A regional look at the state of entrepreneurship as well as the opportunities and challenges that face entrepreneurs in improving prosperity in Sub-Saharan Africa.
The 2011 Legatum Prosperity Index™ attempts to understand what makes countries prosperous and what factors are involved in national success. The Index is the only global assessment of countries based on both wealth and wellbeing. This report investigates the challenges and opportunities that entrepreneurship faces in improving sub-Saharan Africa’s prosperity.
The Prosperity Index contains eight sub-indices, including the Economy, Governance and Social Capital. Notably, the Entrepreneurship & Opportunity sub-index continues to be the most closely correlated with overall performance in the Prosperity Index.
Most countries in sub-Saharan Africa find themselves in the bottom 30 of the 110 countries that are included in the Index. Despite this, all but three countries saw improvements in 2011 in the Entrepreneurship & Opportunity sub-index. These improvements have been achieved through factors like lower start-up costs, better information and communication technology, and improving optimism about entrepreneurship.
Sustaining these improvements in the Entrepreneurship & Opportunity sub-index will be important for sub-Saharan African countries to raise their overall level of prosperity. This report offers three insights into the state of entrepreneurship in the region and what challenges and opportunities might lie ahead:
Freeing the entrepreneurial spirit of Africa
Throughout sub-Saharan Africa, citizens hold a strong belief that hard work will get them ahead and that where they live is a good place to start a business. This entrepreneurial optimism should be a resource for entrepreneurs in the region. However, the region still possesses certain barriers that will need to be overcome to allow this optimism to fully flourish, such as relatively poor information and technology infrastructure and high transport costs.
Improving governance can help entrepreneurs
Innovation is important not only for economic growth, but also to reduce the costs of goods and services and to improve accessibility to markets and information. Entrepreneurs are the driving force behind innovation and often take risks to realise their goals. Good institutions, such as the rule of law, can protect property rights, enforce contracts and patents, reduce potential risks and stimulate innovative activities. Sub-Saharan African countries, although having relatively poor rule of law, are showing positive signs of improvement.
Despite improving health, an educational deficit could pose a challenge to entrepreneurs
The entrepreneurs of today and tomorrow will depend on workers who are both healthy and educated. Although the region is seeing improvements in health, performance on education is deteriorating, limiting the availability of skilled labour. Moreover, those who are educated, and most likely to be the entrepreneurs of the future, are emigrating at levels greater than the global average.
The report also includes: a regional analysis on the Economy sub-index; a brief summary of how the 2011 Prosperity Index is constructed; and country profiles of the sub-Saharan Africa countries contained within the Index.
Download the full Entrepreneurship in Sub-Saharan Africa report.