My Beauty Best Teacher

Mfonobong Nsehe asks? in an American Chronicle article:

Are there any universities at all which are as supportive of student entrepreneurs as to organizing business plan competitions to fund businesses of students which have mega potential?...Where are you going to find venture capitalists in Kenya or elsewhere in Africa who will be willing to swallow their pride and listen to a student entrepreneur who is armed with nothing but a world-shaking idea?

We have such bright student entrepreneurs in Africa. But until African financiers and the self-proclaimed 'Venture capitalists' are easily accessible and listen to student entrepreneurs in our African Universities, Africa may never have its own answers to such mega, internationally famed corporations like Google, Yahoo, TicketAdvantage, CollegeHumor and Facebook which were all the brainchildren of student entrepreneurs. We need financiers who will believe in and support the dreams of African student entrepreneurs and get those big ideas out of the boxes and into the pages of history. African student entrepreneurs are equally as smart, gifted and visionary and if supported can come up with big, world-changing ideas that would change the world.

And so, will the venture capitalists in Africa please stand up?

From the CIPE Blog:

In Ghana, rural entrepreneurs are gaining presence as a political constituency...With a greater political voice for rural entrepreneurs, the people in poverty can lead the charge to eradicate poverty.The Private Enterprise Foundation (PEF)has several programs designed to bring rural entrepreneurs into the political process.

• With proper resources and training, farmer-based associations can become an effective voice for rural entrepreneurs.
• Engaging the private sector in the legislative advisory process provides a vital opportunity for dialogue on reform issues with policymakers.
• Private sector associations are important for improving Ghana’s business climate and making the broader business community a part of democratic decision-making.

Lucia Akosua Quachey writes(doc):

The fundamental importance of women entrepreneurs in promoting made in Africa goods is enormous. However, African governments and the private sector under estimate the crucial and important role women entrepreneurs play in production of goods and services and development of enterprises and the benefit to promoting made in Africa.
Entrepreneurship in all its diversity in Africa provides a dynamic and potentially efficient means of meeting the many of the emerging challenges of development and low productivity in Africa. The relationship between economic development and promoting the growth of the informal sector is in many ways symbolic. Entrepreneurial activity of the informal sector breeds innovation, injects competitive pressures and develops opportunities in economies. It is the foundation in many respects for broader economic development. African women entrepreneurs have a matured long standing tradition of entrepreneurship for centuries. In the context of promoting made in Africa goods, on-going reforms and rethinking of development will put women entrepreneurs in a pivotal position in relation to expectation

Mike Butcher writing in TechCrunch:

The internet enables dramatic change in the way that businesses can operate – this is what I have called the new ‘physics of business’.But in any given sector, if that change is going to happen, a number of forces need to be working together. The most critical of these is a healthy cadre of entrepreneurs.Indeed, the commercial story of the internet is also the story of how a remarkably small number of entrepreneurs have caused a remarkably large amount of upheaval, and reated a quite spectacular amount of value as a result.
Larry Page and Sergey Brin, Jerry Yang and David Filo, Niklas Zennstrom and Janus Friis, Mark Zuckerberg, Jeff Bezos, Pierre Omidyar, Reed Hastings, Marc Benioff (Salesforce.com), Andrew Black and Edward Ray (Befair), Craig Newmark and Jim Buckmaster, Natalie Massenet (Net-a-porter),Tony Hsieh (Zappos.com), Evan Williams and Mark Pincus.
The list could fit on the back of a napkin, but this gang have between them created hundreds of billions of dollars of shareholder value. Just as importantly, but they have done so by disrupting the sectors they operate in – from advertising to gambling; high-fashion retail to enterprise software; movie rental to telephony – none will quite be the same again...[continue reading]

Apoorva Shah asks?

The question is not whether there should be more innovators and entrepreneurs in Africa, but how? What concrete steps must be taken in order to develop the business sector?

