Africans On The Outside
Looking at the social and economic impact of migrating entrepreneurs
KIZITO OKECHUKWU | JUNE 12, 2018
In 2016, we conducted a study interviewing entrepreneurial African diasporas living and working in the UK and the US.
We found that migration for entrepreneurial purposes could obviously present an opportunity, but can also present numerous challenges. Visionaries and innovative entrepreneurs are present in all communities, yet not all communities adapt quickly to the disruptive changes they provoke. This prompts entrepreneurs, professionals and innovators to either challenge the resistant nature of disruptive innovation, pursue rent-seeking opportunities or migrate to an environment that is more welcoming and embracing of economic creativity and innovation.
In Africa, very limited data and research is available on entrepreneurial migration patterns. The research studies that have been conducted did contribute to shaping the literature on entrepreneurship activity across the continent. Yet, they focus mainly on aspects such as the growing informal sector, entrepreneurship as a survivalist activity, the barriers which entrepreneurs face and the nature of the entrepreneurial activity. Very few demonstrate the entrepreneurial activities of Africans living in other parts of the world.
The highest number of African migrants residing in the US and UK are Nigerians, followed by Kenyans, Zimbabweans and South Africans. Noting the aforementioned migration trend, an exploratory study was conducted to determine some of the socio-economic factors that induce Africans to migrate to these countries.
Although the sample of the study conducted only reflected input from second-generation migrants, who are mostly educated with postgraduate qualifications and with a professional background in the finance and technology sectors, it still gives us a glimpse of the entrepreneurship migration landscape on the continent.
In an article two years ago, Njeri Kimani, the leader of the Africa Capacity Building Foundation also highlighted that there are tens of thousands, if not hundreds of thousands, of highly-skilled Zimbabweans in the diaspora. Their departure is Zimbabwe’s loss, and the rest of the world’s gain. If Zimbabwe is ever going to turn itself around, it will have to somehow start convincing these talented people to stay. In 2011, over 1 000 medical graduates who were born or trained in Africa, migrated and were registered to practice in the USA alone.
Many African start-ups also take part in various competitions, which promise to develop them in world-class accelerators and hubs around the globe. Although these are opportunities, they present hidden challenges, as most of them end up losing their product’s IP, get convinced into selling their prototype for a song or their initiatives gets ‘stolen’ by the accelerators or hubs in the host countries.
The International Organisation for Migration estimates that there are 300 000 African professionals residing outside Africa, with 20 000 more leaving the continent every year. Meanwhile, Africa must employ some 150 000 expatriate professionals at a staggering cost, estimated at around US$4 billion per year.
When it comes to the adverse impact on revenue, our study estimated that in 2016, the African continent lost close to US$652 billion per year, due to African entrepreneurs and professionals operating outside the continent. In 2050, it is estimated that the continent can expect to lose an estimated US$1.5 trillion.
How can we fix this?
- Infrastructure development is a key driver for growth. To create an inclusive economy, Africa needs to ensure that it invests in its infrastructure to accelerate growth and development. Basic services such as roads, water, electricity, telecommunications (most importantly access to affordable data, specifically in South Africa) and reliable public transport systems are all needed to ensure that economic growth is stimulated.
- Focusing on product need is very important. African governments need to focus on what is being consumed, who consumes it and where does it come from? Only then can we open up a wealth of opportunities for various start-ups to tap into. Even the Africa Continental Free Trade Area Agreement signed by dozens of African Presidents earlier this year should follow the product concept.
- Equipping our youth with education is critical, but not just generic by nature. We must ensure that the skills taught match the opportunities available on the market.
- Responsible leadership will ensure that various African leaders put the interest of their people first, by doing all they can to empower them.
- Build and sustain a strong entrepreneurial ecosystem that will support the development of start-ups across the entire continent. At the Global Entrepreneurship Network (GEN) Africa, we will continue working with various stakeholders in building and sustaining our ecosystem.
- Explore and open up more opportunities for start-ups and create market pipelines for them
On the flip side, migration doesn’t only offer cons, there are pros as well. Many African diaspora now leave their host country equipped with skills to advance economic development in their home country. An opportunity, given that the African diaspora entrepreneurship communities are a growing phenomenon that has been under-utilized within the African entrepreneurship communities. The communities will be at an advantage because their ethnic and social affiliations position them strategically in shaping cross-border trade and commerce activities within the African community.
Although most countries would much rather keep and empower their start-ups and entrepreneurs, we can’t lose sight of the fact that today, there are 215 million first-generation migrants around the world, representing 3% of the global population.
If migration continues to grow at the same rate as over the past 20 years, some analysts predict that there could 405 million international migrants by 2050. These trends illustrate that diaspora networks offer an enormous global reach and are potentially the new and pervasive tool of global development and entrepreneurship.
Finally, we need to strive to promote African startups, appreciate their talent and find ways to keep and commercialize their initiatives on the continent.
Kizito Okechukwu is the Co-Chair of GEN Africa 22 on Sloane and Executive Head of SEA Africa. 22 on Sloane is Africa’s largest startup campus.