By far the biggest employer of people in Africa is what is generally called the “informal sector.” I personally don’t like this title “informal,” preferring something like the “entrepreneurial” sector, but the truth of the matter is that most people in Africa survive and put their kids through school, by being “self-employed” in some sort of business activity.
Whilst most of the people in this sector are generally literate, having been to school, there’s very little in our education system that actually prepares them for a life running their own business.
This attitude that people must “fend for themselves” is something we need to end across Africa. Governments do have a responsibility to help create real jobs in an economy.
For those government leaders that ask for my advice, there are always five things that I recommend:
1. Publicly acknowledge that the “informal sector” is the central activity in your country. Whether people are smallholder farmers, street traders, or tradesmen and women, don’t be ashamed to acknowledge them as real economic players. They are contributing to the economy just like the biggest businesses that you have in your country.
2. Acknowledge the importance of this sector by putting in place policies that enable them to prosper. When they prosper, they will grow, employing more people. Start by holding meetings with them which are genuinely aimed at listening, and engaging them with dignity and respect.
3. Ensure law enforcement officials respect the informal sector. If governments don’t formally recognize the key role of this sector in the economy, law enforcement may treat these entrepreneurs badly. This is what makes this sector vulnerable to corrupt officials.
4. Ensure this sector enjoys real rights under the law. For example, no policeman should be allowed to arbitrarily confiscate someone’s goods, without due process. Courts should be arranged (and officials trained) in such a way that they can adjudicate the needs of this sector speedily, and cost effectively.
5. Introduce entrepreneurship training into the formal education curriculum. By the time someone has completed seven years of school, they should be able to put together a basic profit and loss statement, and a basic balance sheet. They should also be able to read financial statements. This is really, really simple, and not much more complicated than reading football scores!
A high school leaver must also know:
# how to register a company, and register for tax.
# the basic company law of their country.
# about banks and how they operate.
# about payroll, and laws governing the rights of others.
# how businesses really operate, and how prosperity is generated in an economy.
# about sustainability, of both economic growth and the environment.
I would go as far as to say that anyone who goes to a university must also have mandatory entrepreneurship training, irrespective of what they study. This is because we have university graduates that are also unemployed, who could easily create jobs for themselves and others.
Together we can help our vast army of entrepreneurs in Africa become skills-based “enterprise builders.”
I strongly believe that if Africa focuses on fostering and developing entrepreneurship, there will be a remarkable uplift in job creation.