The importance of governance, financial institutions, and the overall "enabling environment" has already been proven by the widely referenced World Bank Doing Business Reports. By measuring the difficulty of starting and sustaining business, the report allows for governments to know where to direct and manage reforms. However, an assessment of business know-how and expertise is less frequently discussed, and some over-enthused optimists, especially those on the microfinance bandwagon, insinuate that skills like balancing a checkbook or managing organizational structure are inherent in all entrepreneurs, even budding ones in Africa and South Asia.
Yet studies show that many times it is not the availability of funding or even government reforms that hold back business development, but simply business expertise. Management skills are especially important when entrepreneurs look to scale their businesses and employ more workers

The Association of African Business Schools (AABS), organized by the International Finance Corporation's Global Business School Network, is a quiet but crucial voice in a sector where passions thrive on shirtsleeves and megaphones. The AABS member schools collaborate to improve the standards and increase accreditation of business schools in Africa. Right now, only one school, the University of Cape Town in South Africa, ranks within the Top 100 Business Schools on the 2007 Financial Times Global MBA Index.
But more entrepreneurial Africans in the middle and lower-middle classes should also have the opportunity to attend decent business schools close to home, preventing brain drain and catalyzing larger-scale local business development. As the AABS addresses the quality of business schools, private donors can look to increase the quantity of these schools

FinancialNigeria reports:

Interfaced with the capacities and growth aspirations of Diaspora African businesses, some of the challenges faced by local entrepreneurs on the continent become opportunities for mutual benefits. A good number of Diaspora African entrepreneurs have distinguished themselves in their profession and industry. They have access to capital and are able to mobilize investible funds within and outside their community. They have integrated well with the international system, while they seek opportunities to further expand their businesses outside of their country of residence. In this connection, African is a vast market for them...While African governments continue to press for more favourable trade conditions perhaps when the Doha Round of negotiations resumes, a clear outcome of the process of engagements between African entrepreneurs at home and abroad can conduce to Africa moving out of the aid fixation. Leveraging on Diaspora network and capital, Africa economies can leapfrog on the crest of private sector-led growth.

From the Council for Foreign Relations Stephanie Hanson writes:

A small group of economists now argue that brain drain might have a positive impact on Africa. Those skilled workers, their research shows, are often sending significant quantities of money back to their home countries. A March 2008 paper by economists William Easterly and Yaw Nyarko says remittances to Africa are likely undercounted, but on average they are equivalent to 81 percent of the foreign aid (PDF) received by an individual country. A 2005 World Bank study showed that remittances from skilled workers to their families in Guatemala, Mexico, and the Philippines helped reduce poverty in those countries.
In some cases, talented workers are even returning to their home countries to work or start businesses. Though research on this phenomenon in Africa is limited, economists have documented the effects of Chinese and Indian tech entrepreneurs returning to their home countries. This so-called brain circulation—in which entrepreneurs start new companies but maintain business links in the United States—has been extensively researched by Anna Lee Saxenian of the University of California, who calls these entrepreneurs "The New Argonauts." Some experts believe African skilled workers could have a similar positive effect on their native economies...[continue reading]

In a paper about Somalia, Tatiana Nenova writes that "...the private sector has demonstrated its much-vaunted capability to make do. To cope with the absence of the rule of law, private enterprises have been using foreign jurisdictions or institutions to help with some tasks, operating within networks of trust to strengthen property rights, and simplifying transactions until they require neither. Somalia’s private sector experience suggests that it may be easier than is commonly thought for basic systems of finance and some infrastructure services to function where government is extremely weak or absent..." A discussion analysing this assertion had a number of conclusions in their introductory remarks Ian Bannon and Tim Harford stated that "...Entrepreneurs in Somalia have used three tactics to operate in an institutional vacuum. First, they have “imported institutions,” for example by using banking systems in nearby countries. Second, they have used clans and other local networks of trust to help with contract enforcement, payment and transmission of funds. Third, they have simplified transactions to a point where other tactics are not needed. How can these tactics be reinforced or defended? Are there others that can be supported? There are inherent limits to what the private sector can achieve without the support of a capable state to enforce property rights and provide basic public goods. But there is also a risk that a failed state will be replaced by a predatory one. How can fledgling states be encouraged to support, rather than predate on, entrepreneurs?
Entrepreneurs often need to bridge religious, ethnic or tribal boundaries to get things done. Can entrepreneurship be harnessed for peace and reconciliation?..."
Via PSD Blog

Ashoka Fellow "...Moussa Kane has begun to organize Mali's informal economy into a formal association that compiles data on the informal sector and provides basic services to impoverished entrepreneurs. The association provides startup equipment and in-kind loans to entrepreneurs and offers business and financial training to help small ventures succeed. His organization is the first company of its kind in Mali to be owned by its due-paying members, and it is financed and run entirely by members of the informal sector. Its services will be accessible to the approximately 40 percent of Mali's population involved in the informal sector...Although it provides basic sustenance to many, the informal sector is disorganized and risky. Members of the informal economy, like the street vendors that crowd Bamako's avenues, do not have access to loans, are harassed by the government for their occupation of unregistered public space, and are vulnerable to complete collapse in the event of an illness or accident. Furthermore, most "informal entrepreneurs" do not understand the essentials of bookkeeping, business management, and resource allocation, and are therefore unable to turn a consistent profit..."

