Innovation and Entrepreneurship in Africa

October 21, 2015

Matt Kinsella’s 4th Blog from Kenya 

My role with Renewable World is primarily to help develop their Community Implementation Model, the process by which individual projects are executed at community level.  The key parts of the model, which really differentiate it from the standard project management processes seen in industry, are the community mobilisation and capacity building stages.  These stages focus on helping the community establish and run a new, legally registered, community-owned business organisation, which can manage the renewable energy technology provided to them.  Each business is run by a committee of local people, who must work together to manage the system, oversee sales of energy to the community, and ensure the organisation runs at a profit.  The energy systems which we provide are, for the communities we work with, an innovation – a new technology, bringing new opportunities.  The people who put themselves forward to manage this new technology take on a significant responsibility – they assume the role of energy-entrepreneurs, running an innovative start-up social enterprise on behalf of their community.

Entrepreneurs can be understood as creating value by bringing together three factors: a business opportunity, resources to invest, and an organisation capable of supplying innovation to the market (Wickham, 2006).  For the communities around Lake Victoria, the opportunity is clear: villages full of people without electricity, who are keen to get reliable power at rates they can afford.  Renewable World take care to work closely with each community, using participatory methods to assess the level of demand there – if there is real and sustainable demand, then there is potential for a community-owned energy supply business to work.  The resources to be invested are the people who will run the business, and the energy hub equipment.  The people volunteer from within the communities themselves, and are trained and supported by us and our local partners.  The initial fixed capital is provided by Renewable World, thanks to the generosity of our donors.  Buying this equipment would be beyond the means of the communities – for people living on less than two dollars a day, raising thirty or forty thousand dollars of capital upfront, whether through saving or borrowing, is simply unfeasible.  So these first two components of the entrepreneurship ‘triangle’ are relatively straight-forward – the demand for energy already exists, creating an opportunity, while the necessary resources can usually be mobilised, partly from within the communities, and partly from donors and fundraising.  It is the third element, organisation, where the difficulties lie.  Many technology/infrastructure-focussed development projects risk failure because they struggle to establish sustainable organisational or business models to support the project in the long-term.

This is why community mobilisation and capacity-building are so central to the Community Implementation Model.  In villages where basic literacy and numeracy are low, and the demands of earning a living and caring for a family are significant, participation in these new organisations is a big commitment.  It presents new challenges and opportunities for each individual committee member, which should not be under-estimated.  Identifying the right people, and supporting them as they build and grow their enterprise is vital to success.  Many of the committee members must learn basic business and technical skills – how to run a small business at a profit and keep the books; how to govern an organisation, make records of decisions, and follow a constitution; how to operate and maintain a brand new piece of technology.  Yet, as I saw when we visited Lake Victoria a couple of weeks ago, there are people in each community eager to rise to the challenge, learn these new skills, and assume these new responsibilities.  Their willingness to grasp the nettle is to be applauded.  Renewable World and our local partners will stand by them as they do so – effectively acting as a business incubator to these fledgling energy-enterprises, helping them develop their skills and capacity, and grow their businesses and energy systems.

These lakeside entrepreneurs are also part of a bigger picture, a wider context of risks and opportunities.  Starting a new business from scratch is difficult anywhere in the world.   Even in developed countries, where the economic and governance environment is typically more favourable for entrepreneurs, most start-ups will fail in the first few years.  In the developing world, those challenges can only be magnified.  Yet the benefits can also be significant – entrepreneurship is recognised as having an important role to play in economic development and GDP growth (Wickham, 2006).  Though many will fail, those entrepreneurs who go on to success can create new employment opportunities, and grow their businesses at a rate which big corporations can usually only dream of.  Multiply that effect by all the entrepreneurs in Kenya, and across Africa, and you have a significant force for generating new wealth.  And indeed, many economists and business commentators have come to recognise that, far from stagnating, Africa is a region of huge potential for growth, much of it still untapped.

Certainly, the idea of starting your own venture is not alien in Kenya – in a country where unemployment is high, particularly among young people, taking matters into your own hands and starting up a micro-business is often the only viable option.  People trying to seek out their own opportunities can be found everywhere here.  The kiosk-owner, the smallholder, the roadside fruit seller, the barber shop, the fisherman, the men who gather to wash cars outside the fuel station, the hustlers hawking their wares in Nairobi’s many traffic jams – each of them is a small business person in their own way, trying to earn a few bob, and working to improve their circumstances.  Many of these people are driven by some measure of desperation, and many lack the skills and resources to progress their venture beyond generating a hand-to-mouth income.  Through necessity, the entrepreneurial spirit is alive and well here, but the odds remain stacked against the poorest, most will fail, and life remains hard.  It is, I think, a key role of NGO’s like Renewable World to support such people in developing their skills, their enterprises, their community organisations, and to help them organise, improve their sustainability, reduce their risk of failure, and maximise the benefits and incomes they can achieve.  This is perhaps one of the development sector’s greatest challenges.

(Reference: Wickham, P. A.; Strategic Entrepreneurship, 4th Edition; Financial Times/Prentice Hall)