Africa's first Entrepreneurial Ecosystem Index launched

At the Global Entrepreneurship Conference GEC+Africa in Cape Town, the African Entrepreneurial Ecosystem Index (AEEI) was presented for the first time. The launch of this index took place in the presence of African ministers, researchers, policymakers, investors and entrepreneurs. It is the first measurement of the quality of entrepreneurial ecosystems on the African continent, which stakeholders in the countries can work with. The African Entrepreneurial Ecosystem Index was compiled by an international team of investigators, including researchers of Utrecht University -  led by Erik Stam (Utrecht University School of Economics).

With the African Entrepreneurial Ecosystem Index, we can provide an overview and insight into the enormous diversity in the conditions for entrepreneurship in Africa for the first time, in a way that also offers points of leverage to improve these conditions, in order to achieve better quality of entrepreneurship and sustainable development in African countries, says Erik Stam.

African Entrepreneurial Ecosystem Index (AEEI)

The AEE Index brings together key elements of entrepreneurial ecosystems to create an insightful data infrastructure. We focus on seven challenge areas for the context of entrepreneurship in Africa, says Erik Stam. These range from governance (quality of the rule of law but also, for example, how easy it is to register a business) to culture (the level of trust, variables in entrepreneurship culture) to support (the extent to which people have networks, there are support hubs, etc.).' Other key elements are human capital, finance, market access and physical infrastructure.

We had to bring together a lot of different data sources for that to create a comparable and sufficiently comprehensive overview, says Stam. That was a much bigger challenge in Africa than in Europe, for example. Moreover, you have to ask yourself whether what you are used to doing in Europe fits the local context in Africa. But something really great has come out of that now. In the end, we have the complete data from 27 countries.

Top five

We can use the index to give an initial glimpse into the quality of the entrepreneurship ecosystem for each country. Stakeholders in the country and regions can identify the weakest links and work on improving them. On a variety of sub-indicators, the data can of course provide more sophisticated insights if required, Stam says.

What stands out, looking at the index? In the top five, we see Mauritius at the top and Tunisia and Morocco as runners up. Tunisia in particular has been doing quite well over the last decade and is now Africa's number three. But does that mean they do well in every respect? Stam wonders. If you look at the data, you see that in Governance and Infrastructure challenge areas, the index values are very good, as in Human Capital. But Tunisia is still relatively weak in Finance, Support and Market Access. So, there are still challenges there.

We offer better insight into the strengths and weaknesses of the conditions for entrepreneurship and economic development in Africa.

By compiling this Africa Entrepreneurial Ecosystem Index, we offer better insight into the strengths and weaknesses of the conditions for entrepreneurship and economic development in Africa. The African continent has a huge very young and growing population, and is rich in resources of great value, Stam continues. We observe great diversity in the quality of entrepreneurial ecosystems that can turn these opportunities into prosperity for all. There is a group of countries, in both Sub-Saharan Africa (e.g. Botswana, Ghana, Kenya, Mauritius, Nigeria, Rwanda, Senegal) and North Africa (e.g. Egypt, Morocco, Tunisia), where entrepreneurship is leading to a leap in prosperity, but also countries (such as South Africa) where a decline is taking place.

Not all African countries in the AEE Index

The researchers were not able to fully map all 54 African countries. For the missing countries, they have not been able to collect enough data to construct the index. That depends on all kinds of context-bound factors, and in general there is still a lot to be done to get the data infrastructure in place for the whole continent, according to Stam. Such data collection has also not been done in Africa before,' he says. ‘It is probable, though, that countries that are not in it like Chad and the Central African Republic, for example, have a lower quality ecosystem than the 27 countries for which we have complete data.

Annual index

How will it progress? The AEE Index was launched at the Global Entrepreneurship Conference (13 and 14 March in Cape Town, South Africa), which included a policy-focused workshop attended by several ministers, secretaries of state and policymakers as well as a research workshop, which focused mainly on how the index came about, and how it could be further improved.

It is planned that the index will be repeated every year. Not only to make the data public for academic use, but certainly also to make the data increasingly user-friendly, so that they can be used to further improve the conditions for entrepreneurship, by governments, investors and entrepreneurs themselves. It's a great start to a very positive narrative, Stam says.

Research team

The AEE Index was created in part thanks to a number of key collaborating parties, notably the Innovation for Policy Foundation (I4Policy) and Stellenbosch University. From the Utrecht University School of Economics (U.S.E.), Kwabena Addo, Robert McDonald, Emmanuel Mensah and Erik Stam were involved.

Through the flagship initiative Entrepreneurship-led Sustainable Development in Africa of the Utrecht University Centre for Global Challenges, Utrecht University also aims to further contribute in the coming years to a data- and dialogue-driven approach to entrepreneurship ecosystems, leading to sustainable economic development.

More information

Would you like to know more about the AEE Index? Please contact Erik Stam: e.stam@uu.nl.