Anzisha YouthEntrepreneurship Survey 2016
1. Introduction
2. Executive summary
3. Respondentprofile
4. Growth
5. Salesandmarketing
6. Human resources
7. Funding
8. Support
Table of contents
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Anzisha YouthEntrepreneurship Survey 2016
Africahastheyoungestpopulationintheworld,withanestimated200millionpeoplebetweentheagesof15and24,accordingtotheAfrican Economic Outlook report. But despite fast economic growth overthepastdecade,manyyouthsstillstruggletofindproductiveemployment.Unlesstheseyoungpeoplecanbeputtomeaningfulwork,thedemographicdividendcaneasilyturnintomassfrustrationandunrest.Entrepreneurshiphasanimportantroletoplayincreatingemployment. Thegoalofthe Anzisha Youth Entrepreneurship Survey 2016 is to pro-videasnapshotoftherealitiesfacingyoungentrepreneursinAfrica.Itfocusesonfiveareasofoperatingabusiness,namely(1)Growth,(2)Salesandmarketing,(3)Humanresources,(4)Fundingand(5)Sup-port.Itisintendedthatstakeholderssuchaspolicymakers,supportorganisations,andentrepreneursthemselveswillbenefitfromtheseinsights.Witharelativelysmallsamplesizeof101,thesurveydoesnotpurporttobeascientificstudy.However,theresultscanbeseenasindicativeofbroadertrendsandattitudes.
Introduction 1
Methodology
The Anzisha Youth Entrepreneurship Survey 2016 isbasedonanemailedquestionnaireansweredby101youngentrepreneurslocatedacrossthe continent. Respondents were within the 15 to 25 age group at the timeofcompletingthesurvey,althoughthemajorityedgedtowardstheupper-endofthisbracket.Allquestionnaireswerecompletedbetween3Septemberand25November2015.
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Executive summary 2
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· Those who participated in the survey are confidentaboutthefuture.Morethanthreequarters are“verypositive”(79%),while21%are“somewhat positive”abouttheoutlookfortheirventures.Noneex-pressed any negative sentiments.
·Fundingisbyfarthegreatestimpedimenttogrowth,with48%ofrespondentshighlightingitasthebiggestobstacletoexpandingtheircompanies.
·Only14%ofrespondentscurrentlydobusinessinterna-tionally,indicatinganuntappedgrowthopportunity.
·Whenitcomestomarketingtheirbusinesses,youngentrepreneursinvestinpaid-foradvertisementsonsocialmedianetworks(58%),aswellasexhibitionsandevents(50%).However,word-of-mouth(83%)isbyfar themostpopularmarketingmedium.Relativelyfew makeuseofmoreexpensivechannelssuch astelevision(10%),outdoor(17%)andradio(18%).
·Intermsofhumanresources,employeecost(43%)isthebiggestchallengefacingyoungentrepreneurs, followedbyalackofadequately-skilledtalent(20%), motivatingstaff(12%)andattractingtalent(10%).
·YoungCEOsrewardandincentivisetheiremployees inavarietyofways,withtrainingprogrammes(51%), bonuses(47%)andgifts/daysoff(43%)beingthemostpopular.Alargepercentagealsoallowtheiremployeestoparticipateinthesuccessofthebusinessthroughprofitshare(37%)andequitystakes(22%).
·Only27%ofrespondentshavesecuredoutsidefunding/investmentfortheirbusinesses.Familyandfriends(59%)arethetopsourceofcapital,inadditiontogrants(52%)andcrowdfunding(22%).Themajorityofthosewhohavenotsecuredoutsidefundingsaiditisbecausetheydon’tknowhowtofindpotentialbackers. ·Over50%indicatedtheydohaveapartnerinthebusi-ness,andinmanycasesmorethanone.Thetopreasoncitedfornothavingabusinesspartneris:“Ihaven’tbeenabletofindsomeonesuitable”(46%).
