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Ideas & Debate

Supplier diversity key in entrepreneurship

 

Entrepreneurship plays an important role in creating economic opportunities viable for employment creation, poverty reduction, and growth and development of an economy. The capacity and willingness to develop, organise and manage a business venture along with accompanying risks with an aim of making a profit forms entrepreneurship.

An entrepreneur can be defined as a person who seeks to create his/her own workplace but also generates workplaces for others.

By nurturing a culture of entrepreneurship, the Kenya Vision 2030 development aspirations of raising productivity, generating jobs and increasing revenues can easily be met.

Equally, similar development outcomes as envisaged by the Big Four agenda will be achieved through an expanded manufacturing sector where men, women, youth, and people with disability are actively contributing to the economy through entrepreneurial activities.

Entrepreneurs can be classified as either necessity or opportunity oriented. The discussion around necessity entrepreneurs is premised on the fact that the youth are forced into participating in entrepreneurship circumstantially without being properly equipped; with no growth aspirations hence have limited impacts on the economy.

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Necessity entrepreneurs are said to be survival-oriented and move into entrepreneurship as a last resort, making them to have little or no value addition to the economy. Necessity entrepreneurs may be referred to as push entrepreneurs.

Contrary to necessity entrepreneurs, opportunity entrepreneurs identify a market opportunity to fill and as a result contribute immensely to the economy. Opportunity entrepreneurs are also referred to as pull entrepreneurs.

Economist Joseph Schumpeter believed in the creative destruction concept of entrepreneurship where one can introduce a new product, method of production or new market.

According to empirical research by the Kenya Institute for Public Policy Research and Analysis (KIPPRA), most women in Kenya tend to be necessity entrepreneurs with low aspiration levels compared to men who are largely opportunity entrepreneurs.

Women tend to depend largely on their firms for daily economic survival; this may motivate them positively initially. However, challenges associated with necessity entrepreneurs such as access to credit, markets, technology and other resources inhibit their potential for generating innovations and job growth for competitive advantages, which are especially necessary in export. This in turn affects their aspirations.

Supplier diversity is key in achieving entrepreneurship goals by allowing variety in procurement of goods and services for any business or organisation. It emphasizes creation of a diverse supply chain that seeks to ensure inclusion of various groups in the procurement plans for government, non-for-profits organisations, and private sector.

Supplier diversity should not only be aimed at promoting necessity entrepreneurs but rather provide a platform to transit them to opportunity entrepreneurship with a real chance of value addition and output expansion.

The MSME survey of 2016 establishes that majority of unlicensed establishments in Kenya were female owned (61 percent) as opposed to male owned (32.1 percent). The results also indicate that of those operating in licensed businesses, 47.9 percent were male while 31.4 percent were female. Further, these businesses are mostly micro, informal, generally face access to credit challenges, and are operated by poor women. Women tend to operate in establishments with low value add hence have a low impact on productivity and employment.

With these challenges in perspective, women find it difficult to participate in supplier diversity in government and beyond. In responding to the challenges faced by different special interest groups (women, youth and persons with disability), the government through a legal requirement in 2013 started to implement access to 30 percent of government procurement opportunities within the Access to Government Procurement Opportunities (AGPO) programme to ensure supplier diversity.

While this may be so, the private sector organisations seem to be left behind in promoting supplier diversity, yet the potential is immense considering the important role in driving economic growth and employment creation.

A few companies like the East African Breweries promote and support supplier diversity through sorghum farming contracts with women farmers. The foregoing discussions bring a few things into perspective; first the private sector organisations need to supplement government efforts of promoting supplier diversity and inclusion by opening such opportunities to the special interest groups.

Secondly, while opportunity entrepreneurship is desired, it is flawed to exclude the necessity entrepreneurs from policy debates since they don’t necessarily stay in this category forever. Necessity entrepreneurs may develop over time and become progress-oriented.

The writer is a policy analyst at the Kenya Institute for Public Policy Research and Analysis (KIPPRA).

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