Have you ever wondered what is the importance of entrepreneurship to the economy in Africa and beyond?
Here are the 8 Importance of entrepreneurship.
A large part of the development in a nation is determined by the numbers of entrepreneurs in that nation and this show how important entrepreneurship is to every country.
Most of the developed countries we have today are termed “developed countries” because of the impacts the entrepreneurial individuals have made on the nation.
The entrepreneurs help in the innovation of solutions to challenges facing the nation’s economy and when these challenges at settled, the nation is seen to develop gradually.
The importance of entrepreneurship to a developing country can not be underrated because this can be the stepping stone to development in the country.
But is entrepreneurship that important to you and me?
Well, I can’t answer that until we understand what the importance of entrepreneurship is and how it affects us.
What is the importance of entrepreneurship to the economy?
The 8 importance of entrepreneurship to the economy are:
#1. Entrepreneurship promotes wealth creation.
One essential importance of entrepreneurship is wealth creation.
Entrepreneurship has a major role to play in the process of wealth creation. Well, this is not the case most of the time because some types of entrepreneurs don’t run their business to make money.
But most of the businesses are made for the sole purpose of creating wealth for the entrepreneurs and their family.
A large number of people who are successful financially or wealthy are entrepreneurs and this should tell of the importance of entrepreneurship when it comes to creating wealth.
Although there are various ways of generating wealth, entrepreneurship is one of the most effective ones only if done well.
So if you are interested in creating wealth for yourself and your family, you might want to try entrepreneurship.
#2. Entrepreneurship promotes employment Opportunities.
As the business of an entrepreneur grows, there is always a rise in the need for labour.
In other to satisfy the need for labour, there is a rise in the employment rate. Various employment opportunities arise and this has a positive impact on society.
Some of these opportunities come with training programs that allow the unskilled workers to take advantage of the opportunities and get trained for the job.
With the rise in employment opportunities in the nation, the rate of unemployment is reduced. Those who were unemployed are now are employed, leading to an increment in the standard of living in society.
According to research, it is said that the small businesses in the U.S. were responsible for the creation of 1.6 million net jobs in the year 2019 and this is a huge benefit the society has to gain from entrepreneurship.
#3. Entrepreneurship increases national income.
Another major importance of entrepreneurship is the national income of various countries geometrically increase in their GPA.
One of the major sources of income for a nation is tax. Tax is one of the biggest revenue a country has.
With entrepreneurship, the entrepreneurs running their businesses in the country and the employees have to pay tax
When the number of entrepreneurs in a country rises, the national income of the nation rises.
The tax revenue gained in the nation can be used in assisting the other struggling sectors in the nation thereby improving the economy of the nation.
It can also be used to retrain the existing workers in the country to improve their intellectual ability for better and effective performance.
#4. Entrepreneurship fosters economic growth.
The growth of every economy can largely be affected positively by the levels of entrepreneurship in the nation.
As the entrepreneurs establish their business with innovative business ideas and creating solutions to problems, other closely related business or sectors in the economy benefit from this.
As they all benefit from such innovative idea, there is a noticeable growth in the economy of the nation.
The increase in the national income as a result of the incoming taxes coming from the entrepreneurial activities in the nation also has a role to play in the development of the economy.
The government uses a huge part of the taxes in financing projects that improves the economy of the nation.
Also, the production of these goods in a particular country would increase the GDP (Gross Domestic Product) of the country.
And as the GDP of a country increases steadily in any developing country, the possibility of the country becoming a developed one, in 5 years, is high.
#5. Entrepreneurship aid community development.
One importance of entrepreneurship that people overlook is its ability to foster community development. This is why impact investors are on the rise to support social entrepreneurs.
Development of the community can be achieved through different means and entrepreneurship is one of them.
Entrepreneurs tend to work with the venture of like minds as theirs’s to develop the community where they are sited.
They tend to invest in a major community project in the environment and this leads to the development of the community; making life better in the environment.
Entrepreneurs sometimes also finance the local charity organization in the community, helping the fewer privileges in the best way they can.
Some entrepreneurs do all these as a way of giving back to the people and giving others, especially the fewer privileges, opportunities to create a successful life as they have done for themselves.
Most of the successful entrepreneurs all around the world are found involved in financing different community project even when they are not going to gain anything financially from these projects.
#6. Entrepreneurship birth social changes.
Another essential importance of entrepreneurship is the ability to birth innovation in every country.
Every entrepreneur builds their businesses from an innovative idea on how to solve a certain problem in society or generating a better and more effective solution than the preexisting one once available.
These acts make the traditional ways of solving those problems outdated and change the way of life of the people and also improves the quality of the economy.
Let’s take for example a community having a problem with the circulation of water to every part of the community and the people have to take a distant journey to get water which still isn’t sufficient and pure enough to satisfy their need in the community.
Entrepreneurs in the community can come up with an innovative solution to this problem; providing the community with a standard water supply system that supplies sufficient and pure water.
Many times, these innovative solutions are converted to a business enterprise to make a profit but some entrepreneurs might do it as a form of giving back to the community.
Ever way, this innovative solution would cause a social change in the community. People no longer have to take any distant journey to get water.
Their time would then be well spent and they become even more productive citizens.
#7. Several Linkage
When I say linkage here, I mean the link generated between businesses.
When there are new startups be entrepreneurs, the production of their products or offering of their services raises the demand for other product related to them.
Most of the time, these products related are raw materials used in the production of the new product made by the startup.
As this link gets stronger and larger, all business linked together to experience a steady process which has a positive impact in the society.
Alright, now having a high demand for steel in a country and this demand is satisfied by the importation of steel into the country.
The importation of steel into the country will surely come at a high price which in turn raises the price of the products they are produced with the steel.
When some entrepreneurs in the country discover this need for the steel they country and come up with a business idea to start a steel production company in the country.
With a start in the production of steel in the country, there, will be a rise in the demand for the raw materials needed which includes coal, iron ore, nickel and so on.
Company in the country that produces these raw materials experience an increase in the sale of their products.
Also, the demand for steel in the country can now be satisfied locally which lowers the cost of getting steel and in turn, there is a drop in the price of the products produced with steel in the country.
This linkage is something that happens in every industry in the country. With a start of a business enterprise producing product A, there is a rise in demand for product B which is the raw material for producing A.
#8. Promotes International Trade Development (Export Promotion)
Another importance of entrepreneurship is its ability to develop international trade relationship between country.
With entrepreneurs in a particular country coming up with innovative solutions in form of products or services to solve certain problems in their country, there is a possibility that these same problems exist in the neighbouring country.
Therefore, the need for these products would arise in those countries and these needs have to be satisfied.
In other to satisfy this need, the product has to be exported to the neighbouring country.
This act alone can build a good relationship between countries and strengthens the international trading system.
After going through this 8 importance of entrepreneurship you now know how entrepreneurship can affect you and me positively.
You can tell what a nation would be like without entrepreneurs and how we all will be badly affected by it.
Like I said earlier, the importance of entrepreneurship to every nation cannot be underrated. It is very much important to you and me and the nation at large.
Are you interested in knowing some amazing facts about entrepreneurship and how you can become an entrepreneur, then read