How ESOs empower Africa’s entrepreneurial ecosystem

Summary:

• In 2018, Immy Nakyeyune founded Mkazipreneur in Uganda to support women entrepreneurs across Africa. The organization has trained over 10,000 women and transformed many non-tech-enabled SMEs into tech-savvy enterprises. Despite significant growth in the entrepreneurial ecosystem in sub-Saharan Africa, including a 227% increase in early-stage funding between 2018 and 2022, challenges like capital and training shortages persist.

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In 2018, Immy Nakyeyune embarked on a transformative journey, founding Mkazipreneur with a resolute mission: to support women entrepreneurs across Africa. Through strategic funding and purposeful partnerships, Mkazipreneur in Uganda has trained over 10,000 women entrepreneurs and transformed non-tech-enabled, women-led SMEs into technologically adept enterprises. The organisation has also played a pivotal role in facilitating access to capital and markets, propelling the growth and sustainability of women-led ventures. 

There are many similar stories of organisations spurring the growth and sustainability of startups across sub-Saharan Africa. These organisations, often called Entrepreneur Support Organizations (ESOs), operate as incubators, accelerators, and tech hubs. They provide invaluable and contextualised support that African entrepreneurs need to grow within and beyond their local markets. The region boasts over 600 active ESOs, a testament to the continent’s high rate of entrepreneurship.

Over the past few years, the ecosystem in sub-Saharan Africa has seen unprecedented growth. Between 2018 and 2022, early-stage funding increased by 227%, highlighting the rapid development of the startup scene in the region. Despite this surge in funding, substantial capital and training shortfalls persist, hindering meaningful advancements to ensure sustainable growth and development. Investors’ scepticism adds another layer to this challenge as startups in the region are often overlooked and considered high-risk and lacking the necessary infrastructure and support systems for scalability. De-risking startups is, therefore, key to boosting investor confidence, and this means going beyond directing funding to startups to investing in ESOs, the first line of support for early-stage startups in the region. 

Ecosystem Building: Strengthening ESOs for Sustainable Growth 

Despite their importance, only a small fraction of funding reaches ESOs. Organisations such as the Argidius Foundation are at the forefront of ecosystem-building initiatives, supporting the creation of effective ecosystems for small and medium enterprises. Through the Uganda Ecosystem Builders program, the foundation partnered with Village Capital to support Mkazipreneur and 12 other ESOs to improve their strategy and sustainability. 

“After seven years of offering free services, the program challenged us to shift to paid-for-services, and we have not turned back. The start was slow, but we have attracted a new calibre of startup founders who are able and willing to pay. The beauty of paid-for programs is that participants are way more active in the program. They feel the pinch of their money. We are also attracting entrepreneurs more committed to growing their businesses,” shares Noeline Kirabo, Executive Director of ., a Uganda-based ESO providing business development services for small and growing businesses. “This move has helped us diversify our revenue streams, and we are putting more weight on generating earned revenue. We are clear about how and who we are targeting. Going through the program was a real wake-up call for us. We are certain that we can stay afloat with our new business model no matter the changing tides.” 

E4Impact is another example of a notable ESO that has benefitted from ecosystem-building initiatives. In 2021, the ESO was among the few selected to join the O-Farms program established to scale the circular agri-business ecosystem in East Africa. 

“We joined the O-Farms program to enhance our support for emerging entrepreneurs and strengthen our overall business capabilities in the agri-circular space,” Isabella Tenai, Accelerator Manager at E4Impact, reflects on their experience. “Through the program’s comprehensive training and preparation, we significantly improved our program management skills and expanded our knowledge in agri-circularity. As a result, we have seen notable improvements in our ability to support entrepreneurs in the green economy and have successfully applied these learnings to other projects within our organisation, for example, the E4Impact Accelerator and WONDER, among others. The program’s insights into circularity principles, market development for the last mile, and structured investment readiness have been precious, enabling us to drive growth and efficiency across our initiatives.” 

Development Finance Institutions (DFIs) similarly channel their funding towards ecosystem-building to advance their broader initiatives promoting economic development. In 2022, the Africa Development Bank (AfDB) launched the Innovation & Entrepreneurship Lab as part of its Jobs for Youth in Africa strategy. One of the strategies The Lab is using to foster youth innovation and entrepreneurship is supporting ESOs. “By supporting organisations that structure entrepreneurial ecosystems and provide direct support to startups, the African Development Bank hopes to create a ripple effect that will spur creation and growth of more startups, create jobs and value for their communities and clients,” highlights the bank. 

More recently, with support from Norway through Norad—the Norwegian Agency for Development Cooperation, Village Capital launched the Empowering Sustainable Entrepreneurship Africa program. This initiative, designed to strengthen climate entrepreneurship in Ghana, Kenya, Malawi, Mozambique, and Tanzania, has a two-fold structure. First, it supports ESOs by providing them with the tools and resources to build sustainable organisations, enabling them to develop initiatives that effectively support climate startups. Speaking on the program’s launch, Per Fredrik Ilsaas Pharo, the Director of Climate and Environment at Norad, shared, “Entrepreneurs and startups with innovative ideas and services have an important role in contributing to the Sustainable Development Goals. Today, such actors often lack access to financing and technical support due to many barriers. We hope that some of these barriers will be overcome by strengthening the entrepreneurial ecosystem through Entrepreneur Support Organizations.” 

The connection between ESOs and entrepreneurs cannot be overlooked. Founders need more than funding: they need an ecosystem that can fully support their unique needs. ESOs act as catalysts, providing critical support to nurture sustainable startups and cultivating an investable pipeline for impact investors. Strengthening this vital partnership is key to creating a thriving ecosystem, especially in regions such as sub-Saharan Africa, where the entrepreneurial landscape is vibrant yet challenging. Investing in ESOs is not just a strategic move; it’s smart business.

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This article is a guest contribution from Susan Nakami, Region-Lead Africa, Village Capital. As the Regional Lead for Africa at Village Capital, Susan oversees regional strategy, program development, and ecosystem growth across the African continent. She is a serial entrepreneur and innovation enthusiast with extensive business advisory experience and designing, implementing, and monitoring programs tailored to the African context. Susan is particularly passionate about unlocking access to capital for African women founders.

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