Lack of access to finance is stifling East Africa’s vibrant entrepreneurial ecosystem, as such more effort needs to be made to address these challenges and unlock the economic potential of the sector, according to SPRING accelerator.
Disrupt Africa reported the SPRING accelerator is set to support startups with solutions improving the lives of adolescent girls living in poverty; the accelerator aiming to help 200,000 girls living in poverty by 2019.
The first cohort of 18 startups from Kenya, Rwanda and Uganda will join the nine-month incubation programme in June, and will receive an average of US$80,000 per startup.
In an interview with Disrupt Africa, Sachin Gupta, director of economic growth and livelihoods at GRM International and SPRING’s project director, said while the startup ecosystem in East Africa is well-established, there are a number of challenges still facing entrepreneurs across the region – a key obstacle being lack of access to finance.
“The startup ecosystem in East Africa is diverse in the three countries, it is well established but still faces several challenges,” Gupta said.
According to Gupta, the governments of Kenya, Rwanda and Uganda have all started to make progress in terms of supporting startups through regulation and compliance.
“Kenya for one is a success story for start-ups which thrive in a vibrant economy; grassroots challenges have necessitated innovations that fuel startups and by extension, create employment,” he said.
“The Rwandan government has made private sector development a priority by establishing institutions whose main purpose is to design and implement business regulation reforms. Rwanda provides a fruitful platform for startups seeking to grow their innovations,” Gupta said.
“In Uganda there is considerable potential and a wide range of opportunities, both for rural and agriculture-linked micro to small enterprises and for linkages with small and medium enterprises competing in national, regional and international markets.”
Despite these various efforts at the national level, the one challenge which remains unresolved across all three countries is financing, Gupta says.
“Access to finance has and continues to be a challenge in all the three countries. We need more initiatives to partner in addressing these challenges for entrepreneurs,” he said.
Gupta says entrepreneurs have a key role to play in growing Africa’s economies, as well as solving critical challenges such as poverty and unemployment.
“The private sector is an engine for growth in developing countries in Africa. The African continent continues to be riddled with varying social and economic challenges being tackled by countless development partners. In particular, East Africa is a dynamic hub with new businesses sprouting up each day that could address the challenges of widespread poverty and unemployment,” he said.
As innovators, entrepreneurs can provide new home-grown solutions to challenges, as well as opening up and promoting new markets, Gupta says; adding that SPRING has been impressed by the “immense creativity” it finds on the part of entrepreneurs in East Africa.
“Entrepreneurs have the role of being innovators in developing countries. They bring new goods and technologies to markets, opening up new markets, processes and ideas, and can commercialize new knowledge,” Gupta said.
“At SPRING we have had a glimpse of the immense creativity that we see in the most simple of startup designs in Africa. We look forward to working with the finalists to perfect their business strategies, designs and market readiness in East Africa and the globe at large.”