF Entrepreneurship Programme; a holistic and structured approach to developing entrepreneurs across Africa. These pillars include a 12 week Startup Enterprise Toolkit training programme to build entrepreneurs’ capacity to manage their business effectively; the allocation of an expert mentor; seed capital investment of €4,066 (US$5,000), which is non-returnable; an online platform for entrepreneurs to build relationships with each other; an annual gathering of the entrepreneurs, policymakers and private sector leaders from across Africa at the TEF Entrepreneurship Forum in Lagos; an online resource library of information to help the entrepreneurs develop their businesses; and, finally, the TEF alumni network, which grows by 1,000 entrepreneurs each year.
In terms of the programme’s eligibility criteria, the entrepreneurs and businesses we support must be located in Africa, and the businesses be a maximum of 3-years-old. Since we first opened the application portal in January 2015, the number of applicants has doubled almost every year, from 20,000 to the 151,692 applications we received this year when we closed the portal for the fourth round of the programme.
Which of the pillars is the most vital for the long-term success and sustainability of the entrepreneurs’ enterprises?
It has to be the training. When I meet TEF entrepreneurs, I ask them for their key take-away from the programme. A large number cite the training programme, as well as the mentorship and the opportunity to connect with other like-minded entrepreneurs from across the African continent. The seed capital is the last thing that they mention.
We are slowly changing the mind-set of entrepreneurs from grant seekers to investment seekers, who see themselves and their businesses as an investment opportunity. You only become investor ready once you have got paying customers or clients for the products or services that your business is based on. The challenge is to design a business model that will turn €4,060 (US$5,000) into €406,000 (US$500,000). For example, one of our entrepreneurs went through the training and mentoring, received the seed capital, and went on to invest that seed capital and his training wisely. He came back a year later to tell us that his food processing business was generating €980,000 (US$1.2 million) in revenues. We know that after the 12-week training programme, if the entrepreneurs are serious, they will be able to turn their ideas into viable businesses – we have seen evidence of this impact and we know that they will succeed.
Which sectors are the entrepreneurs most commonly innovating in?
Our programme is sector agnostic, but we were really blown away in the first year, when the applications started to come in, by how many of the ideas were in agriculture. From the first application, we are able to track the sector, country and gender of all the applicants, as well as the development stage of their business ideas.
Entrepreneurs are already diversifying – they can see where the growth opportunities for businesses are – in agriculture, education, training and ICTs, for example, which are the fastest growing sectors across the African continent. However, what amazes us is that fashion is emerging as a major sector, which is very nice to see because many African countries, at one point in their existence, were large cotton producers. Many of those countries, including Nigeria, had a very vibrant textiles sector, which has been allowed to decline, but young entrepreneurs are now seeing fashion as a potential opportunity.
What advice would you give to young entrepreneurs wanting to go into agribusiness?
My advice is not just applicable to those going into agribusiness, but business generally – they should identify the gaps in the market and align that with their own passions and interests and then locate the resources they need to get their ideas off the ground. Entrepreneurship is not something you can do on the side while you are holding down a job. Eventually you are going to have to make a choice by asking, “Do I dedicate myself 100% to making this business work or do I take my entrepreneurial zeal into the company I am working for and become an intra-preneur?” I think whether you are an entrepreneur or working for a company you have to add value.
You also have no excuse not to do research; you can research the sector, the domain and market opportunities online and offline, depending on your sector. If you can afford some data, use it wisely. You cannot say, “I am an entrepreneur,” until you have done an intense amount of research on your idea.
Do you have any examples of successful agribusinesses that have grown up through TEF Entrepreneurship Programme?
Joel Cherop is an agriculture entrepreneur from Uganda, who had 1 ha of land on which he wanted to be able to grow three types of crop per year, rather than just one, by channelling the underground water. He has been able to realise this dream and you can imagine the revenues he has generated from selling three types of crop per year compared to one. He is now well-known in his community, to the point that the President of Uganda heard about his story and came to his village to see for himself what the young entrepreneur was doing. He has since taken the training he received from our programme and trained 50 other farmers, telling them to think of themselves not just as farmers, but as business owners.
We have another entrepreneur who is using drone technology to spray crops with fertiliser and distribute seed from the air. Others are using apps to enable farmers to market produce to their customers. Farmers are already using mobile phones to check prices of commodities on a daily basis – cassava, yams, whatever they are growing – to give them an understanding of the market for what they are producing. With over 30% of TEF entrepreneurs coming from the agriculture sector, we know agriculture, from farm to fork, presents extraordinary opportunities for young African entrepreneurs.
What are the opportunities to transform entrepreneurship in Africa?
For me, it is the human capital which offers the greatest opportunity. This continent has the youngest population in the world; with over a billion people living in Africa there is huge human capital. The greatest potential lies in harnessing that capital and deploying it for the economic and social development of the continent. Nobody will want to leave their home and country and go looking for work elsewhere if we can create those opportunities here.
There is also an extraordinary amount of untapped natural resources – 60% of the world’s arable land is on this continent. Uganda alone has over 14 million cows, and yet it imports second-hand shoes! There are many countries that grow cocoa, but never actually eat the chocolate. The sufficient development and retention of value chains, which tap into the natural resources available on the African continent, will create new opportunities for entrepreneurs and jobs for young people.
What about technology?
Inevitably technology offers huge potential as well, and Africa is leapfrogging in technology. Look at how access to mobile phones across Africa has revolutionised everything. Right now, the internet and mobile data is expensive, but technology is a transformer and an enabler. If you are a snail farmer, cassava processor, or groundnut processor, for example, technology can help you to connect with potential buyers and help you to think about the market for your product or service beyond your local area. Everyone who is smart is using technology to enable their business to reach new customers and new markets, and stay ahead of the competition. Africa must build its own tech developers, we must begin to use the talent from here. All of TEF’s technology platforms – the application portal, the online mentor learning platform, the document management system and the TEF Hub for the graduates of the programme – have been built by local developers.
We are investing a lot in ICT entrepreneurs – they constitute 10-12% of the entrepreneurs that we have supported. They have got extraordinary solutions, which are unique to meeting the needs on the continent, just look at the impact of M-Pesa on mobile money transfers!
What more needs to be done to support entrepreneurs?
Funding mechanisms need to diversify. Right now, entrepreneurs do not have many options for sourcing capital; they usually have to go to a bank and pay incredibly high interest rates. Private equity, venture capital, and business angels are all risk averse. We have to encourage investors to take some risks in investing in early-stage and high-growth enterprises – from across the continent. Governments also need to embrace entrepreneurship as an option for creating jobs and improve infrastructure to create an environment that is conducive for entrepreneurship across Africa. Africa needs more investment in talent and innovation.