In CIPE Robert Litan on capitalism:

When oligarchs dominate, they keep entrepreneurs from building new industries that might threaten their hold on power. When state-guidance dominates, bureaucrats can import ideas to jump-start development but aren’t equipped to develop new ideas. When big firms dominate, innovation becomes routinized and incremental rather than radical and transformational. The oil-rich countries of the Middle East and North Africa have long been more or less oligarchic thanks to revenues from oil and the patronage they support.
When entrepreneurs have a strong presence, they help break down oligarchies through creative destruction from new industries, generate new ideas to sustain development, and, in tandem with the dispersive commercial capacity of big firms, they radically transform every day lives for the better.

Mutumwa Mawere recently addressed the Nigerian diaspora he stated:

...There are countless examples of African entrepreneurs and professionals who have substantial amounts of money in Africa but it is evident that the prosperity has not been democratized to the extent of creating an African ownership class able to take the continent’s majority into a new and dynamically positive direction underpinned by new values of work, combined with saving, investment and an ownership mentality. It is also important to underscore that there is a distinction between being “rich” and being “wealthy”.
Yes, some Africans have made money but because financial literacy and “platinum rights” was not stressed as much as a sense of public justice and civil rights were by our founding fathers and we did not keep it (the money) and we certainly we did not grow it.
Many have made money but no one has really taught us how to keep it in our communities.
Imagine, after 13 years of South Africa’s democratic dispensation, we still do not have a new mutual for blacks? No one taught us about financial literacy and the basic tenets of a free enterprise system that appears universally to capture the imagination of many progressive and successful nations.
The challenge of understanding the free-enterprise system and making it work for the majority of Africans has to become a core part of any conversation among Africans concerned about wealth creation and creating sustainable wealth addresses for Africans. Most of our wealth addresses are not assignable and transferable let alone from one African generation to the next.
Any successful nation building enterprise must necessarily be sustained by a healthy, robust and growing tax base and not foreign aid. Africa’s post colonial budgets still remain principally funded by bilateral and multilateral sources of finance.
Africa must create its own dominant class of very successful entrepreneurs, at all levels. We should have our own wealth builders and not become a continent specialized in distributing other people’s wealth.
As we approach the 47th birthday of Nigeria, we must focus on converting ourselves from cash economy customers into banking (our own banks), tenants into homeowners, small business dreamers into small, medium and large scale business owners, minimum wage workers into living wage workers, economically illiterate into economically empowered citizens.
Many of us are consumed with directionless conversations that are primarily focused on what governments can do for us and not what we can go for ourselves. We tend to be good at being against something and not for something.
Literacy can be a sustainable instrument for poverty eradication. They often say that when you know better, you tend to do better.
Any when Africans know better, I have no doubt that we can transform ourselves from islands of affluence to oceans of hope and prosperity. We have not invested much in literacy and integrated the literacy challenge in our post colonial agendas.

Any nation is as good as the interests that inform it. The only power we have as Africans in any field on endeavor whether it is in politics or the wealth game is the power to organize ourselves. One hand cannot clap but two hands can surely make a noise.
Why then is it the case that we have not been able to use our collective spent to our advantage? Many of our African governments have benefited from the financial illiteracy of Africa’s intellectuals. Africa has invested in human capital and yet such investment has not been able to provide any leadership on the bread and butter issues.
Surely, it is evident to all of us that any consolidation of our pain and opportunities can create a critical mass that is missing in action. Imagine if all Nigerians resident in South Africa could consolidate their mobile phone expenses into one pool, how much impact would they have in the South African economy.
Equally, if all Zimbabweans resident in South Africa chose to use one bank, how much would that bank be worth? Even the obvious things that Africa needs to do are not so obvious to our leaders.
I think it is self evident that the poor need the rich in as much as the rich need the poor. Can you imagine a nation of only poor people with the same means and possibilities? On the key ideological questions, we have heard many people argue that a free enterprise system is not suited for Africa and many of our governments in Africa have perfected the skill of creating ideological and theoretical entrepreneurs/bureaucrats without asking the question whether in fact if all the rich people were eliminated, Africa would be any better.
The post colonial experience has confused many of us to the extent that we are now looking for intelligent leaders to govern us when leadership may have little to do with intelligence. Even in a family, it would not be normal for all the children to be the same. Those who do well in one generation inspire the next generation to do better.

