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13.0 The Entrepreneurial Firm The External Environment: Entrepreneurs and entrepreneurship in Africa



(Journal of Developmental Entrepreneurship, Oct 2002 by Kiggundu, Moses N)

The third category of factors accounting for the success or failure of entrepreneurship is the external environment within which both the entrepreneur and the firm exist and operate. The external environment includes a number of sundry factors including local and national politics (Buame, 1996), the quality of public administration (Ng & Yeates, 2000; Svensson, 2000), personal and national security, militarism, family, society and culture (Dia, 1996; Sam, 1998). It also includes the market, technology, the physical environment, the regional and global economy and society (Kiggundu, 1989; Trulsson, 1997; Jorgensen, et al., 1986), and the prevailing industrial relations system. The individual and interactive effects of these factors on entrepreneurial success, varies across time and space. Drawing on the experiences of recent political and macro-economic reforms, it would appear that an enabling environment for entrepreneurial development is necessary, but not sufficient by itself, to sustain changes in entrepreneurial behavior and firm performance.

Government policies, attitudes, overall quality of public administration and service to entrepreneurship, or lack thereof, have long been blamed for entrepreneurial problems in Africa (Elkan, 1988; Kallon, 1990; Ng & Yeats, 2000; Svensson, 2000; Koop, et al., 2000; Rasheed & Luke, 1995). Ng and Yeats found that the African business climate is less favorable than other regions, which compete with Africa for trade and investment. Taxation, security of property rights, and the regulation of trade and other commercial activities are more restrictive in Africa than other globalizing regions. Koop et al observed that "the business environment in Uganda is tough" (2000, p. 64). Both Buame and Kallon reported that public attitudes and societal values in Ghana and Sierra Leone respectively are not supportive of the underlying values of capitalism in general and entrepreneurship in particular.

Kalabule (Ghana) and Magendo (Uganda) are two societal practices, which illustrate the challenges of African entrepreneurship. Kalabule and Magendo both refer to illicit, improper, or illegal business conduct. They are used to criminalize entrepreneurial activities in order to allow those in positions of control and influence to make quick and illegal money. According to Buame, Kalabule ruled in Ghana in the 1990s, and during that time, no commercial law, no banking law, no company law, and no laws of ethics were in force. Lawlessness and corruption inflicted people in different occupations including taxi drivers, managers, police officers, military personnel, teachers and public servants. In addition to undermining the legal framework and the national integrity and regulatory system, both Kalabule and Magendo undermine trust and confidence among the entrepreneurs, which form a critical part of the foundation for private enterprise (Langseth & Stapenhurst, 1997; Pope, 2001). Practically every African country has its own version of Kalabule and Magendo at great cost to the entrepreneurs, the general economy, public administration, and the wider society. Reforms aimed at eliminating Kalabule and Magendo are not only good for the small entrepreneur trying to survive in a tough business environment, they ultimately help to define and shape the future of the continent, and its place in the global economy and global society. Table 1 lists the correlates of entrepreneurial success relevant for the external environment.


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