Entrepreneurship in Africa

Entrepreneurs are important actors for sustained development in Africa. Entrepreneurship occurs when an individual or group of individuals garner their available resources and take action to achieve a desired goal. It requires a measured risk –– where the entrepreneur balances up possible failure against the benefits and rewards of success. Typically, these rewards can be measured in financial terms, but they can also be measured in other economic, social and cultural ways. Entrepreneurs can create employment for themselves and others, they can introduce new innovations into the products and services we use; they can develop an identity in society as a result of their success; and they can become role models for future entrepreneurs. The network of beneficiaries of entrepreneurial endeavour typically reach far beyond the entrepreneur, to children who are fed, educated and whose future opportunities can be enlarged, to workers and their families, to the communities and societies in which entrepreneurs operate.

Entrepreneurship is often treated synonymously with running a business. However, while entrepreneurship is critical for success and growth in business, something Africa needs much more of, it is a much broader concept.

Entrepreneurship is a process that fuels innovation and creates value in economic and social settings. It is essential to success and growth in business –– where businessmen and women see new opportunities (i.e., new markets and customers, better ways of serving existing markets and customer, or new processes for providing better or cheaper products and services). In this regard, entrepreneurship is a cornerstone for indigenous business and economic development in Africa.

However, entrepreneurship is also essential for tackling many of the new social challenges African countries face. It is the process through which people identify ways to tackle social challenges in new and innovative ways. Social entrepreneurship involves many of the same processes used in business entrepreneurship, but applies these in social settings, such as in the provision of housing, education and health services.

The image of the entrepreneur –– typically a white businessman involved in information technology –– has prevented many people from considering entrepreneurial endeavours. Entrepreneurs are young and old, women and men, black and white…

Governments stifle entrepreneurship in Africa through policy and legal frameworks that upset the risk-reward balance and by creating unnecessary barriers to entrepreneurial activity. When entrepreneurship becomes too risky, due to the lack of public provisions that provide social and financial protection should an entrepreneurial venture go wrong, potential entrepreneurs play safe and stick to the conventional ways of doing things. In such instances, entrepreneurship and innovation is limited to those with deep pockets who can gamble their resources in the hope for greater reward. However, many people in Africa do not have the resources to gamble in this way. The poor are typically averse to risk because they are more vulnerable. Failure hurts more when you don’t have sufficient resources to fall back on. As a result, too much risk dampens entrepreneurship.

On the other hand, the removal of risk also upsets the risk-reward balance. Risk is an essential element in the entrepreneurship dynamic. It encourages us to take care when considering new ventures and not to go headlong into such ventures without research and assessment. Risk moderates our appetite for reward.

Removing risk creates an attitude of entitlement and erodes the entrepreneurial spirit. Where there is no risk, projects are entered into with little planning or care. Failure is of little consequence because there is no pain associated with it. The removal of risk encourages ventures that are poorly planned and reduces commitment in the project. The lack of risk implies that someone else––usually government––is picking up the tab for our possible failure.

Much has been written on the process of entrepreneurship and the creation of entrepreneurs. Even in Africa, a number of entrepreneurship development schools have been established (often within business schools or university business faculties) and references to the need for African entrepreneurs abound. This book focuses on the role of African governments in promoting entrepreneurship in economic and social settings. It does not focus on any single element in this endeavour, such as entrepreneurship education or access to financial for indigenous businesses, but encourages government policies makers to take a more systemic are strategic look at the ways risk and reward can be balanced to ignite an entrepreneurial spirit.