Entrepreneurship is a great catalyst to promote inclusive growth in developing countries.
There are more than 300 million small and medium enterprises in developing countries. We all know that small businesses provide opportunities for inclusive development in their communities in many ways., including being the main providers of jobs, particularly for less advantaged people. Furthermore, small businesses are usually the suppliers of basic goods and services in low income or isolated communities.
However, despite the large importance of entrepreneurship to economic growth, the developing world still faces enormous challenges in order to unleash its full potential. In addition to apparent needs like access to capital, the following challenges have to be taken into account when it comes to improving the entrepreneurial ecosystem.
Rural areas are key to economic growth
Rural areas are key in developing markets to unlock economic growth. According to FAO, in 1960, 22 percent of the population in developing countries (460 million people) lived in cities and towns. By 2015, that reached 49 percent (3 billion people). Significantly half of the population in developing markets still live in rural areas.
The proliferation of technology and subsequently smartphone adoption in rural areas, albeit at a lower penetration rate, provides more opportunities for rural entrepreneurs.
Meanwhile, “From sustainability in farming in countries like Kenya to finding ways to deliver better health care in Indonesia, top leaders are improving rural areas and making a better way of life for both businesses and individuals living in developing [countries],” according to Forbes contributor Billy Shaw Susanto. A focused effort to support entrepreneurs in rural areas will lay the groundwork for future economic and entrepreneurial growth.
Incubators and accelerators are catalysts
Global accelerators fuel entrepreneurs and startups with highly supportive ecosystems. Early-stage startups in the developed world have access to funding, mentorship, networking, coworking spaces, educational resources, investors and more; all of the things that are designed to build and grow successful startups. However, this is often a luxury (or non-existent) in many developing countries.
Incubators, accelerators and VC funds provide entrepreneurs access to a global market. Additionally, mentorship in the managerial aspects of running a startup including cash flow, managing people, and marketing, and so on are more easily accessible.
Entrepreneurs need accessible incubators and accelerators (especially in impoverished areas) alongside people within these communities who know local challenges and are empowered to solve them.
Bridge the R&D and development gap
It is harder for entrepreneurs in developing countries to fill the gap between R&D and the launch of a startup. For example, this can include physical prototype development and patent registration. Investors will often say, “The concept is excellent and we see your R&D, but we need the prototype.” Entrepreneurs in developing countries need financial, operational and technical partners to bridge this gap.
Government policies helps entrepreneurship ecosystems thrive
When a local government promotes policies and programs that support the development of talent, an entrepreneurial culture, and capital for small and medium enterprises entrepreneurs thrive. This is why it’s essential for developing countries to look at their policies and create programs that incentivize entrepreneurial development.
Jesmane Boggenpoel is an experienced business executive and former Head of Business Engagement for Africa at the World Economic Forum in Switzerland. She has served on the boards of various South African and international organizations. She is a Chartered Accountant and holds a Master’s degree from Harvard University’s JFK School of Government. Jesmane was honored as a Young Global Leader of the World Economic Forum, is a Harvard Mason fellow and a shareholder and founding board member of African Women Chartered Accountants Investment Holdings. Boggenpoel has extensive global experience having studied and worked on three continents, as well as traveling to over 65 countries.