AEI often works on youth employment/entrepreneurship, market systems, and private sector engagement contracts by providing technical advisory services, carrying out landscape analysis, or helping design a project. It’s been established globally that being a small business is challenging and often unforgiving, even in places like the US or Europe, where solid environments are enabling. AEI is an African small business facing the same challenges as new youth entrepreneurs, small family businesses, or large market actors. Here’s what we’ve learned along the way, and our understanding helps us provide more tailored technical advisory services:
Formalization
Formalization is critical for opening a bank account, winning contracts, and even benefitting from government programs. However, formalization also comes with…taxes. Suppose you want to help small businesses in Africa formalize. In that case, you first have to help them navigate tax requirements and address how to increase revenue to cover their tax payments, which are very high relative to services received.
Taxes, Taxes, Taxes
Tax law needs to be more evident in most former French colonies. An accountant can help, but we needed a seasoned Senegalese businessperson to guide us through the ins and outs of taxes and registration requirements (employment contracts and rental agreements have to be registered, too!), especially the practicalities: where to pay, when, and how all the different taxes are calculated.
Fits and Starts
It’s been well-documented that it takes around five years to begin to succeed as a small business in the US. I would say that this trajectory might even take longer in Senegal, at least, as succeeding requires understanding all the factors that impact one’s bottom line. It also takes that long to find qualified human resources, create a track record, and partner with like-minded organizations. Providing coaching and mentoring to new businesses is critical for long-term success.
Human Resources
Once we sorted out taxes, finding skilled human resources was our greatest challenge. We prioritized hiring locally but found that the educational system needs to prepare graduates for work. We had employees with newly minted finance degrees who couldn’t use Excel or development management master's degree recipients who had never written a report, a contract, or carried out a literature review. Understanding the likely gaps in HR capacity allows you to integrate capacity building.
Author:
Jocelyn Farrington is AEI’s co-founder and Senior Expert, renowned for her expertise in Strategic and Landscape Analysis and Technical Advisory Services, particularly in program design. Her impressive track record includes over 20 years of executive-level experience in development organizations in West Africa, where she has successfully raised more than 500 million dollars for her clients.
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