Africa Needs an Entrepreneurship Policy
To the extent that entrepreneurs create new businesses, they are important. It is the path breaking offerings by entrepreneurs, in the form of new goods & services that results in new employment, which can produce a cascading effect or virtuous circle in the economy. The stimulation of related businesses or sectors that support the new venture add to further economic development.
The message therefore is that Kenya, and indeed all African countries, can ignore an entrepreneurship policy at their own peril. There is an inaccurate belief that the existing SME (small and medium enterprise) policy is an entrepreneurship policy. If an SME policy focuses on the firm then an entrepreneurship policy or E-policy focuses on the individual. If the scope of SME policy is on the existing businesses then an entrepreneurship policy goes beyond existing firms.
Entrepreneurship policy and SME policy aim at causing two different kinds of effects in the economy. Entrepreneurship policy is focused on the key actors in the business, the entrepreneur, while SME policy seeks to increase the competitiveness of the firm. Entrepreneurship aspires to increase the level of supply of entrepreneurs, while SME policy hopes to increase the number of competitive firms.
Entrepreneurship policy is about measures influencing individuals in a society. Unlike the SME policy the entrepreneurship policy does not have to focus only on the adults or individuals in the existing working force or individuals in a process of starting a company or individuals working together in a public organisation. It is about more or less every individual independent of what age and situation they are in for the moment. It argues that it is individuals, not firms that do businesses.
The best way to visualize the entrepreneurship policy is via the MOS model by Lundström and Stevenson where M stands for Motivation, O stands for opportunity and S stands for skills.
Research on the MOS model shows that there will be higher levels of entrepreneurial activity in economies where people are aware of entrepreneurship as a feasible and viable option and willing to explore it (Motivation); have access to opportunities to gain the knowledge, skills and ability to be able to pursue it (Skills); and can gain ready access to the start-up supports they need, such as information and ideas, counselling and advisory services, business contacts, capital and encouragement, in an enabling regulatory and policy environment (Opportunity).
To operationalize “Motivation” Lundström and Stevenson include the social value placed on entrepreneurship and its desirability and feasibility as a career and employment option. The level of these elements could be heightened through awareness, information, exposure, role models and actions to increase social legitimacy.
When the standard newspaper covers agricultural success stories on Saturdays it is not only creating awareness but also displaying agripreneurial role models. It is also giving the necessary information to the populace and in effect training those who could not afford formal structured training. This goes on to motivate those who thought agriculture is not
profitable and by extension forms an agripreneurship mind-set among the populace. A policy that would reward the standard newspaper and all other media channels that create similar awareness would be an entrepreneurial policy but unfortunately it does not exist yet.
“Skills” is operationalized in terms of technical, business and entrepreneurial skills and know-how. The acquisition of entrepreneurial skills and know-how could come through the education system, training programmes, experience working in a small business, hands-on experience in starting and running an enterprise or through peer and professional networks. Most entrepreneurs learn to do what they do through trial and error so there is considerable scope to create formal learning opportunities that will better enable future entrepreneurs.
In Kenya there is no entrepreneurship education at primary and secondary schools. The business studies at secondary schools produces business oriented but not entrepreneurship oriented students. The difference is summarized in the statement, “all entrepreneurs are business people but not all business people are entrepreneurs”. In Kenya we have more business people than entrepreneurs. A tested avenue for operationalizing the “skills” component is by created business incubation centres. A good attempt at this was the creation of Kenya Industrial Estates but unfortunately it is anchored on the SME policy.
“Opportunity” is operationalized by Lundström and Stevenson in terms of the support environment for entrepreneurship – the availability of information, advice, capital, contacts, technical support and business ideas, as well as the ease of access to these resources. It also encompasses the regulatory environment and processes of government administration. In order to create more Opportunity conditions, governments can reduce or eliminate obstacles in the regulatory, administrative, legislative and fiscal systems that may act as inhibitors to business entry. They can also reduce the penalties associated with bankruptcy, and the resulting “stigma of failure”. In addition, labour market and social security policies and systems may impose hidden barriers or “quiet disincentives” to the self-employment versus paid employment decision; these must also be examined.
The funds that have been created for youth and women such as the small enterprise fund under the Moi regime, the women fund under the Kibaki regime and the Uwezo fund under the uhuru regime have unfortunately never been institutionalized. Indeed they were created on political platforms with some wastefully duplicating or even polarizing each other. An entrepreneurship policy would institutionalize such funds.
When we observe farmers who keep planting maize in their farms even when the sizes of the farms are dwindling due to population-led subdivisions and making their maize farming uneconomical it is because there is no entrepreneurship policy to make them innovative. With an appropriate entrepreneurship policy such farmers would switch to horticulture and start to practice vertical farming that adds lots of value to their meagre plots.
When we observe new businesses duplicated in existing sectors and selling the same products in the same market it points to lack of an entrepreneurial policy. The existence of such a policy would see new businesses that create new markets for the same product. Thus when banks saw in children a new market and created children savings accounts they were being entrepreneurial.
When someone opens a new restaurant to compete the existing restaurants with the same food and services then that is business but when someone starts an outside catering venture and home delivery foods he/she is being entrepreneurial. When universities keep using the traditional teaching methods for on-campus teaching they are in business but when they develop appropriate e-learning modules and employ on-line conferencing methods of
delivery then they are being entrepreneurial.
An entrepreneurship policy would motivate school children to answer differently the question…what do you want to be when you grow up? Rather than say, “ I want to be a doctor” they would say, “I want to own a hospital” If the former is a mind-set of one who wants to be an employee the latter is for one who wants to be an employer.
Henry M. Bwisa – email@example.com
Prof. of entrepreneurship – JKUAT