· Respondents receive support and advice from a variety ofsources,suchasnetworkingevents(64%), mentors(62%),trainingprogrammes(54%)and onlineresources(52%),tonameafew.
·Themajoritydescribedthelevelofsupportavailabletoentrepreneursintheircountryas“fair”(43%).However,24%and17%labelledthesituationas“poor”and“verypoor”respectively,suggestingsignificantworkremainstomakeiteasierforyoungbusinesspeopletosucceed.
·Whenaskedwhatshouldbethetoppriorityforgov-ernmenttobettersupportyoungbusinessowners,themajoritysaidthatentrepreneurshipshouldbetaughtinschools(32%).Thesecondmost-popularsuggestionwastoimproveinfrastructure(20%),followedbytheintroduc-tionoftaxincentivesforyoungentrepreneurs(14%).
Anzisha YouthEntrepreneurship Survey 2016
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Respondent profile 24 Nigeria
13 Kenya
4 Ethiopia
6 G
hana
2 Iv
ory
Coas
t2 Morocco
2 Eg
ypt
8 Ugand
a
6 South Africa
1 Namibia
1 Lesotho
2 To
go
1 Angola
1 Tu
nisia
4 Ca
mer
oon
1 Bu
rund
i
6 Zimbabw
e
3 Malaw
i
3 D
.R. C
ongo
3 Rw
anda
4 Zambia
4 Ta
nzan
ia
Gender representation
Male Female
81% 19%
In what sector do you operate?
15% Agriculture
15% Education
15% Technology
8% Social upliftment
7% Business services
6% Media & marketing
6% Fashion & art
5% Consumer products
5% Environmental
5% Healthcare
4% Finance
4% Energy
3% Construction
2% Tourism
Whydidyoubecomeanentrepreneur?
57% To make a difference in the world
15% To take advantage of an opportunity
12% To leave a legacy
9% Other reason
6% To take control of my own destiny
1% To become wealthy
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Followingyearsofrapideconomicgrowth,manyAfricancountries arefacingheadwindsintheformoffallingcommodityprices,lessaccommodativeglobalfinancialconditionsandastrongUSdollar.However,theentrepreneurswhoparticipatedinthesurveyareover-whelminglyupbeataboutthefutureoftheircompanies.Some79%indicatedtheyare“verypositive”,whiletheremaindersaidtheyare“somewhatpositive”.Noneexpressedanynegativesentiments.
Fundingisbyfarthegreatestimpedimenttogrowth,with48%ofrespondentshighlightingitasthebiggestobstacletoexpandingtheircompanies.Interestingly,only3%ofrespondentscitedtechnologicalchangeaffectingtheirindustriesasthelargestchallenge.Thisissur-prisinggivenhowtechnologicalinnovations–suchasAirbnbandUber–aredisruptingtraditionalindustriesacrosstheworld.
Growth
Funding 48%
9%
7%
6%
5%
5%
4%
3%
3%
3%
3%
2%
2%
Economic climate
Marketing
Access to market info
Managing HR
Other
Managing growth
Competition
Regulatory compliance
Sales
Technological change
Ability to innovate
Attracting talent
Whatisthebiggestchallengetogrowingyourcompany?
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Whattermbestdescribesyouroutlookforyourventure?
Very positive
Somewhat positive
Somewhatnegative
Verynegative
79% 0% 0%21%
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Thevastmajorityofthosesurveyedarecurrentlyonlydoingbusinessintheirhomemarkets,thereforemissingoutonregionalandglobalopportunities.Only14%indicatedtheyexporttheirproducts/services.Thissuggestsaneedtomakeyoungentrepreneursmoreawareoftheopportunitiestoselltheirproducts/servicesinternationally,especiallyin other African countries. With initiatives such as the Tripartite Free TradeArea,momentumforgreaterregionalintegrationisgatheringsteam,anditislikelytobecomeeasierforAfricancountriestotradewith one another.
