ENTERPRISING: Tailor Toure Isiaka makes an outfit in his tailor shop in Adjame, Abidjan, Ivory Coast. Tailors are thriving in the informal business sector in Ivory Coast.  Picture: EPA
ENTERPRISING: Tailor Toure Isiaka makes an outfit in his tailor shop in Adjame, Abidjan, Ivory Coast. Tailors are thriving in the informal business sector in Ivory Coast. Picture: EPA

Since independence from colonialism, African industrialisation, development and growth have been stunted because most governments have not explicitly encouraged entrepreneurship.

In fact, most African governments and countries have either actively discouraged or were indifferent to entrepreneurs, and rarely fostered supporting institutions, policies and environments for entrepreneurship.

Given that most African countries after independence inherited economies without much advanced industry, skills and financial resources, entrepreneurs, who could add value to raw materials, leverage technology to come up with new methods of production, introduce entirely new industry sectors and manufacturing products, were desperately needed.

Although we often assume an entrepreneur sets out his or her stall independently, an entrepreneur could operate inside and outside organisations, and could operate in the private, public sector and non-profit sector.

Within an organisation, whether a state-owned or private company, an entrepreneur could for example create a new product or a new way of producing a product. Robert Hirsch points out that entrepreneurship within an organisation could also involve coming up with a new ground-breaking organisational structure or delivery model that changes the industry. But an entrepreneur could also be setting up a non-profit organisation, which provides a new service or create a new product of value to consumers.

Hirsch, a leading researcher on entrepreneurship, says the entrepreneur spends “time and effort”, takes risks and creates something new of “value”. And subsequently reaps the rewards - or fails.

In many African countries, genuine entrepreneurs, who through their own time and efforts, money and taking risks, make it, are often not only outside the inner circle of the leaderships, but they are also often viewed with suspicion by political leaders, citizens and even civil society.

Many African independence movements and their leaders adhered to variations of Marxism-Leninism, Maoism or so-called African socialism, and saw private business and entrepreneurs, whether local or international ones, as “capitalists” bent on exploiting the African masses.

The term “capitalists” in many African countries has a negative connotation, reserved for exploitative former colonial companies and businessmen and women, who brutally abused African labour during colonialism.

Furthermore, former colonial power and industrial country investors who set up shop in African countries in the post-colonial period, after countries implemented World Bank and International Monetary Fund (IMF) enforced structural adjustment programmes, were often as exploitive of African labour, resources and the environment.

They reinforced among many African leaders, governments and citizens that “capitalists” are all bad. African entrepreneurs, not linked to the state, were often therefore also labelled as “capitalists” and therefore seen as exploitative by implication.

The left-leaning African independence movements and leaders made the mistake of thinking that the US-type of unfettered liberal market economy was the only form of “capitalism” and democracy. In the US liberal market model, the markets are all-perfect, business has overwhelming power, and the state’s role is essentially only about maintaining order.

However, in the post-World War II period, apart from the US free market type of capitalism, there were many variations of market-based economies in both industrial and developing countries.

The North European social democratic states, with their mixed economies, combined state-led development with markets, which they regulated and encouraged private entrepreneurs. In the Asian developmental states, the so-called “Asian Tigers” also combined the state-led development with “governing” their markets, and actively developed domestic entrepreneurs.

In many African countries in the post-colonial period, local entrepreneurs, because they were often from minorities, were either squashed, their enterprises expropriated and foreign companies were nationalised.

Furthermore, many other African post-independence regimes pursued economic empowerment and indigenisation programmes whereby they took over companies belonging to former colonial “settlers”, minorities and foreign companies and redistributed them to indigenous communities.

However, in most of these cases of economic “empowerment” and indigenisation, the expropriated assets were given to “political” entrepreneurs, the independence movement leader, party elite and their families. The recipients were rarely genuine entrepreneurs, and often mostly collected “rents”, rather than creating value.

After the 1980s, when many African countries fell into economic decline, countries were forced to privatise state-owned companies, as a condition for development aid and financial support from industrial countries, and multilateral lenders such as the World Bank and the IMF.

However, many of these privatised state-owned companies were often also sold cheaply to “political” entrepreneurs allied to the independence movement leader, party elite and their families. These “political” entrepreneurs did not add value to the businesses, did not create new products, or new production methods.

In many instances where African privatised state companies were sold to foreign companies, these companies often did not add value to the businesses either.

They often increased efficiencies by cutting costs, jobs and extracting preferential markets, supporting regulations and subsidies from African countries, which ironically had privatised these companies to end the very same protections.

New foreign owners often transferred “value”, whether profits or assets, back to their countries of origin as quickly as they could, just in case it was nationalised or indigenised again.

African leaders' distrust of entrepreneurship has also undermined the development of entrepreneurs in the public, private and social enterprise sectors.

By African leaders and civil society discouraging private and social enterprises, they also, by implication, crushed the entrepreneurial spirit - a focus on innovation, value-adding efforts and new product creation - in the public sector, too. This is one reason for the delivery, implementation and efficiency failures of many post-independence African public sectors.

African countries will have to be turned into entrepreneurial societies, with entrepreneurship development encouraged in the private, public and non-profit sector.

African leaders, governments and citizens, must end conflating genuine local “entrepreneurs” with the exploitative colonial and post-colonial industrial country “capitalists”; or with the corrupt African “political capitalists” who became rich on economic empowerment, indigenisation and privatisation, because of their connections to the governing leader and party, rather than on their entrepreneurship capability.

African countries need supportive policies, institutions and public attitudes towards entrepreneurship. Over the long-term, African schooling at all levels must encourage innovation, entrepreneurship and self-sustainability.

At the moment most of Africa’s genuine entrepreneurs are in the informal sector producing monocrops they have grown up with or grazing cattle for meat or milk either for themselves or for surrounding communities. They need to innovate in their own context - producing new crops or new products, not available in their communities or country, or adding value to existing ones. But they must also look at new ways to manage, whether pooling their savings, to fund upscaling, value-adding; securing new markets for their products.

Government policies, institutions and official attitudes must support the development of attempts to innovate, create value and try new production methods and organisational structures by African entrepreneurs in the informal sector.

Introducing merit-based systems into African societies, rather than political connectivity, ethnic, regional and religious affinity, will enhance entrepreneurship.

Political “entrepreneurship”, as the dominant form of African entrepreneurship, should be discouraged by government and society. Genuine African entrepreneurship that has through hard work and effort, risk-taking and innovation become successful must be celebrated - as people to emulate.

  • William Gumede is chairperson of the Democracy Works Foundation. His most recent book is Restless Nation: Making Sense of Troubled Times