When successful companies crowd out the job creation potential of smaller businesses
The tension for economic development in Africa will be finding the critical balance between developing globally competitive industries and stimulating enough job creation to absorb the youth bulge which is looming large on the employment horizon. The key to unlocking a win-win for both parties will be to create a better-integrated supply and value chain between the two groups.
As the table below highlights, the challenges vary significantly for each African nation. In certain countries, small, medium and micro enterprises (SMMEs)may contribute little to GDP growth, but significantly to employment and therefore more inclusive growth. Ethiopia, Zambia and to a lesser degree, Uganda and Rwanda would be cases in point. Ghana, and to a lesser degree, Kenya, Nigeria and South Africa are countries where support for SMMEs contributes significantly to both GDP and employment. Finally Zimbabwe's GDP benefits from SMME development, yet this market segment seems to be less important for job creation.
The implication is, if multinationals understand their role in the broader economic ecosystem, they can develop their initiatives more responsibly. In those African countries where small and medium-sized countries play a key role in job creation, multinationals can play an important role in the support systems they can build around their supply chains or enterprise development projects.