Building Entrepreneurial Ecosystems in Sub-Saharan Africa

A Quintuple Helix Model

Constant D. Beugré

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN:
  9781137568939
• eBook ISBN:
  9781137568946
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

Explores the potential of entrepreneurship as solution to Africa's stunted economic development

Presents a Quintuple Helix Model of entrepreneurial ecosystems development

A valuable guideline for forward-thinking policymakers

© The Author(s) 2017

Constant D. BeugréBuilding Entrepreneurial Ecosystems in Sub-Saharan AfricaPalgrave Studies of Entrepreneurship in Africahttps://doi.org/10.1057/978-1-137-56894-6_1

Begin Abstract

1. Introduction

Constant D. Beugré¹

(1)

Delaware State University, Dover, Delaware, USA

Abstract

This chapter introduces the book and explains its rationale. Specifically, the chapter argues that the development of entrepreneurial ecosystems is important in providing opportunities for the emergence of high-growth potential entrepreneurship in sub-Saharan Africa. It could contribute to the formulation of new strategies and mechanisms aimed at providing opportunities for gainful employment for the many young people of sub-Saharan Africa. The chapter also introduces the key issues discussed in the book.

Keywords

EntrepreneurshipEntrepreneurial ecosystemsProductive entrepreneurshipSub-Saharan AfricaUnproductive entrepreneurship

End Abstract

There are three main reasons that led me to write this book. The first reason is to challenge the prevailing view in most sub-Saharan African (SSA) countries that governments should provide jobs to college graduates. In fact, in most SSA countries, when students graduate from college, they expect their governments to provide them jobs in the public or even private sector. It is true that such practice started just after independence when the newly independent countries needed professionals in almost every sector of government. However, this way of thinking is no longer sustainable because government does not create wealth (Beugré 1998). It is obvious that today, times have changed and the population growth along with the increasing number of graduates has made this practice nonsustainable, even counterproductive.

The second reason is that the population growth has put pressure on governments. Although more young people are being educated than ever before, opportunities for employment have not kept pace. For example, it is a common experience that about 80 percent of the graduates from Nigerian universities find it very difficult to get employment every year (Adejimola and Olunfunmilayo 2009). These two compounding factors, high population growth and lack of employment opportunities, create the bedrock for social unrest. It is, therefore, important to envision new strategies and mechanisms to provide opportunities for gainful employment for the many young people of sub-Saharan Africa.

The third reason is a professional and personal one. As a scholar of management, teaching and writing on entrepreneurship, I am convinced that entrepreneurship could provide opportunities for SSA countries to turn the tide. This is particularly important in an era where technology provides opportunities for the young people in sub-Saharan Africa to not only connect with the word but also leverage the vast natural resources available in sub-Saharan to contribute to the betterment of their personal lives and their communities. Today, it is obvious that more countries are turning to entrepreneurship as a means of enhancing opportunities for economic development and growth. For example, Ariza-Montes and Muniz (2013, p. 40) suggest that ‘fostering an entrepreneurial culture constitutes one of the most important priorities for all countries’. Likewise Auerswald (2015, p. 10) argues that “while societies can advance for a short while by making incremental adjustments to the status quo, long-term development requires entrepreneurship and innovation.” Thus, the purpose of this book is to develop a framework for fostering entrepreneurial activities in sub-Saharan Africa (SSA). The main argument of this book is that entrepreneurship could help to create a new development paradigm that could effectively contribute to economic growth and wealth creation in sub-Saharan Africa (Robson et al. 2009; Naudé 2010; Ogbor 2009). For this to happen, countries in sub-Saharan Africa must initiate, implement, and nurture entrepreneurial ecosystems. These entrepreneurial ecosystems could be at the national, regional, local, or organizational levels.

It is worth acknowledging that entrepreneurship is not a new concept or practice in Africa (Olutayo 1999). In fact, from merchants to street vendors to modern corporations, African countries have harbored entrepreneurs for centuries. As Elkan (1988) put it almost three decades ago, “there is little evidence that Africans are lacking in entrepreneurial spirit or fail to grasp business opportunities when they are within reach. What matters most is the economic environment: if it places entrepreneurship at a discount, it is not surprising that there is then a dearth of it. When the environment changes and government policy comes to depend more upon greater enterprise, the likelihood and the evidence are that people will respond” (p. 184). This echoes Baumol’s (1990) contention that entrepreneurship is an omnipresent feature of human nature. Thus, it is almost inherent to human society. However, what differs across geographic areas is not the degree of underlying entrepreneurial spirit, but how this spirit is channeled (Sobel 1988).

Although there has been remarkable progress in many areas, more needs to be done for sub-Saharan African countries to become middle-income level countries. For example, South Africa, an economic powerhouse and a member of the BRICS (Brazil, Russia, India, China, South Africa) countries, still has several pockets of deep poverty. Likewise, Nigeria, the largest economy and most populous country in Africa, has many areas that still suffer from endemic poverty. These two examples indicate that despite its large resources and economic potential, sub-Saharan Africa is still the least developed region of the world.