Is Africa’s future safe with a system where the state thinks for its citizens or where the citizens think for themselves and act in their own self interest? Many believe that governments (created by the same citizens) can and should be expected to lead the anti-poverty crusade and yet human history has not given us any good examples of governments acting in the interests of citizens who are not in government.

We must take ownership of our destinies and we must be the change that we want to see in the continent. No one else is going to do it for us. We must sell ourselves as worthy of investment and we must change our attitudes because in the final analysis, our attitude to wealth determines our altitude.

Anyone can make money in a growing economy than can be stolen in a decaying and dysfunctional system. If we look at Africa’s unmet needs, then we can appreciate the possibilities that exist in the continent and yet we think and act in a fragmented and confused manner. Those who should ordinarily lead appear to be visionless preferring to focus on yesterday (which is gone) and not on actions that create a better Africa.
Before we can think of creating an African pool of wealth, we need to understand the meaning of wealth. Wealth has come to mean an abundance of items of economic vale or the state of controlling or possessing such items and encompasses money, real estate and any personal property.
In many countries wealth is also measured by reference to access to essential services such as health care or the possession of crops or livestock. Accordingly, an individual who has accumulated wealth relative to others is often described as wealthy.
Therefore, wealth refers to some accumulation of resources. In light of the above, Africa is not recognized as a wealthy continent because of the inferior relationship between the majority of us and items of economic value. We are generally challenged in the resource accumulation enterprise...

Efam Dovi reports on the importance of access to credit for micro-entrepreneurs looking to ascend into manufacturing:

About 80 per cent of women-owned businesses are stuck at the “micro” level. They are unable to expand because they lack properly coordinated support, cheap and long-term credit and sufficient access to new technologies. They face poor infrastructure, low capacity and sometimes obstructive government policies

notes that the banks appear more willing to give loans to importers of cheap products than to local manufacturers. The importers sell their produce quickly, at higher returns. But home-grown businesses require more time to turn a profit and to repay their loans, so the financial institutions shy away from them.

Alex O. Awiti a fellow at the Earth Institute writes:

Entrepreneurs can catalyse sustainable economic growth by identifying market opportunities and business models that meet the needs of underserved communities in emerging economies. In essence, entrepreneurs can be true allies in poverty alleviation through market solutions, employment and wealth creation as opposed to aid and subsidies. Proponents of foreign aid often think of poverty as a technical problem they can solve using a universal blueprint or Big Plan and huge dollars in financing. If it were that simple poverty would be history. Efforts to alleviate poverty must recognise that poverty is a complex labyrinth of social, institutional, political, historical, geographical and technological factors.

Lauren Citrome in CIPE:

When businesses are informal, they do not have recourse to legal protection. When a corrupt official comes to collect a bribe, they do not have any formal means to contest. An informal business owner cannot easily grow his or her operations because without formal registration papers, there is less access to capital. If a business cannot use legal dispute-resolution mechanisms, there is increased risk for hiring employees outside of one’s family.
In many countries, however, prohibitive barriers to formalization keep entrepreneurs in the informal sector. For example, business registration offices may be located only in major cities and rural entrepreneurs cannot access them. Formalization may also entail an overly burdensome tax responsibility. In some cases, business owners lack the information and know-how to register their businesses, even if they wanted to do so.

Fekru Debebe asserts(PDF) that :

Privatization essentially increases the role of the private sector in the national economy and induces changes in basic values and attitudes in a society. The common characteristic features of countries which rely primarily on the private sector and free markets are freedom, basic human rights and democracy. These values are important to the development of the private sector and the acceptance of privatization would initiate a fundamental shift toward democratic values...The privatization process can also be a significant positive influence in the development of African entrepreneurial talent. In the statist development strategy of the past, indigenous entrepreneurial talent had neither been solicited nor its role recognized and encouraged. As the result, local entrepreneurs moved to where domestic opportunities were open to them, the informal sector...The new spirit toward privatization and market oriented policies is likely to bring entrepreneurs into the formal sector where they can learn and be trained in the tools of modern finance, commerce, and management. As they become more skilled and educated in an environment of freedom and private enterprise they are bound to make significant contribution to economic progress of their nations.