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08 - 15 June 2005 
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Development

Poverty a potential for growth

Is Africa investing in difficult options to development? In a keynote address to delegates at the SIFE World Cup competition on entrepreneurship, Mr Jack Shewmaker, a former chief executive of Wal-Mart, America’s largest retail chain, said: “Entrepreneurs try easier, they do not try harder; entrepreneurship is about being smart.” To be successful, Shewmaker said, an entrepreneur needs to define what is around him without prejudice, then look at the global perspective in order to move on.

Narrating his personal story, Shewmaker, now a millionaire, talked about his previous job of ‘candling eggs’ – holding eggs over a candle to determine whether they were good for sale. An odd job when ones look at it through a modern prism, but it earned him a wage nevertheless. This is a job that has already been phased out in most parts of the world by technology.

Individuals and countries ought to focus on the jobs of the future. We don’t need to invest time in protecting egg-candling employees, or even those who carry grocery on their backs instead of wheeling it. To an entrepreneur, there is no such a thing as a problem. “…entrepreneurs have no time for negativism, there is no such thing as a problem; everything is just an opportunity” said Shewmaker. All that one needs to do is identify his goal and hold himself accountable. People must learn to move out of their comfort zones and take risks. Good entrepreneurs take the least traveled road; playing it safe will not spur prosperity in Africa.

For Kenya, and by extension Africa, entrepreneurship is understood to mean activities carried out by the illiterate and the uneducated. The ‘Jua Kali’ (open air market) sector predominantly focuses on modifying items for household use. The education system is designed to produce workers and not innovators. Most people follow pre-set manuals to the already existing products that may not necessarily fit the needs of the continent. Very few individuals are willing to risk and venture into the uncharted seas of economic opportunity. Arguments to the effect that the developed countries have flooded the markets of poor countries, thus stifling their creativity are not uncommon. This is by all counts a fallacy? In a continent where people fetch water from a river tens of kilometers away, children suffer malnutrition, diseases are rampant and people die of starvation every year, entrepreneurs shouldn't be a rare breed to find

A few years ago, it was unthinkable that one would buy bottled water, use a bicycle taxi for town travel, and eat in a restaurant, because culture insisted that one must only eat food prepared at home. Savvy entrepreneurs have managed to convince people to change their perception. A leading economist, Mr Joseph A. Schumpeter, once argued that, “it is however, the producer who as a rule initiates economic change, and consumers are educated by him if necessary; they are, as it were, taught to want new things, or things which differ in some respect from those which they have been using.”

According to a report edited by Arne Bigsten and Peter Kimuyu on “Structure and performance of manufacturing in Kenya,” distribution of business ownership among different populations indicate that no African population owns corporations, 18.5 percent own limited liability companies, 13 percent own partnerships, while 67.4 percent sole proprietorship. The Asian population on the other hand has 1 percent owning corporations, 71.4 percent limited liability companies, 18.1 percent are in partnerships and 9.5 percent in sole proprietorship. European population 14.2 per cent own corporations, 42.9 limited liability, while none are in partnership and 42.9 percent own sole proprietorship.

If one was to carry out a study on “political ownership” in Kenya, the reverse would be true. Common sense would hold that a poor continent should have the majority of her intellectuals and thinkers focusing on wealth creating ventures. Not so in Africa. It is true that the African’s limited ability to access finance and human resources has largely chained him to low-level enterprises, but entrepreneurs are not known to give excuses. The few Africans who have accumulated capital have ended up in politics. Others have stuck in micro and small enterprises to escape taxation. As Jack Shewmaker observed: “You cannot tax success in order to build more success.” Another reason why entrepreneurship in Africa is low is because of government involvement. Governments in Africa are struggling to own businesses and corporations instead of getting them privatized so that they can be run by entrepreneurs.

The key to economic prosperity in Africa is certainly the African people. Left free to solve their own problems, free to choose solutions on their own, Africans will definitely turn poverty into opportunity. Africans must take responsibility and steer the continent to greater heights of prosperity. This can be done through resolving the twin dilemmas facing the continent on property rights issues as concerns land and facilitating a more peaceful and productive way to solve the crisis. This can be done through reverting land owned by the government to communal ownership as a transitional strategy towards individual ownership. Property ownership should be treated as sacred by law and must be respected by politicians. A greater drive towards individual ownership that respects gender, tribe and race must be prioritized.

Creating incentives for both local and foreign investors must be encouraged. To focus only on external investment may not necessarily create a critical mass of consumers needed to spur economic growth. Africa needs to improve on her physical and legal infrastructure that can facilitate both an increase in production and consumption. The legal reform must ensure that contracts are enforced and disputes resolved in an efficient manner. Government to government aid has tended to promote the political industry as opposed to the productive manufacturing, agricultural and service industries critical to economic development. Ways should be explored to facilitate access to credit by innovators and business people in Africa. Other than pushing for more aid, Africans should push towards access to technology that will promote food productivity, health and efficiency.

Self-confidence is a must if Africa is to make progress. Lack of confidence not only compromises wealth creation but limits risk-taking, leading to many people sticking to comfort zones. For Africa to develop, people must urgently seek to travel the least taken routes. Africans must promote intra-Africa trade in order to spur low-level production and consumption as a step towards international market entry. Africans must join Jack Shewmaker in saying “I am only interested in what I can do, not what people think I cannot do”.

 



By James Shikwati
Mr. Shikwati is the Director of Inter Region Economic Network


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