Re-Engineering Development in African Countries Part Nine: Building an Entrepreneurial Culture

This article is a continuation of Re-Engineering Development in African Countries Part Eight.

An entrepreneur is a term that was created by the French in 1875 to 1890 to describe a person, usually an employer of labor, who organizes and manages any enterprise, especially a business, with considerable initiative and risk to themselves, financial and otherwise. Entrepreneurship is the regenerative economic development engine of society. The experiment with Socialism proved conclusively that the “profit-motive” is a primordial human response to socio-economic stimuli. Without the stimuli vis-à-vis perceived benefits, denominated by ambition for personal gain, spontaneous economic activity atrophies and dies. Ask every former communist or socialist country. Entrepreneurs will respond to: (1) Opportunities to profit from alleviating supply chain deficiencies in society; (2) Opportunities to profit from launching new innovative products and services never before available to consumers; (3) Opportunities to profit from improving on existing products and services in order to piggy-back on the established market for an existing service or products; (4) and opportunities to gain direct and indirect benefits from government incentive to amplify economic activity in a particular or multiple sectors, to mention a few stems of opportunities that fuel and motivate entrepreneurs to act.

Fig 1. Support Structure for Entrepreneurship culture

The unique nature of entrepreneurship in a free or semi-free enterprise society is that no one tells them where to direct their effort or how much risk to take. Their activities ebb and flow with the stimuli society provides. The motivations of entrepreneurs vary but at the core of entrepreneurship is the desire and willingness to risk capital-time (seed) resources to alleviate supply chain deficiencies in a socio-economic paradigm in return for opportunity to propagate beginning (seed) capital resources. Therefore, entrepreneurship is a driver of innovative solutions to supply chain deficiencies and, as a by-product, to unemployment.

A major impediment in African countries, therefore, is the absence of a proper entrepreneurial culture. Entrepreneurs are the innovators, job creators and the economic development plan of society. When entrepreneurs start businesses from which they expect to profit and prosper they are doing so because they perceive a shortfall in society’s supply-chain. Tangentially and coincidental to the specific profit seeking desire of starting the business, the process also creates work and simultaneously produces goods and services society needs. It is a self-regenerating economic engine that is perpetually at work when the right economic policies are in place and it is driven by citizens. In Nigeria, Tony Elumelu, the illustrious entrepreneur and philanthropist, has set up entrepreneurial development philanthropy with a pledge of $100 million to develop entrepreneurs in Africa. While it is a worthy initiative, it is a drop in the bucket of what is required for African countries to rev up the engine of production through massive entrepreneurship development and culture. The public sector must be fully engaged in building entrepreneurial capability in their countries because they can reach more people quicker.

Beware of Bad Entrepreneurship and Crony Capitalism

There is good and bad entrepreneurship. In African countries, the latter predominates. Public sector corruption and bad entrepreneurship are two peas in a pod. Where you find one the other is always present. A regime of licenses to import goods into society creates and empowers bad entrepreneurship. Government is pre-selecting winners and thereby permitting massive pay-for-play schemes that punish the poor who must pay for the price-gouging that will emanate from the process. Instead, government should rather create and enhance open competition through a tariff structure that allows everyone who has the resources to take the risk to enter the arena. It should be governed by a simple standard of having very high, astronomical if necessary, tariffs for non-essentials and lower tariffs for import essentials. Allowing anyone to participate will engender competition and keep prices low even for non-essential products attracting high tariffs. Broadening the playing field engenders true entrepreneurship. While constricting the playing field through gate-keepers like licensing creates a form of bad entrepreneurship and crony capitalism, both of which tax the consuming public.

In African countries, the business and political landscape is rife with the distortions created by cronyism in business. People don’t risk capital as much as they are looking for guaranteed profits and success. They want to put their “thumb on the scale” to obtain a predetermined result. Politician business persons use their political office to pave a way for their business success and as a bonus;,they also benefit from illegal tolls and a graft system. People with import licenses are able to sell it for immediate profit without ever engaging in the business for which the license was issued. Import-Substitution Industrialization is the mother of all access privilege monsters. With the right political access, any (so called) “industry” is able to qualify as a manufacturing process even if all they are doing is assembling furniture that has been manufactured elsewhere and can import “raw materials” without incurring cost of tariff.