Whilemanyentrepreneursdreamofonedaysellingtheirbusinesses,68%ofthosewhoparticipatedinthesurveyhavenosuchintentions;14%indicatedtheyareunsure.
Areyourproducts/servicessoldinternationally?
14% Yes 86% No
Doyouplanonsellingyourcompany in the future?
18% Yes 14% Not sure68% No
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Some56%ofrespondentsuseface-to-faceclientvisitsastheir primarysaleschannel,followedbyonline(24%),walk-ins(11%),directcustomerenquiries(7%)andtelephonesales(2%).
Almostthreequarters(73%)indicatedtheydon’temploycustomerrelationshipmanagement(CRM)software,highlightinganopportunitytooperatemoreefficientlybyutilisingtechnology.
Word-of-mouth(83%)isbyfarthemostpopularmarketingmedium.Ascouldbeexpected,giventherelativelysmallsizeofthebusiness-essurveyed,moreexpensivemarketingchannelssuchastelevision(10%),outdoor(17%)andradio(18%)arelessutilised.
Theseyoungentrepreneursdo,however,makeuseofpaid-foradver-tisementsonsocialmediaplatforms(57%)aswellasexhibitionsandevents(50%).
Sales & marketing
Whatisyourbusiness’sprimarysaleschannel?
56% Face-to-faceclient visits
24% Online
11% Walk-incustomers
7% Customerenquiries
2% Phone sales
Almost three quarterssurveyed said they don,t use any CRM
software .
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Whichofthefollowingmarketing platformsdoyouuse?
83%
57%
50%
30%
24%
22%
18%
16%
10%
17%
Word of mouth
Paid-for social media
Expos & events
Direct mail
Print advertising
Professional PR
Radio
Outdoor
Google AdWords
Television
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Thebulkofrespondentsemployrelativelyfewpeople–56%haveonetofiveemployees,while19%hiresixto10people.Some16%havenoemployees.
Employeecost(43%)isthegreatestobstaclefacingentrepreneurswhenitcomestohumanresources.Thisisunderstandableasthema-jorityofcompanieswhichparticipatedinthesurveyarelessthanfiveyearsold,andthereforelesslikelytohavetheresourcestohiretoptalent.Alackofadequately-skilledtalent(20%)isthesecondbiggesthurdle,followedbymotivatingstaff(12%)andattractingtalent(10%).
Human resources
Howmanyfull-timeemployeesdoyoucurrentlyemploy?
16%
19%
8%
1%
0%
56%
No employees
1-5 employees
6-10 employees
11-20 employees
21-100 employees
100+ employees
Howmanyemployeesdoyouexpectto hire in the next two years?
17%
22%
19%
22%
10%
10%
1-5 employees
6-10 employees
11-20 employees
21-50 employees
51-100 employees
100+ employees
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Anzisha YouthEntrepreneurship Survey 2016
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YoungCEOsrewardandincentivisetheiremployeesinavarietyofways,withtrainingprogrammes(51%),bonuses(47%)andgifts/daysoff(43%)themostpopular.Arelativelylowpercentagecontributetomedicalaid(14%)andpensionschemes(3%).Overathird(37%)indi-catedtheyshareprofitswithemployees,while22%haveprovidedanequitystakeintheircompanies.
Whatisthetopchallengeyoufaceinterms of human resources?
43% Employee cost
6% Unfavourable labour regulation
9% Retaining talent
10% Attracting talent
20% Lack of adequately-skilled talent
12% Motivating staff
Mostpopularformsofemployeebenefits,rewardsandincentives:
51% Training programmes
47% Bonuses43% Gifts/days off
37% Profit share
30% Certificates
22% Equity stake
14% Medical aid
5% Other 3% Pension
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Anzisha YouthEntrepreneurship Survey 2016
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Only27%ofrespondentshavesecuredoutsidefunding/investmentfortheirbusinesses.Familyandfriends(59%)arethetopsourceofcapital,alongwithgrants(52%)andcrowdfunding(22%).Bankloans(4%)aretheleastcommon,trailingventurecapital(7%),angelinvestors(11%)anddevelopmentfinanceorganisations(11%).
