April 25, 2017

Ask entrepreneurs how to tailor Africa’s SMME growth

Business Day (South Africa)

Dianna Games

It’s tough being an entrepreneur in Africa. There is a lot of talk about the importance of entrepreneurs on a continent where formal employment opportunities are scarce yet where largely untapped dynamism abounds.

There is also no shortage of talk about the need for support structures for individuals and micro, small and medium enterprises (SMMEs). But the success of these so-called solutions has been patchy.

SA is among the developing countries that have whole ministries dedicated to small business development, though their effectiveness has been rather limited. Indeed, there is an argument that government intervention is the last thing entrepreneurship needs.

Growing a small business can be made complicated — in fact strangled — by red tape. Bureaucrats tend to view the needs of a small business as simply scaled-down versions of what bigger businesses require. They aren’t.

Investors, too, don’t always understand that SMMEs often cannot absorb the large sums of money private equity companies and funding agencies want to throw at them. Nor is their main need necessarily one of funding.

The best way to find out what small, promising company operators need is to ask them. I chatted recently to a young entrepreneur who is going places, driven by her desire to explore opportunities in Africa and tell her story in the process.

Rwandan-born, Europe-raised Tania Habimana started out in a corporate environment. Trained in the apparel business, she left her home in Holland to drive Dutch multinational Suitsupply into African markets.

Her journey taught her the "warts-and-all story" of doing business in Africa. Suitsupply left her to her own devices, offering minimal corporate support, itself knowing little about the continent. In time, she set up her own business, supplying suits to well-heeled businessmen across Africa.

The formal, European way of doing business, which she was used to, got her nowhere. She had to quickly adapt to a more informal, less structured environment.

"Face time" with clients has been key to her success. She found that each client was a repository of advice. Chatting while measuring them up for suits yielded many of the insights that enabled her business to expand.

The hard work, guile and vision paid off. Habimana now has clients in Nigeria, Kenya, Zimbabwe, SA and Burundi. She is sharing her learnings in a 10-part television series called Tailored Business; each episode deals with a different aspect of the SME journey, with a focus on fashion. Africa has just 1% of the $1-trillion global fashion market. Thousands, if not millions, of Africans are eager to be part of the growth of that market.

Habimana highlights one of the key problems for an entrepreneur: the typical African small enterprise doesn’t easily fit into the existing business infrastructure. Investors and funding agencies lack an understanding of how to help SMMEs and start-ups.

Funding is only part of the story. More than anything, entrepreneurs need guidance on how to run a going concern, to know what works and what doesn’t and how to market themselves.

Government interventions, under the guise of support, often drive failure rather than success by making life more complicated for SMMEs. In truth, the recipe is relatively simple: a more open, easily navigable environment with plenty of advice and support to transform ideas into reality and cash flow. Sprinkled with a touch of funding, of course.

• Games is CEO of business advisory Africa @ Work. See original article on https://www.businesslive.co.za/bd/opinion/columnists/2017-04-24-dianna-games-ask-entrepreneurs-how-to-tailor-africas-smme-growth/

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