ABSTRACT

There is a new wave of optimism across Africa with the advent of open market and support of private enterprise by many governments after years of a tight public sector led development. Accompanying the euphoria of entrepreneurship is the phenomenon of tech start-ups. The study of tech-start-ups is still in its nascent stages in academic circles on the continent. There is limited literature on the prospects tech start-ups can have on socioeconomic development in Africa. As a result, this study was centred at finding role-played by tech start-ups on the socioeconomic development in Ghana in particular. The study employed the qualitative research methodology and relied on semi-structured interviews and observation to gain more insights into Ghana’s start-up ecosystem from major stakeholders in different components of the tech start-up ecosystem in Ghana. There was also a review of the relevant literature on the topic. The study found that the major roles of tech start-ups in Ghana are harnessing innovation, creation of jobs, and increased competition for firms. The major challenges that are obstacles to the prospects of tech start-ups were identified by the study included poor infrastructure, financial constraints, unfavourable regulations and an immature ecosystem. The study proposed recommendations which included the need to have more academic research on the significance of tech start-ups to Ghana’s development, the need for tech entrepreneurs to explore crowdfunding as a solution to their financial constraints and the need for annual reports on the state of the Ghanaian tech start-up ecosystem to help identify progress made and challenges. It is imperative to find solutions to these challenges to improve upon the ecosystem in Ghana and enhance their global competitiveness.

CHAPTER ONE INTRODUCTION

              Background to the Research Problem

Since the turn of the 21^st century, Africa has been experiencing a boom in entrepreneurship. High hopes have been invested in the continent’s home-grown digital economy, envisioned to become an engine of rapid socio-economic development and transformation. Phrases such as “The Next Africa”¹, or “Silicon Savannah”² capture the sentiment that Africa is now a continent of economic opportunity and growth, driven by global entrepreneurship, a growing middle class of consumers, a well-educated and driven economic elite, and improving Internet infrastructure.

Africa  is  gaining  more  attention  on  the  world  corporate   and   entrepreneurship   map.  From being labelled as a no-go zone by most multinational corporations in the 1980s, there is a lot of focus and attention on Africa in recent times for good reasons.³ There is a rise in growth rates, decade’s old conflicts and wars are being phased out to sprout democracy and competent governance. There is a general improvement in infrastructure and internet connectivity and this is making it possible for consumer power to grow, hence promoting a sharp rise in entrepreneurship and business.

In their article on entrepreneurship, Wilhelmina Smith and Tendai Chimucheka identify entrepreneurship as a very vital component of any economy.⁴ They identify it to be a required instrument to promote economic growth, alleviating poverty and reducing it as well employment opportunities and job creation. There is no doubt that a relationship exists between entrepreneurship levels and the economic growth of any nation.⁵ Entrepreneurship has been recognised as the bedrock of economic development of all countries.

Empirical evidence available suggests that countries of the developed world utilized entrepreneurial activities to reach their heights of development. In the same vein, developing countries cannot seek to achieve their development goals without incorporating the importance of entrepreneurship.⁶ It has therefore been argued by Omoruyi et al that the development of entrepreneurship has contributed to the assumption of economic growth of most developed countries.⁷

The global entrepreneurial renaissance has been growing with the heaviest impact experienced in China where individuals have been able to transform the Chinese economy with their entrepreneurial ability and innovations.⁸

Traditionally, the state is the main engine of growth and development in Ghana and as such, the government carries the burden of economic growth and employment on its shoulders. Though both the state and the private sector are engines of growth and development in Ghana, the state is the major player to this regard. The government often relies on foreign aid or assistance to spur economic growth and development.⁹ Despite the constant in-flows of foreign aid, unemployment is on the rise and majority of the population is unable to afford three square meals daily.¹⁰ According to the 2013 World Development Report from the World Bank on jobs, Ghana’s graduate unemployment rate is exceptionally high and estimates that 48 per cent of 24 to 35-year olds are unemployed.¹¹

However, concerning entrepreneurship in Ghana, this trend is changing with the ever-increasing faith in the entrepreneurial ability of citizens as well as conscious efforts by the government to encourage the growth of entrepreneurship through programmes such as the National Entrepreneurship and Innovation Plan (NEIP).¹² The Registrar General’s office in Ghana records that close to 92 percent of registered companies are micro, small, and medium sized enterprises.

Available information attribute 85 percent of manufacturing jobs and close to 70 percent of GDP to SME’s in Ghana. This has a direct effect on economic growth, income and employment.¹³

Among these SMEs are tech start-ups, which qualify as SMEs. According to Lizzie Merrill who indicates that entrepreneurship is indigenous to Ghanaians and thus with an abundance of resources, swelling number of educated citizens, and access to technology, many new businesses, start-ups and social innovativeness, are emerging in their numbers to try and solve some of the challenges here.¹⁴ Ghanaians are hooked onto the prospects of solving problems in the society by setting up tech start-ups in Ghana. It is therefore not surprising that out of eight leading African countries housing over ten technology hubs, Ghana was ranked sixth, according to the 2016 Group Speciale Mobile Association (GSMA) infographic report.¹⁵ South Africa was ranked first with its 54 hubs, followed by Egypt with 28, then Kenya with 27, Nigeria with 23, Morocco with 21, Ghana with 16, then Tunisia and Uganda with 15 and 12 hubs respectively. The proliferation of smartphones, the huge market for e-commerce as well as the desire to use technology to solve local issues have boosted the growth of Ghana’s entrepreneurial revolution in the tech start-up scene. Due to their viability and ability to make profit, the number of Ghanaian tech start-ups receiving  investment  has  increased  and  two  well-known  start-ups  meQasa.com and OMGVoice, have received over 1.5 million dollars in investment from foreign investors to expand their services to other parts of Africa.¹⁶ Recently, Logique a Ghanaian tech start-up in artificial intelligence, became the first local start-up to enjoy locally gathered investment in its innovation by attracting over 4 million dollars of funding from local entrepreneur, Anthony Akorley who owns a number of companies which includes GIG Energy and Smile Gh. Even more, international donors and philanthropists appear to be shifting the focus of their activities to promoting entrepreneurship and tech start-ups on the continent.