I See Entrepreneurial People!

“People from the rest of Africa have a lot to teach us about entrepreneurship. If you drive through African cities late at night, you will see many entrepreneurs hard at work, with their workplaces lit only by candles or torchlight. The sense of energy across the continent is massive particularly in East and West Africa. Nobody stands still. They are always finding ways to make money” (7)

I have done business in many African countries. My ‘sixth sense’ or my perception beyond my five physical senses, confirms the presence of this restless and haunting entrepreneurial spirit.

Renascent Africa

Entrepreneurship plays a crucial role in economic growth, and is increasingly viewed as a stimulus to wealth creation in emerging, developing, and developed economies as a result of the actions of individual firms (8) (14). Economic changes are the most important determining factor of the African Renaissance (11). The economic situation of Africa is often presented as the main issue motivating an African Renaissance, since there will be no practical change in the life of the great majority without economic development (4).

However, the role of the entrepreneur as an agent of this economic change and growth as promulgated by Joseph Schumpeter is relatively absent from most of the discourse on renascent Africa. Schumpeter considered entrepreneurship as the process by which the economy as a whole goes forward, and that through innovation the entrepreneur is the protagonist of economic activity in general (16). Entrepreneurship has important economic value (19).

Entrepreneurship and Economic Growth

Entrepreneurship is frequently credited with causing economic growth and creating employment and societal well-being. It is one of the main engines of economic growth and accounts for the majority of new business development and job creation in the United States, the world’s largest economy (10). Additionally, a rise in national and firm level productivity can be achieved by enhancing knowledge, innovation and entrepreneurship (9).

It appears that economic growth has been spectacular wherever entrepreneurship has been identified and actively encouraged (12). For example, the four Asian tigers of Hong Kong, South Korea, Singapore and Taiwan have accepted the innovative spirit, adopted entrepreneurship and now thrive economically. Entrepreneurship, innovation and new ventures provide the fuel for the engine of the modern economy (2). 

Entrepreneurship and Job Creation

Entrepreneurs have a very important, but specific function in the economy. They engender considerable employment creation, productivity growth and produce and commercialize high quality innovations (19). Start-ups and small businesses have emerged as the driving force of innovation, jobs, competitiveness and growth (1).

South Africa, in particular, and Africa in general, is engaged in robust debate as to how to perpetuate its economic growth, inclusive prosperity and job creation. For instance, unemployment at about 37% is one of South Africa’s most pressing socio-economic problems (5).

A recent McKinsey Global Institute report (2012) states that:

“While Africa’s growth has been strong, challenges remain – and the employment challenge is perhaps the greatest…Africa must accelerate the creation of wage-paying employment… (as) economic growth reaches people through employment income…so Africa’s challenge is to ensure that economic growth translates into the stable wage paying jobs that are the key to the continued expansion of the consuming class” (6)

Can African entrepreneurship help?

African Entrepreneurship

Several issues exist regarding entrepreneurship in the African context. For instance, it has been said that, African entrepreneurship is more likely to succeed in relatively small businesses than in large undertakings (3). Other reports have bemoaned the lack of a spirit of enterprise and have partly attributed the relatively low level of foreign direct investment (FDI) in Africa to a shortage of entrepreneurial capacity (18). Although more Africans have education, they do not necessarily have the entrepreneurial and commercial talents to create successful businesses (3) others maintain.

However, a recent major study of African entrepreneurship found ‘exceptional effort, foresight, resourcefulness, thrift and ability to perceive economic opportunity’ (3). Also, a number of Africans have created very large businesses (3) and globally renowned businesses. There is thus little evidence that Africans are lacking in entrepreneurial spirit or fail to grasp business opportunities when they are within reach (3).

Sub-Saharan Africa is in the midst of an entrepreneurial revolution that is renewing the region with new opportunities, increased employment and a robust rise in gross domestic product to one of the highest GDP growth rates in the world (20). A critical question is:

“How can Africa’s recent economic progress be deepened and broadened to achieve continent-wide sustainable growth and development?” (18).

It seems that for African countries to grow and benefit, more of its citizens need to take entrepreneurial risk (15) as entrepreneurs are indispensable to economic development (13).

Photo Credit: The Sixth Sense (17)

References

1. Audretsch, DB. 2007. The Entrepreneurial Society. Oxford University Press.
2. Bjerke, B. 2007. Understanding Entrepreneurship. Edward Elgar Publishing.
3. Elkan, W. 1988. Entrepreneurs and Entrepreneurship in Africa. Research Observer.
4. Evaldsson, AK, & Wessels, A. 2004. The African Renaissance: A Brief Historical Orientation. Journal for Contemporary History, 29(1).
5. Evans, J (Eds). 2011. Jobs, Jobs, Jobs. Free Market Foundation. South Africa.
6. Fine, D, Wamelen, A, Lund, S, Cabra, A, Taontiki, M, Dorr, N, Leke, A, Roxburgh, C, Schubert, J, & Cook, P. 2012.Africa at Work: Job Creation and Inclusive Growth. McKinsey Global Institute.
7. Games, D. 2013. Business in Africa: Corporate Insights. Penguin.
8. Ireland, RD, Hitt, MA, & Sirmon, DG. 2003. The Model of Strategic Entrepreneurship: The Construct and its Dimensions. Business Horizons.
9. Lambooy, J. 2005. Innovation and Knowledge: Theory and Regional Policy. European Planning Studies.
10. Lumpkin, GT & Dess, GG. 1996. Clarifying the Entrepreneurial Orientation Construct and Linking it to Performance. Academy of Management Review.
11. Matthews, S. 2003. Nepad: Realizing the African Renaissance? Politeia.
12. Merrifield, DB. 1993. Intrapreneurial Corporate Renewal. Journal of Business Venturing.
13. Piketty, T. 2013. Capital in the Twenty-first Century. Harvard University Press.
14. Salgado-Baida, H. 2007. Entrepreneurship and Economic Growth: An Empirical Analysis. Journal of Development and Entrepreneurship.
15. Schramm, CJ. 2008. Toward an Entrepreneurial Society: Why Measurement Matters.
16. Stevenson, HH & Jarillo, JC. 1990. A Paradigm of Entrepreneurship: Entrepreneurial Management. Strategic Management Journal.
17. The Sixth Sense (film). 1999. Directed by M. Night Shyamalan. The Kennedy Marshall Company/Barry Mendel Productions. Hollywood Pictures.
18. Van Niekerk, LK. 2000. Economic Aspects of the African Renaissance. In Solomon H & Muller M (Eds) Contributions towards an African Renaissance. Africa Dialogue Monograph Series 1.
19. Van Praag, CM & Versloot, PH. 2007. What is the value of Entrepreneurship? A Review of Recent Research. Small Business Economics.
20. Xavier, SR, Kelley, D, Kew, J, Herrington, M, & Vorderwalbecke, A. 2013. Global Entrepreneurship Monitor South Africa 2012 Report. Global Entrepreneurship Monitor.

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Alvin I Chikamba CA (SA) MBL (UNISA) is the founder and Chief Executive Officer of The OutVest Group (Pty) Ltd and of Entrepreneurial Confluence Strategists (Pty) Ltd, an entrepreneur focused business whose purpose is to grow organizations and create jobs through its proprietary entrepreneurial growth strategy. He is passionate about his new saying that ‘Afrika Is The New Black’ and can be reached at [email protected] or follow him on LinkedIn, his blog entrepreneurialconfluence.wordpress.com and Twitter @strategoi