Government Policies That Encourage Entrepreneurship

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Entrepreneurship in African countries greatly contributes to economic development and sustainability since it creates more jobs. Thus, African governments are formulating significant initiatives and policies for the development of entrepreneurship. The following are government policies that are spurring entrepreneurial confidence in the continent.

Simplifying Business Formation and Registration Processes through Digitization

Business formation and registration can be tiresome since you will need to go through several departments to obtain the necessary certificates and permits. Some African governments have simplified the process through digitization of business processes where business registration can be done entirely online.

Togo is among the fastest countries in starting a business in Africa. The government abolished the requirement to notarize company documents and reducing the time to register a company (it takes 3 days). Introduction of online registration systems also makes registration easier.

Nigeria has made business registration easier by reducing the time needed to register a company and introducing an online platform for stamp duty payment. Egypt has also reduced the number of days to start a business (from 16 to 11 days).

Morocco combines the stamp duty payment with the application for business incorporation, making it easier to start a business (it takes 9 days). Kenya, Rwanda, Djibouti, and Ivory Coast have simplified the tax filing process by adopting electronic systems of tax payment.

The Senegal Start-up Act passed in December 2019 promotes the growth of digital technology in West Africa that aims to ease business registration.

Additionally, the ease of property registration in Rwanda, Togo and Kenya encourages real estate businesses. Rwanda’s open data initiative has helped to crreate a nationwide digital based land registry system.

It [the digital land registry] has improved income security for many rural citizens, while opening the door to a new wave of rural development, allowing many, often for the first time, to apply for credit against the value of their property and to invest in new business.

Land Information Inquiry Portal. The portal helps you in knowing the ownership of a parcel , if the parcel has a caveat and/or restriction, if the parcel is under mortgage, if the parcel is under transaction, and the planned land use.

Protection of Intellectual Property

Every successful entrepreneur started with having a business idea. Business ideas can be similar, but the process used to turn the idea into reality may differ from one entrepreneur to another. Most entrepreneurs in Africa lack the confidence to show their unique ideas and strategies for fear of theft. As such, African governments have created policies that give entrepreneurs exclusive rights to new ideas and products.

In 2013, Kenya established the National Innovation Agency to facilitate innovation and help local institutions file patent applications and take legal action if IP rights are infringed. The agency This encourages entrepreneurs to come out and share their ideas and receive the support they need.

In 2018, Rwanda revised its intellectual property policy to, among others, create a standalone autonomous IP office to carry out day-to-day IP administration and intensify IP awareness among IP users and potential users, including creators, innovators, potential investors, research centers and universities, and SMEs.

Policies on the Provision of Industrial Sheds

Most times, entrepreneurs fail to engage in business activities due to a lack of business premises. This can be due to the high rental fees charged on renting business stores. Several African governments are solving this problem by providing industrial sheds and premises that entrepreneurs can use to carry out their businesses.

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The Kenyan government, for instance, has encouraged entrepreneurship by setting up industrial sheds to cater to Jua Kali (informal sector) artisans. Ethiopia has also constructed several industrial parks to provide working premises for manufacturing enterprises.

Import Incentive Schemes

Some manufacturing and processing enterprises use imported raw materials. However, it is usually difficult and expensive to import raw materials due to high import tariffs. African governments promote manufacturing enterprises by reducing import tariffs and simplifying clearance procedures.

Malawi has a 100% duty-free importation of equipment and raw materials for entrepreneurs engaged in horticultural products for export.

Ghana has simplified the whole importing process by introducing a paperless customs clearance processing system. This encourages entrepreneurs in dealing with imports.

Introduction of Tax Incentives

Small and Medium-sized Enterprises (SMEs) are the backbone of every growing African economy. Most small business owners struggle to raise funds to facilitate their businesses’ growth, and tax increases will only discourage growth. African governments are creating flexible tax policies like exempting some enterprises from taxes.

Nigeria exempts small businesses with an annual turnover of less than N25 million from Company Income Tax. Agro-allied enterprises in Nigeria are also exempted from tax during the first five years of operation.

In April 2018, Tunisia passed the Tunisia Start-up Act to provide incentives such as tax exemptions for start-up founders.

