HAPPY WORKERS DAY

It is May Day. We celebrate workers around the world. Hardworking men and women giving their best daily and moving the society forward.

Today, we specially celebrate young entrepreneurs in Nigeria and Africa at large. We recognise the challenges of starting and running a profitable business here. Challenges of irregular power supply, petrol shortage, lack of credit or capital. 

In the article below, we share from a new paper by Marcel Fafchamps & Simon Quinn on further evidence that capital stimulates entrepreneurship in low-income countries.

Evidence from Ethiopia, Tanzania, and Zambia:

We gave US$1,000 cash prizes to winners of a business plan competition in Africa. The competition, entitled ‘Aspire’, was intended to attract young individuals aspiring to become entrepreneurs. Participants were ranked by committees of judges composed of established entrepreneurs. Each committee selected one winner among twelve candidates; that winner was awarded a prize of US$1,000 to spend at his or her discretion.

…Six months after the competition, we compare winners with the two runners-up in each committee: winners are about 33 percentage points more likely to be self-employed. We estimate an average effect on monthly profits of about US$150: an annual profit of 80% on initial investment. Our findings imply that access to start-up capital constitutes a sizeable barrier to entry into entrepreneurship for the kind of young motivated individual most likely to succeed in business.