One of the main reasons for developing indigenous entrepreneurs is to create the foundation for self-regenerative economic development in African countries. It is very difficult for government to devise policies that appeal to business if the core of the business is foreign-owned. The prevailing situation is that most countries in Africa are “renting their private sector.” It makes it very difficult to predict how businesses will respond to supply chain imperatives or (policy) “stumuli” because decisions are pre-determined by the inclination and bent of the core motivators that created the business in the first place. For instance, foreign owned businesses may not respond to the incentives provided by government to stimulate economic activity in particular sectors of the economy because it is not in their wheelhouse. Export trade is one of such areas. Foreign owned companies have gone into most countries to avail themselves of the opportunities in the local market. They are not easily swayed to reverse course and look outwards. This is why lack of a “true” entrepreneurial culture is one of the structural impediments to prosperity in African countries. It is the responsibility of the public sector to remove it through education, exhortation, information, and policy prescription.

Fig 2. Social-economic impact of Entrepreneurial influence

Fortunately, through coaching and mentoring there is a way to turn the situation from one of weakness into strength. A crucial aspect of building entrepreneurial capacity in society is to help people who are inclined to entrepreneurship to identify and nurture the desire. Using a venue like a cultural center, holding seminars for how to start, finance and manage a business will further the process. But that is just the basics. It can include coaching in specific areas of business enterprise such as exporting. If coaching and mentoring is scheduled at regular intervals and is adhered to persistently, the result is that more knowledgeable people with better odds of success because of the coaching and mentoring will start businesses. Over time, the foundation developed from the effort will become the lynchpin of a regenerative economic engine.

A Competitive Civil Service Structure

The dysfunction of the civil service in most African countries is a critical structural impediment. However, it is also one of the easiest fixes in the litany of issues to fix in the economic infrastructure of African countries. Fixing it is a crucial element in becoming prosperous because a poorly functioning civil-service is a productivity killer. When processing a task that should take a few hours stretches on for days and even weeks, it is time that the civil-service has stolen from the nation’s productivity bank that will never be recovered. The time wasted is lost forever. It can be corrected with a system driven by multiple oversight, redundant checks and balances, clear time standards for completing tasks, weekly review of performance standards and a thorough (citizen’s) feedback acquisition and response process. It is also crucial to review the tools that people use to perform their tasks. Comprehensive electronic data management rather than a manual file system is the way to go. African governments should beg, borrow, or steal (I am making a metaphoric reference and not encouraging any of the activities) to make the transition from manual filing system to electronic filing across every spectrum of activity. There is no time to waste in achieving it. The rest of the successful nations of the world is there and African countries must make it happen.

Civil service functions are a huge component of competitiveness in the global arena. Because the civil service is the arm of government that interacts with people who need services provided by government, including collecting taxes, it is by default, the customer service department of government. In accordance with the duties, civil service functionaries must be trained on how to manage customer relations efficiently and professionally. Most important, the jobs should be performance based. Which means a person who is failing to meet basic standards can be dismissed. I vividly remember an experience of visiting the embassy of Cote D’Ivoire in Washington D.C. in 2008, for an appointment with the then-Ambassador and being rudely accosted by the receptionist. She was displaying a level of uncouthness that pervades the civil service infrastructure of most African countries. It is a regressive counter-productive resonance of the ills of society at large. It needs to be cleaned up. A customer service agent is supposed to greet customers warmly and is ever ready to address their needs. That is how it works in countries that work. If Africans want their countries to work, learning the habits of countries that work is important.

In conclusion, African countries have a plethora of opportunities at their fingertips. It is not a prepared meal. Rather it is abundant supplies for making a feast of economic prosperity for their people and for posterity. The only hindrance on the path is one created by Africans. Where ever the hindrance is removed, prosperity will inevitably “fallow,” like ripe mango falls from a mango tree.