This chapter traces the scholarly literature on black African entrepreneurship from the colonial period through the first fifteen years of the twentyfirst century. Sandberg explores the alternative debates about why no substantial capitalist class developed in Africa during the colonial period and in the decades following independence. She then explores the puzzle that the “varieties of capitalism” literature and methodological research that have been so popular in analyzing business’ challenges in Europe have not been widely applied to the African context. African scholarly literature and debates focus mainly on state developmentalism (both import substitution and the East Asian models) and neo-liberal approaches to African political economic development (especially globalization, austerity programs with their curtailing of inputs, undermining transport and other infrastructure, and problematic access to credit). She highlights the related topics of entrepreneurs forming business organizations, seeking mentors, attempting to maintain practices of social responsibility, and the particular challenges for women that inform the chapters of the volume. She underscores that many chapters argue that those entrepreneurs who cope best with the challenges they face seem to have the closest relations with African state officials.
Entrepreneurs play critical roles in the development of any country’s political economy. In this study, we are concerned with small- and medium-sized (SME) black African business actors as they are influenced by African political officials, foreign business representatives, expatriate business owners living in African states (increasingly from India and China), non-governmental organizations , and foreign donors . The European Union, World Bank , and World Trade Organization define SMEs as having less than fifty employees.1 The chapters in this volume offer rich explorations of the challenges these African businesspeople face in the first decades of the twenty-first century.
In this volume, Challenges to African Entrepreneurship in the 21st Century, we ask why have SME black African businesses been so difficult to establish and sustain? SME African entrepreneurs could be playing critical roles in the development of the political economies of African states. In the advanced Western industrial countries, we recognize the role played by such businesses. In the United States, for example, Peter F. Drucker , the prominent author and teacher of management , reminded us that “it is no longer news that small and new businesses provided most of the twenty-odd million new jobs generated from 1970 to 1980 by the American economy.”2 With regards to Africa, Goran Hyden has noted, “Africa’s primary challenge is how to break out of its pre-capitalist cocoon. History suggests the most probable strategy is to strengthen the bourgeoisie by encouraging the establishment of indigenous manufacturers and merchants.”3 After carefully studying Asia’s state developmental model, Joseph E. Stiglitz argues that there even was an important place for entrepreneurs within the programs of state-directed planning and industrial policy-making that led to the accelerated growth of East Asian states.4
But the ability of black Africans to found new businesses and create new jobs has been undermined by many factors. Black African business people are constrained by domestic markets often dominated by state actors and state-allied actors, by large foreign companies accustomed to operating in a globalizing world, and by expatriates who have launched businesses that previously were reserved mainly for small-scale African entrepreneurs in their own states. Black African entrepreneurs have also been constrained by neoliberal austerity policies imposed by Western capitalist donors and International Financial Institutions (IFIs) whose promises had given hope to local African entrepreneurs, but whose practices had dashed those hopes for many.
The effects of African austerity programs of the late twentieth century continue into the twenty-first century for many in the private sector because the “stickiness” of the institutional changes that were implemented continues to contribute to a country’s business environment. As some authors in this volume note, the austerity programs of the 1980s and 1990s had unintended consequences that influenced the domestic relations of African business owners and state officials. These programs simply did not introduce technical changes for business and state sectors as generally was suggested when the austerity programs were first introduced.
In this volume we argue that, in the early decades of the twenty-first century, African states’ domestic political networks , not their economic markets, are the primary variables that determine the success of African businesses. This volume also argues that SME black African businesses in the twenty-first century are facing an array of extraordinary challenges and we identify the nature of those challenges. Thus, African business leaders have had to adopt creative strategies for coping with their states in order to ensure the survival of their enterprises; they have had to assume responsibilities that previously were undertaken by their states’ public institutions , and in some cases, by non-governmental organizations .
To illustrate the dilemma of today’s African entrepreneurs as analyzed in this volume, consider a few of this volume’s findings. African states’ ruling officials often demand political contributions for their campaigns or payoffs after their campaigns from African company officials. African company officials, in turn, seek out bureaucrats and political officials in order to secure the proper licenses to operate, and hope not to be hounded unfairly by tax collectors. African state austerity programs and state budget cuts in service delivery areas have required some African businesses to dig and maintain their own transport roads and water wells. Some African entrepreneurs must produce their own electricity due to the lack of resources and gross mismanagement by state-run energy enterprises. Our chapters also demonstrate that black African firms confront these challenges in the face of competition from foreign firms that often are able to secure advantages that domestic African businesses cannot secure.
It should be noted that the challenges for African entrepreneurs today that the authors of the chapters of this volume identify are not analyzed within some contrived “Afro-pessimism” framework. Rather, the volume’s analysis offers a dispassionate investigation of the present-day environment that African business entrepreneurs must navigate.
Moreover, it is important to evaluate the past as well as the present constraints on black African entrepreneurs in order to understand both business and personal expectations among African entrepreneurs. Thus, this introductory chapter offers an historical context through which we can understand the evolving status of Africa’s entrepreneurs. It also reviews the evolving scholarly literature on black African entrepreneurship to which this volume hopes to contribute.
The Scholarly Literature
African capitalist entrepreneurship has received relatively little attention compared to other subfields of African studies. Three or four academic publications might emerge in a decade. Additionally, in previous decades, a focus on African capitalism was often a vehicle to discuss African labor struggles.5 Other publications that focused on African capitalism investigated international trade and multinational corporations operating within African states.6 These works made important contributions to African studies, but clearly black African entrepreneurship requires its own undertaking as a subfield related to the more general studies of capitalism in Africa.
Previously, authors debated the context for African entrepreneurs and whether or not an African capitalist sector operating in a market economy was necessary in order for African countries to develop. In 1994, Berman and Leys produced an edited volume, African Capitalists in African Development, that offered a range of views on this topic.7 Such studies also demonstrated that, in some cases, African capitalists could compete against foreign firms by courting African state leaders for protection against foreign firms. But other studies revealed that in other cases African entrepreneurs often were constrained by African state officials and the predation of such officials.
During the late 1980s and 1990s, scholars and practitioners also argued whether or not a significant African capitalist sector was a necessary precon...