About Tunisia Startup Act

  • Tax exemptions for startups for up to eight years
  • Public and private sector employees get one year off to set up a new business after which they have the right to return to their old jobs
  • State-funded salary for up to three founders per company during the first year of operations to encourage young people with limited financial resources to become entrepreneurs
  • Allows for pospective entrepreneurs to set up a foreign currency account they can use to procure materials and set up branches or invest in companies abroad

Incorporation of Entrepreneurship in Education Systems

Incorporating entrepreneurship curricula in education systems in Africa equips learners with entrepreneurial knowledge hence nurturing innovative minds in society. For example, The Chandaria business Innovation Center, located at Kenyatta University, provides entrepreneurial training and academic research to students for six months.

The Tunisian government has invested heavily in entrepreneurship education programs leading to a proliferation of start-ups in the country. This is because the learners are equipped with the know-how regarding business formation.

In 2009, Rwanda introduced entrepreneurship as a required subject in secondary schools. As part of its 2016 curriculum reform, all secondary school students in Rwanda were required to take a modified entrepreneurship course focused on providing students with skills to succeed in the labor market.

The Ugandan government has remodeled its education system to include entrepreneurship curricula in both secondary schools and colleges.

Provision of Market and Networking Opportunities

Every entrepreneur aims at serving a specific market, and they must reach their targeted markets without restriction. Namibia, Ivory Coast, Rwanda, South Africa, and Mauritius have an outstanding infrastructure with well-developed roads. This attracts investors and facilitates fast transportation of goods and services.

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Business networking through mentorship programs helps entrepreneurs network with suppliers, customers, and other business associates.  African governments have stepped up to offer mentorship programs to help their entrepreneurs.

Examples include The Youth Enterprise Development Strategy (YEDS) in South Africa, The Youth Enterprise with Innovation in Nigeria (YouWin), and the Youth Enterprise Development Fund (YEDF) in Kenya.

Access to funding for startups and SMEs

Many small businesses in Africa fail due to a lack of capital. Financial institutions often deny SMEs startup capital for fear that they might not be in a position to repay because they lack a credit history. African governments have taken the responsibility to help entrepreneurs access start-up capital to grow their businesses.

The Youth Enterprise Development Fund (YEDF) and the Uwezo Fund in Kenya provide loans to youth-entrepreneurs.

There are structures and programs set up in Nigeria to facilitate access to funds. They include the N-Power programme, Government Enterprise and Empowerment Programme (GEEP), and the Small and Medium Enterprises Development Agency (SMEDAN).

To promote entrrepeneurship, the Youth Venture Capital Fund was introduced in Uganda in 2011.

Enforcing Anti-Corruption Laws

Many African governments are faced with corruption in both the public and private sectors, which has led to the failure of many businesses. Initiatives to finance and equip entrepreneurs are set, but they fail to bring up the desired impact due to theft of finances and nepotism.  However, some African governments have set up strategies to combat corruption and contribute to the development of entrepreneurship.

Botswana is a good example for other African countries when it comes to the fight against corruption. It is the least corrupt African country, enabling the growth of entrepreneurship in the country. There is a whistle-blower hotline in Botswana through which citizens can report corruption. South Africa is currently fighting corruption by improving procurement and rebuilding the capacity of the anti-corruption agency.

 

Promotion of Women Entrepreneurship

African societies underrate women’s potential on many levels, including business. There have been cultural barriers preventing women from participating in activities outside their homes, despite being essential wheels in propelling entrepreneurship in Africa.

However, in modern society, African governments have set up policies and initiatives to encourage female entrepreneurship. This is mainly done through public education and the use of women entrepreneurs as role models to reduce the negative attitude towards women.

Cameroon has set up formal networks to support women entrepreneurs such as the Cameroon Women Entrepreneurs Network and the Association of Cameroonian Business Woman.

The Women Enterprise Fund is an initiative of the Kenyan Ministry of Gender to offer credit to women entrepreneurs and market their goods and services.

Conclusion

African governments are playing essential roles in encouraging entrepreneurship in the continent. These efforts aim to promote economic growth, reduce income inequality, and eradicate poverty.

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