Thetopreasonfornotsecuringoutsidefundingis:“Unsurehowtosourcefunding”(32%).Thishighlightsaneedforgreatersupporttoed-ucateyoungentrepreneursonavailablefinancing/investmentoptions.Some28%ofrespondentssaidtheyhaveapproachedfinanciers/in-vestors,buthadnosuccess.
Funding
What are the main reasons you have not secured outside nvestment?
32%
28%
16%
14%
5%
5%
I value ownership over investment
Bootstrapping without investment
I don’t want to take on debt
No-one willing to back me
Unsure how to source funding
Other
Fromwhichofthefollowingsourceshaveyoureceivedfunding?
59% Family & friends
52% Grants
22% Crowdfunding
11% Angel investors 11%
Private equity
7%Venture capital
4% Bank loan
11% Development finance organisation
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Anzisha YouthEntrepreneurship Survey 2016
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Withoutbusinesspartnersandothersupportstructures,entrepre-neurshipcanbealonelyworld.Some54%oftheentrepreneurssur-veyedindicatedtheydohaveapartnerinthebusiness,andinmanycasesmorethanone.Thetopreasoncitedfornothavingabusinesspartneris“Ihaven’tbeenabletofindsomeonesuitable”(46%),fol-lowedby“Iprefertogoitalone”(19%)and“Theopportunityistoosmalltoshareprofitswithothers”(15%).
Respondentsalsoreceivesupportfromavarietyofothersources,suchasnetworkingevents(64%),mentors(62%),trainingprogrammes(54%)andonlineresources(52%),tonameafew.
Support 8
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54% of recepients have a partner who owns a stake in the business
What is the main reason why you don’thaveapartner?
I fear that we won’t get along
Other reason
Profits too small to share with others
I prefer togo at it alone
Lack of suitable partners 46%
19%
15%
11%
9%
Whichofthefollowingprovidesupportforyourbusiness?
64% Networking62% Mentor
54% Training programmes52% Online resources
23% Business incubator
15% Business coach
6% None
Anzisha YouthEntrepreneurship Survey 2016
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ContrarytoconventionalwisdomthatthereislittleassistanceforyoungentrepreneursinAfrica,themajoritydescribedthelevelofsupportavailableintheircountryas“fair”(43%).However,24%and17%labelledthesituationas“poor”and“verypoor”respectively,meaningsignificantworkremainstomakeiteasierforyoung entrepreneurs to succeed.
Whenaskedwhatshouldbethetoppriorityforgovernmenttobet-tersupportyoungbusinessowners,themajoritysaidthatentrepre-neurshipshouldbetaughtinschools(32%).Thissuggestsmanywereill-preparedfortherollercoaster-worldofentrepreneurship. Thesecondmost-popularsuggestionwastoimproveinfrastructure(20%),followedbytheintroductionoftaxincentivesforyoungentre-preneurs(14%).
Howwouldyoudescribethelevelofsupportavailabletoyoungentrepreneursinyourcountry?
3%Very good
13%Good
43%Fair
24%Poor
17%Very poor
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Whatshouldbethetoppriorityforyourgovernmenttobettersupportyoungentrepreneurs?
32%
20%
14%
12%
9%
5%
8%
Entrepreneurship taught in schools
Improve infrastructure
Tax incentives for young companies
Reduce red tape
Improve regulatory environment
More support from trade agencies
Other
Anzisha YouthEntrepreneurship Survey 2016
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TheAnzishaPrizeisthepremierawardforAfrica’sbest young entrepreneurs. The Prize is managed out of the African LeadershipAcademy’sCentreforEntrepreneurialLeadership,
whichwasestablishedthroughamulti-yearpartnership withTheMasterCardFoundation.
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Thisreportwasproducedincollaborationwith
MaritzAfricaIntelligence.
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About the Anzisha Prize