In light of the United States’ abrupt exit from the global development stage (and the slow phasing out of foreign aid spending by other countries), the principles in our book, The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty, couldn’t be more relevant. In the book, we highlight the importance of investing in market-creating innovations to not only tackle poverty, but also to ignite and sustain prosperity.
Market-creating innovations transform complicated and expensive products into simple and affordable ones, thereby making them more accessible to many more people in society. These innovations are unique as they catalyze job creation (many more people are needed to serve nonconsumers–those who couldn’t afford the product or service prior to accessing the innovation); generate additional tax revenues (the new workers pay income taxes and the new companies pay corporate taxes, and the new consumption increases tax receipts); and triggers a change in the entrepreneurial culture of a place as more people believe their problems can be solved by entrepreneurship and innovation.
Understandably, many philanthropic and development organizations may soon start prioritizing programs that are more sustainable considering the global development landscape. Development programs that fund entrepreneurship and innovation programs with the hopes of helping people in low-income countries become more self-sufficient are likely to become more popular. As I’ve written in the past, for-profit models are the best way to help the poor sustainably. This would be a step in the right direction, however simply funding more entrepreneurship programs does not guarantee success.
My team and I are in the process of designing an innovation and entrepreneurship program which we hope accelerates market creation in Nigeria, and then Africa. One of the first tasks we undertook before beginning our design process was to study existing innovation and entrepreneurship programs in Africa.
We categorized our findings into four main parts. First, who were the programs targeting? Second, what were the programs funding, and how much? Third, where were the programs geographically? And finally, what were the outcomes and how were they measured? Here’s what we learned.
Who?
Most innovation and entrepreneurship programs in Africa are founder-focused and primarily serve pre-seed and new startups. For the organizations that have age requirements, most target youth between the ages of 18 and 35 years. Finally, approximately half the programs we analyzed are gender neutral. This is important because businesses led by women accounted for less than 2% of total funding raised between 2019 and 2023, according to Africanews citing a Tech Cabal report.
As such, concerted effort must be made to level the playing field for women in entrepreneurship. Tackling systemic barriers that prevent women from fully participating in the economy has the potential to unlock close to $300 billion in Africa, according to a report commissioned by the Mastercard Foundation.
In addition, more effort should be made to support more mature and growth stage entrepreneurs, which brings me to the next thing I learned from this research.
What?
In addition to the vast majority of organizations being supported early stage entrepreneurs, many organizations don’t receive any funding from these programs. The median funding amount was approximately $57,000 while the range was between $0 and one million dollars. Additionally, the median length of a typical program was five weeks.
This points to the fact that much of the funding in innovation and entrepreneurship is targeted at individuals and is often limited. This is a good thing as an ecosystem is emerging but, over time, more funding should flow to these organizations and programs.
Consider how the Investing in Innovation program (where I serve on the steering committee) evolved its operations. During the first two years of the initiative, the program identified 60 entrepreneurs in the healthcare supply chain across Africa and provided $50,000 to each. In Phase 2, the program is now more focused and will provide funding of up to $250,000 to a handful of growth stage entrepreneurs working to build the future of pharmacy in Africa. This evolution ensures that entrepreneurs don’t remain in the beginning stage of growth forever. More growth (and especially high growth) requires more funding.
Where?
Many of the programs we studied were localized. About a third were Africa-wide while almost half were sector agnostic.
There is value in designing an Africa-wide and sector agnostic program, however, focusing programs on specific problems in particular localities is important. Innovations often take root in a particular place, at a certain time, designed to solve very specific struggles. Over time, as the innovation provides value to more people, it diffuses. This phenomenon should be applied to how innovation and entrepreneurship programs are designed. Focus first. Scale and diffuse later.
Outcome
The last factor we studied was how the programs measured outcomes. It was difficult to measure outcomes beyond metrics such as number of entrepreneurs supported or funding deployed. More effort should be put into measuring success metrics such as, number of jobs created, instances of new consumption initiated, and size of market created. Without creating new consumption, new jobs and tax revenues will not be created. As such, by measuring these factors, innovation and entrepreneurship programs can get a better sense of the impact they are having in an economy.
Studying 80 innovation programs in Africa reinforced the need for a more structured and long-term approach to funding entrepreneurship—one that moves beyond early-stage support to sustained growth investment. To truly drive market creation and economic transformation, innovation programs must prioritize outcome-driven metrics, gender inclusion, and sector-specific localization strategies that enable sustainable impact.
