Personal Finance

Accelerating the wheels of entrepreneurship in Africa

Scholars and policy makers all agree that growth entrepreneurship is the secret sauce that will drive economic development across sub-Saharan Africa in the next decade. Entrepreneurship is at the core of solving Africa’s social challenges, creating jobs, increasing per capita incomes and ultimately contributing to GDP growth for our economies.

However, different scholars hold different opinions with regard to the interventions and approaches needed to accelerate the wheels of entrepreneurship across the region; and ultimately boost faster our economic growth.

Specifically, there are three schools of thought that advance different but somehow related theories on how best to support entrepreneurship growth across developing countries with a particular focus on sub- Saharan Africa.

The first school of thought proposes interventions targeted to improving the productivity of the entrepreneur as an individual.

The second school of thought believes that the firm should be the focus of growth support since it is small enough but still a significant economic unit that can be easily analysed and developed into different models at the micro-economic level in order to achieve desired outcomes. The third school of thought believes in an ecosystem approach to supporting growth entrepreneurship with a goal of creating a massive wave of change with huge trickledown effect to the society at large.

Support the entrepreneur

Those subscribing to this school of thought believe that the entrepreneur is the core element in the business; and hence all supportive interventions should focus on them in order to help them increase their productivity.

They believe that equipping the entrepreneur with the right skills and psychological attitudes such as risk taking, patience and persistence, strategic thinking and business management skills; will eventually drive the business into a high growth trajectory and ultimately achieve the desired large scale social and economic benefits.

Support the firm

This school of thought believes in structures, systems and processes as the foundation for building successful businesses that will grow faster, employ more people ad increase incomes for their employees and shareholders.

Scholars subscribing to this theory assume that with the right structures in place, an entrepreneur will be able to find their path to enterprise growth; since they possess innate traits to drive business operations and strategy as long as business systems are streamlined.

Working with this school of thought, interventions to support entrepreneurship growth focus on moulding the firm as a whole through business modelling and planning, development of standard operating procedures, monitoring and evaluation structures and aligning of long-term strategies with short-term business goals.

Support the ecosystem

I have a personal inclination towards this school of thought. I believe that entrepreneurship will thrive when we create a medium that allows for creative destruction as advanced by Schumpeter; and allow for positive externalities through networking of entrepreneurs and knowledge share within the ecosystem, as advanced by Krizner.

Creative destruction is the process through which new and better ideas come into being by replacing the existing ideas and solutions.

On the other hand, positive externalities are the outcomes of entrepreneurs’ interactions within an ecosystem; that lead to exchange of ideas which result to innovative ideas being generated and implemented faster.

Schumpeter and Krizner’s theories lead to what scholars refer to as innovation economies; which focus on increasing enterprise productivity in order to spur economic growth and development.

For this to happen, the entire entrepreneurship ecosystem should be made conducive using a top down approach.

The interventions at the ecosystem level focus on creating favourable regulatory frameworks that are not inhibitive in nature to start-ups and SMEs.