November 22, 2016
Recently, the Global Entrepreneurship Week (GEW) held a range of activities in Angola. I was meant to speak at a panel about the creative economy and its impact on resocialization through entrepreneurship and startups.
Unfortunately a last minute meeting held me back and I wasn’t able to share my views on this exciting and extremely pertinent subject matter. Thankfully one of my colleagues from the African Innovation Foundation, Kamal D’Nigel, stepped in on my behalf.
To me initiatives like GEW are vital for the Angolan entrepreneurship ecosystem, which is still weak. Instead of dwelling on the current economic challenges, the GEW event gave Angolan entrepreneurs and the wider business community a platform to highlight opportunities to foster entrepreneurship in Angola.
In 2014, the Global Entrepreneurship Monitor report found that Angola ranked among the most entrepreneurial in the world, with about a third of the population involved in recently established businesses. The study also found that Angolan entrepreneurs tend to be opportunity driven rather than needs driven….something I find slightly odd given that Angola has one of the biggest informal economies in sub-Saharan Africa and a large number of citizens are already engaged in some form of needs-based business.
Behind the Veil of Angola’s Informal Economy
As at 2015, the Ministry of Finance in Angola estimated that the informal market now constitutes some 60 percent, dominated largely by women who are largely engaged in various forms of retailing activities. Many of them are heads of households. However, punitive policies are making it increasingly difficult for them to carry out businesses on the streets. These informal entrepreneurs have next to no opportunity to borrow from banks to scale and commercialize their businesses. They are therefore obliged to pay extremely high interest rates to parallel market money dealers for very short term loans, often leaving them in chronic debt.
It must be said that the government has attempted to support entrepreneurship through various programs. Initiatives such as Angola Investe, which provides government guarantee and subsidized interest to loans granted by commercial banks and Meu Negócio Minha Vida, which supports micro entrepreneurship, are estimated to have raised around 65,000 jobs thus far. But how effective have these initiatives been?
In developed economies, SMEs constitute a majority of enterprises and employ majority of the national labor force. Israel, which has experienced great political turmoil for as long as most of us can recall, is now recognized as a developed economy and has been ranked as 23rd by the International Monetary Fund. With a population of eight million people, Israel has over 6,000 startups and attracts more venture capital per person than any other country in the world.
Turning Angola’s needs-based entrepreneurs to opportunity-based entrepreneurs
So what can Angola learn from this? Despite challenges that exist, creativity and innovation are key as they create new ways of thinking around products, market needs and profitable ventures. We need to use creative approaches to leapfrog education challenges and enable greater participation from the informal sector in order to ramp up economic diversification and accelerate job creation.
In the December 2015 EY study, “Cultural Times – The First Global Map of Cultural and Creative Industries (CCI)”, it was estimated that cultural goods in Africa are largely provided through the informal economy, employing some 547,500 people and generating US$4.2bn in revenues. Imagine what this could mean for Angola, with majority of its population engaged in the informal market?
In Angola, new headway is being made to kickstart the startup scene with two emerging innovation hubs - KiandaHub, an incubator for tech startups and Fábrica de Sabão, which I initiated with the support of the public sector by leasing their land. Both are still fledgling ecosystems and seek a lot of support from the Angolan public and private sector in order for them to truly serve their purpose.
Fábrica de Sabão, located in Cazenga and built on the ruins of the old Congeral soap factory, aims to nurture young African startups and support niche urban manufacturing. It is especially designed to be inclusive of the informal sector, a place for creative exploration to thrive. Eventually it will serve as an incubator and accelerator hub but for now it offers co-working facilities for students and young entrepreneurs in Cazenga.
It also has a makerspace, which is proving to be a major pull factor. Local women and youth are involved in various urban manufacturing of niche products such as wooden furniture from recycled pallet wood and created with modern equipment such as CNC machines, chess figurines and boards and steel chairs made from aluminum cans, floor tiles and internet cables made from recycled plastic bottles, screen-printed t-shirts, woven carpets from recycled plastic bags, lamps from steel or old fans with recycled plastic bags or wire, clothing, bags, pillowcases made with recycled fabrics, fashion accessories, arts and crafts.
Making furniture in Fábrica de Sabão's MakerSpace
By giving them the tools and skills they need to become their own designers, producers, manufactures, buyers and sellers based on niche and segmented goods and services, these communities stand a real chance to become part of the formal SME sector. Angolan entrepreneurs should be courageous in exploring the creative sector and believe in their ideas by creating products and solutions made in Angola for Angolans. The public and private sector need to be attaching much greater importance to investing in creative industries throughout the value chain of education, creation, production, distribution and consumption.
The MakerWomen crafting recycled goods at Fábrica de Sabão