Africa is one of the most entrepreneurial continents in the world. Walk down any street in Lagos, Nairobi, or Accra, and you’ll see it—people selling, creating, and building. SMEs make up 95% of all businesses on the continent and contribute about 50% of GDP. Yet, despite this entrepreneurial energy, most businesses remain small, struggling to scale into larger, more impactful enterprises.
“If I could just get one big contract, I’d scale overnight.”
That was Peter, a young entrepreneur in Nairobi, running a small but promising logistics company. His story is not unique – Africa is full of Peters, talented founders running small businesses yet struggling to break past a certain threshold.
Before we continue, let me share a bit about my journey. My name is Innocent and I’ve had the privilege of working with entrepreneurs across Africa, and what I’ve observed is this: while Africa is brimming with talent and entrepreneurial energy, scaling beyond small businesses remains a tough challenge. Today, I want to explore why that is and how we can change the story.
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The Problem: A Continent of Hustlers, But Few Scalers.
The data tells a concerning story. While Africa has more entrepreneurs per capita than almost any other region, very few of them build enterprises that grow beyond a handful of employees. The World Bank estimates that over 80% of African businesses are microenterprises, employing fewer than five people.
The biggest issue? Survival, not scale.
For most small businesses in Africa, the focus is not on expanding, hiring, or entering new markets – it’s about making it through the next month. And that’s understandable when:
• Access to finance is a nightmare: The SME financing gap in Africa is $330 billion. Banks hesitate to lend to small businesses, and venture capital mostly flows to tech startups, leaving traditional businesses in a financial drought.
• Regulatory environments are stifling: Registering a business can take weeks or months. Tax policies are unpredictable. Import/export regulations are complicated. Scaling means navigating an expensive and inconsistent regulatory maze.
• Markets are fragmented: Unlike the U.S. or Europe, where businesses can scale across states with ease, Africa is a patchwork of 54 countries, each with different rules, currencies, and consumer behaviors.
• Talent is expensive and hard to retain: Many skilled professionals prefer corporate jobs, and those who join startups often leave due to lack of competitive salaries or growth opportunities.
These barriers create an ecosystem where businesses are born in large numbers but rarely grow to mid-size or large enterprises.
Photo by Hu Chen on Unsplash
The Opportunity: Breaking Through the Scale Barrier
But here’s the catch – Africa is also full of scaling opportunities for those who can navigate these challenges.
1. The Digital Revolution: Technology is one of the few sectors where businesses are scaling faster. Startups leveraging digital tools – like fintechs and e-commerce platforms – have more access to funding, broader markets, and lower operational costs.
2. The AfCFTA Promise: The African Continental Free Trade Area (AfCFTA) is designed to reduce trade barriers, creating a unified market of 1.4 billion people. Businesses that prepare now to operate beyond their borders will have a head start as regional integration deepens.
3. Alternative Financing Models: With banks hesitant to lend, alternative financing is stepping in. From venture debt to revenue-based financing and crowdfunding, African entrepreneurs need to explore new ways to raise capital beyond traditional loans.
4. Solving Africa’s Real Problems: The businesses that will scale fastest are the ones tackling real pain points – energy, logistics, healthcare, and food security. Infrastructure gaps create massive market opportunities for those willing to solve them.
The Hard Truth: Scaling Isn’t for Everyone
Scaling a business in Africa is not just about having a great product or being a hard worker. It requires a mindset shift from running a small operation to building systems that can grow.
• Are you ready to delegate? Many businesses stay small because the founder wants control over everything.
• Are you thinking beyond today? Businesses focused only on daily survival never invest in long-term growth.
• Are you prepared to fail and try again? The road to scaling isn’t linear. Many of Africa’s biggest companies today had false starts, pivoted, and even failed before getting it right.
Conclusion: Africa Needs More Builders, Not Just Hustlers
The challenge is clear: Africa doesn’t just need more businesses; it needs more big businesses.
The future of the continent’s economy depends on companies that can hire at scale, export beyond their home markets, and create long-term wealth. We need more than just survival-driven entrepreneurs – we need builders who will navigate the complexities, take calculated risks, and push through barriers.
So, are you building to last, or just hustling to survive?
Join the Conversation
What’s been your biggest challenge in scaling your business? Let’s discuss in the comments.
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