“Cost of Doing Business in Africa for Young Entrepreneurs” - By Ms Elsie S. Kanza, Director, Head of Africa AU Conference of Ministers in Charge of Youth Affairs 12 – 14 September 2012, Addis Ababa, Ethiopia

Key Messages 1 Competitiveness: Africa still lags behind 2 Innovation: There is no single simple solution 3 Markets: Regional integration presents a leapfrog opportunity

According to the Forum’s Global Competitiveness Report 2012 – 2013: Competitiveness The Top 5 most competitive economies were: 1 Switzerland 2 Singapore 3 Finland 4 Sweden 5 Netherlands The Top 5 African economies were ranked thus: 52 S. Africa 54 Mauritius 63 Rwanda 76 Seychelles 79 Botswana (92 Namibia, 103 Ghana, 106 Kenya, 111 Liberia, 115 Nigeria, 120 Tanzania, 132 Zimbabwe, 138 Mozambique)

Innovation Youth unemployment is a global problem and there is no magic solution. While there are now multiple efforts to foster innovative entrepreneurs, deliberate steps need to be taken to identify solutions that can be scaled up nationally and regionally. Discussions with African entrepreneurs about the education-employment- entrepreneurship nexus identified the following key challenges: Outdated and impractical university classes result in a mismatch between employers’ needs and employees’ capabilities Early education needs to foster creativity and risk-taking Education reform is critical and needs to involve multiple stakeholders including trade unions, teacher unions and community leaders Technology can spur innovation and as is most evident in the mobile technology sector, Africa’s youth are spearheading the development of new products and services.

Markets Africa’s emerging middle class is now estimated to be about 100 million households (200 – 400 million people) with income levels of about US $4 to US $20 a day Intra-Africa trade is still only 10% of total trade: compared to intraregional trade of 60% in Europe, 40% in North America and 30% in Asia Transportation and logistics costs are the highest in the world; existing infrastructure favours trade with the rest of the world over intra-Africa trade; institutional and legal frameworks prioritise sovereign over regional interests Labour intensive industries like agriculture, still operate at low productivity levels Government and MNC procurement decisions can stimulate the development of the local SMEs