As the African entrepreneurial ecosystem continues to grow and evolve, it has become increasingly important for stakeholders to have accurate and up-to-date information about the state of entrepreneurship on the continent. That’s why the launch of the African Entrepreneurial Ecosystem Index (AEEI) earlier this year is such an exciting development.

Developed through a partnership between the Allan Gray Centre for Africa Entrepreneurship (AGCAE) at Stellenbosch University, the i4Policy (Innovation for Policy Foundation), and Utrecht University, the AEEI is a powerful new research tool that harnesses the power of big data to curate more accurate information about the state of entrepreneurship in Africa.

“We’ve got a data problem on this continent,” explained Dr Phumlani Nkontwana, Academic Director of the AGCAE. “This is why we have been working for years to generate venture and ESO data in some of the 27 countries covered by the new Index. The ambition has been to build longitudinal data sets through data engineering and study them over time to give us good insights into what is happening in entrepreneurial ecosystems across the continent.”

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 (Utrecht University School of Economics). “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.”

What stands out?
Mauritius, South Africa, and Tunisia have been identified as the countries with the highest potential to foster productive entrepreneurship in Africa. On the other hand, Zimbabwe and Uganda are in need of significant support to strengthen their entrepreneurial ecosystems.

This tool evaluates businesses according to their growth potential, managerial strategies, inclination towards innovation, and operational capabilities, providing valuable insights into their likelihood of success and areas of potential concern.

The complete mapping of all 54 African countries proved to be a challenge for the researchers. Due to insufficient data, the index construction for the missing countries remained incomplete. This limitation is influenced by various context-specific factors, highlighting the need for further efforts to establish a comprehensive data infrastructure across the entire continent.

What’s next?
The AEE Index was officially introduced during the Global Entrepreneurship Conference held in Cape Town, South Africa on the 13th and 14th of March. The conference comprised of a policy-focused workshop attended by numerous ministers, secretaries of state, and policymakers. Additionally, a research workshop was conducted, primarily emphasizing the inception of the index and exploring potential avenues for its enhancement.

It has been strategized that the index will be conducted annually. This not only aims to disseminate the data for academic purposes but also endeavors to enhance its accessibility, thereby facilitating its utilization in improving the entrepreneurial landscape. Governments, investors, and entrepreneurs themselves are expected to leverage this data to foster an environment conducive to entrepreneurship.

“It is often difficult to establish how we are doing in the entrepreneurial space. I really think this could be a game changer,” says Itumeleng Dhlamini , Head of Programmes at SAB Foundation.

The AEEI with an interactive map can be viewed at https://africa.ecosystem.build/