Before exploring better the key concepts of this book, it is important to know what is meant by entrepreneurship and by entrepreneurial ecosystems. Entrepreneurship is often defined as the process by which individuals pursue opportunities without regard to resources they currently control (Stevenson and Jarillo 1990). As this definition implies, at the start of the entrepreneurial process lies an opportunity. A second way of looking at entrepreneurship is to consider it as a mindset, that is, a particular way of thinking and acting. This second definition relates entrepreneurship to innovation. When it occurs within existing organizations, entrepreneurship is defined as innovation (or corporate entrepreneurship or intrapreneurship), the process of transforming ideas into actual physical products or services. For entrepreneurship to prosper in a given country, several factors need to be in place.

Thus, this book explores the extent to which the creation of entrepreneurial ecosystems could foster entrepreneurial activities in sub-Saharan Africa. Geographically, sub-Saharan Africa is the region south of the Saharan desert. Politically, countries such as both Sudan and South Sudan are part of sub-Saharan Africa. Countries in the northern part of the African continent are part of the Arab world and are not generally included in the World Bank’s statistics related to Africa. Although considered as the least developed region of the world, sub-Saharan Africa is currently the second most growing economy in the world after Asia. It also has several advantages in terms of nature resources and human endowment.

Developing entrepreneurial ecosystems could help to reduce the heavy reliance on governments for employment and facilitate the emergence of creative economies in sub-Saharan Africa, thereby moving the continent from a resources-driven to a knowledge-based economy. Since the seminal work of Schumpeter (1934), several scholars have established a strong link between entrepreneurship and economic growth (Baumol 1990; Wennekers and Thurik 1999; Wennekers et al. 2005; Acs 2006; Sobel 1988; McMullen 2011; Ariza-Montes and Muniz 2013). For example, using Baumol’s (1990) concepts of productive entrepreneurship and unproductive entrepreneurship, Sobel (1988, p. 645) notes that productive entrepreneurship is the fundamental source of economic growth and wealth creation.

In the present book, I explore the means through which entrepreneurship could serve as a means to enhance economic development and growth in sub-Saharan Africa. In doing so, I offer strategies and guidelines for building entrepreneurial ecosystems in sub-Saharan African countries. I do so because I believe that entrepreneurship could play a critical role in the development of sub-Saharan Africa. Very often, entrepreneurship in sub-Saharan Africa has been limited to the informal sector, that is, informal entrepreneurship or necessity-based entrepreneurship. It is not that necessity-based entrepreneurship is necessarily bad, but it cannot help sub-Saharan Africa leverage its vast resources for competitive advantage and economic growth. Thus, I focus more on entrepreneurial ecosystems involving high-growth ventures because this type of entrepreneurship has the potential to contribute to employment creation and economic growth (Acs et al. 2008; Autio and Acs 2010; Estrin et al. 2013). This could lead to the emergence of high-impact entrepreneurs who are defined as entrepreneurs inclined to pursue growth and innovation (Acs 2010). Indeed, high-impact entrepreneurs are the actors that intensify competition, provide the largest potential for new jobs, and enhance economic growth (Stenholm et al. 2013, p. 177).

According to Baumol’s (1990) theory of productive and unproductive entrepreneurship, the institutional environment determines whether people channel their energy toward productive or unproductive entrepreneurship. Applied to sub-Saharan Africa, one may argue that the institutional environments lead people to engage more in informal entrepreneurship. For example, the statistics of the International Labor Organization (2002) show that informal entrepreneurship represents more than 70 percent of economic activity in sub-Saharan Africa. Yet, informal entrepreneurship does not lead to the creation of new jobs and therefore cannot be construed as an engine of economic development and growth. No country can become an economic power house if most of its citizens work in the informal sector. Perhaps, the prevalence of the informal sector could be the result of systemic barriers to high-potential entrepreneurship.

The present book includes nine chapters. The second chapter presents the sub-Saharan Africa region and identifies its economic potential. This lays the groundwork for the subsequent chapters. The third chapter defines the concept of entrepreneurial ecosystems, explores its relevance for sub-Saharan Africa, and identifies its pillars. It does so by developing a Quintuple Helix Model as a conceptual framework to discuss the creation of entrepreneurial ecosystems in sub-Saharan Africa. The chapter also provides guidelines on building entrepreneurial ecosystems and addresses the question of who should lead the effort in building an entrepreneurial ecosystem in a particular country. The fourth chapter discusses the role of government in fostering entrepreneurial ecosystems. The fifth chapter analyzes the role institutions of higher education could play in the development of entrepreneurial ecosystems. Particularly, the chapter discusses the importance of entrepreneurial education, the development of campus-wide entrepreneurial ecosystems, and the establishment of business incubators.

The sixth chapter discusses the role of the private sector in the development of entrepreneurial ecosystems. The chapter focuses on the role of private banks, private investors, venture and angel capitalists, and corporations that could provide seed mo...

Table of contents

• Cover
• Front Matter
• 1. Introduction
• 2. The Business Environment in Sub-Saharan Africa
• 3. The Need for Entrepreneurial Ecosystems in Sub-Saharan Africa
• 4. Role of Government
• 5. Role of Institutions of Higher Education
• 6. Role of the Private Sector
• 7. Role of Citizens
• 8. Role of International Organizations
• 9. Conclusion
• Back Matter