AfriLabs Capacity Building Needs Assessment

T H E M E 3

Sus ta i nab i l i t y cha l l enges threaten ESOs and Ent repreneur s l ong- term sur v i va l

Are you currently financially sustainable? (% of rating)

How much additional funding would you require to support the entrepreneurs in your community as needed in the next 3 years? (% of rating) 2%

ESOs are not generating enough money to support their activities. 52% of ESOs revealed that they are not financially sustainable. 55% of ESOs need between 50% and 100% increase of their funding to support entrepreneurs in the next three years. ESOs rely mostly on grants from the government and companies. 83% of ESOs have shown that at least 20% of their revenues are achieved through government funding. Focus groups have shown that the sources of funding for ESOs are mostly from personal/founders funds, donor funds and co-working space rentals. The financial instability of ESOs has contributed to the high rate of ESOs closure in Africa, where most ESOs are not able to survive after donor funding. As the number of ESOs increases, there is also a high number of ESOs going out of operations. This is attributed to the fact that most ESOs lack the technical capacity to diversify revenue stream through offering services, to reduce dependency on grants. Focus groups reveal that over 50% of ESOs rely on 100% exter- nal funding support to maintain operation. This situation calls into question the sustainability of ESOs in Africa‚Äôs innovation ecosys- tem and the necessity for corrective actions. ESOs need to diversify their revenue sources and not only rely on donor funds and rent fees from co-working spaces. This requires ESOs to identify their key business strengths and build a sustainable business model around them. This is one of the initial steps towards transitioning from donor funding dependence to self-sustaining ventures.

17%

26%

30%

52%

18%

55%

No Yes Break even

10-25% 25-50% 50-100% Over 100%

What is the breakdown of your ESO financing? (% of rating)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

83%

79%

69%

68%

53%

50%

33%

30%

26%

26%

23%

21%

18%

17%

16%

16%

15%

14%

14%

13%

11%

9%

10%

9%

8%

8%

7%

8%

7%

7%

6%

6%

6%

6%

5%

2%

1%

1%

0%

0%

0%

0%

0%

Owners / managers own funding

Donor Funding Foundation Funding

Government Funding

Corporate Social Responsibility Funding

Income from services

Rent for Co- Working

Other

0-20% 21-40% 41-60% 61-80% 81-100%

31

N E E D S A S S E S S M E N T R E P O R T

Trends and insights from ESOs, entrepreneurs, and investors

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