Successful entrepreneurship in developing countries

A personal report on the mini-conference about women entrepreneurship in de development context last Friday.

Who and under which circumstances can one start a successful business? And what makes a successful entrepreneur in the first place? When you make enough profit to employ staff that provides them with a living as well? To be able to work and care for your family at the same time? Or having a business that besides a small profit provides solutions to social challenges?

I am lucky to have been part in building an independent youth sports organisation in Zimbabwe for 4 years. Sports teaches life skills like leadership and organising. Besides, we jointly managed to set up small business ideas that provides income for the organisation’s social activities and a few jobs. The fitness centre in one of Mutare’s townships is still effective and provides a living for 3 persons! What’s more – although due to economic circumstances in both Zimbabwe and the Netherlands (lack of funds) the sports programme supplies fewer activities – all sports leaders who I still meet through Facebook, have found a way to make a living apart from the sports programme. I believe they have learnt the skills and the art of seeing opportunities, either in business or in finding a job in a country with a (formal) unemployment rate of 95%!

Entrepreneurship as a solution
Governments and NGOs use entrepreneurship as the solution for the fall in financial resources and jobs. Ideally, government will provide enough jobs, and opportunity entrepreneurs (those who see opportunities and act upon it) will start successful businesses that will also provide jobs for those who do not have the skills, motivation or the innovativity that makes a good entrepreneur.
However, that is not the case in developing countries, where average 90% of the people take part in the informal sector, and is some kind of entrepreneur. And it is also not the case anymore in the Netherlands, with a growth in self-employed these days. Many of them you may call necessity entrepreneurs – those who start a business to survive. Merel Langeveld even calls it the biggest mistake of economists (and NGOs): the idea that everyone can be or wants to be an entrepreneur and can be successful in it.

Personal skills & tools
All literature, experts and management courses do agree: a successful entrepreneur needs a set of skills and tools that you can learn if they are not yet present. That are literacy, ICT skills, business plan writing, and management-, marketing- and accountancy skills. But also characteristics as being confident, decisive, perseverant, resilient and have the courage to take risks. Yvette van Dok cites a professor who reveals the more an entrepreneur is able to learn to recruit and expand a social network the more (s)he will be successful.
Tools that one needs are an innovative idea, a (social) business plan (including a strategy, a market investigation and a marketing plan), starting capital, and the means to manufacture or sell products (e.g. a computer).

Context can make or break success
An enabling (or disabling) environment influences an entrepreneur’s success. Poor entrepreneurs (or entrepreneurs in poor countries) are worse off: possibilities for finding capital, to safe money, or to insure risks are few, and only one hitch (drought, floods, a defaulter, a sick family member that needs money for medical care) can mean the end of your business. Women entrepreneurs are worse off too: in several countries in terms of education, and in some countries women are not allowed to have property (e.g. a bank account) or cannot inherit property, like land, and lack of access to property and power are the main pillars of poverty.
To take these contextual barriers to the very foundation: Martha Nussbaum mentions 10 essential capabilities for any human being to be able to develop as a person (let alone as an entrepreneur). For example a double workload (a job and doing the housework) for women causes a lack of time to be able to develop in terms of health, in terms of participation (political, in the community, in conferences or market opportunities) and so to be able to work on her essential network.

The art of entrepreneurship
There is more to business than the science (skills, tools) and access to its means, and that is the art of entrepreneurship, according to Merel Langeveld. It is up to discussion if one can learn an art, or if it is something from within. Art means being motivated, creative, innovative, inquisitive and be able to recognise and act upon opportunities. Or, as a YouTube movie showed questions: Is there a (small) Bill Gates in me?

Strategies to become a better entrepreneur
Management courses and business training usually only focus on the science of business. And NGOs usually train business skills without making a difference between opportunity- and necessity entrepreneurs. Merel Langeveld stresses the importance of a tailored-made training with eye for the target group (are they educated?, ICT literate?, confident? etc) and the context (the book Poor Economics mentions great examples). Since, life is more complicated than a blueprint.
One starts to wonder if entrepreneurship can be stimulated at all. On the other hand, the art of business as in creativity is not stimulated in African education as it is in the Netherlands. (Some) people will be able to improve creativity by role playing, learning by doing, or meeting role models. Another way for personal development is coaching of talent and support empowerment.
For non-creative entrepreneurs there is a middle course in micro-franchising, whereby the innovative idea is already there, and having the skills are sufficient to be able to run the business.

Some examples of strategies supporting entrepreneurship
Hivos is working on the skills-and-tools-side by providing coffee farmers (including 40% women) with train-the-trainer courses in coffee business which lead to 300% more yield, income rose by 66% and also the quality of the coffee improved impressively.
Banerjee & Duflo also see a solution in planning: an entrepreneur should think thoroughly about her (or his) future together with close family members about savings, investments, strategies, insurances, and pensions. The poorer you are, the more decisions you need to take, and it demands for far-reaching comprehensive planning and self-control.
Yente and Sundjata are working on the context-side: Yente lobbies for access to capital between €50.000 and €200.000, since that is the gap between microcredit and existing grants and loans. A gap that is especially hindering successful women entrepreneurs. Sundjata organises Senegalese women working in the informal sector for common goals to protect their legal and social position.
Talent Beyond Limits (in cooperation with Afrileads) is working on talent coaching, and shared a nice YouTube film of future women entrepreneurship.

Social Business
Looking at the world’s economic situation there is no doubt that entrepreneurship will have an important part in it, so we’d better do (or support) it well!
What makes a successful entrepreneur depends on the entrepreneur’s personal goals. For me the future is in social business. If business can tackle social challenges, it is not only about making money and providing jobs, but also about delivering output for the community or the environment, which is probably something we will start valuing more these days.

 

Sources:
o Mini-conference on women entrepreneurship in de development context (30 November 2012). Organised by Saskia Vossenberg  (Maastricht School of Management & Haagse Hogeschool) and WO=MEN in cooperation with Hivos, Yente, Sundjata, Merel Langeveld and svikaworks. Short summary.
o Creating capabilities. The human development approach. Martha Nussbaum. (2011)
o Poor economics. Banerjee & Duflo. (2011)
o Documentary: POOR US: AN ANIMATED HISTORY OF POVERTY (25/11/2012)

Comments

One Response to “Successful entrepreneurship in developing countries”
  1. Inemarie schreef:

    Netherlands-African Business Council (NABC) on LinkedIn:
    Thank you for your contribution and it is an interesting article. Very much appreciated. I would like to add to the article as it missed out an important aspect. It is not only governments and NGO’s that are using entrepreneurship, it is also the private formal sector, local and international that are engaging with the entrepreneurs to help them develop and to become formal businesses with sustainable business models fostering good employment.

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