9.0 The Entrepreneurial Firm Organization Form: Entrepreneurs and entrepreneurship in Africa

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

There are many entrepreneurial activities and firms in Africa because selfemployment is a key driving force. Most of these are very small in size which makes them vulnerable. Failure rates are quite high, especially in the first two to five years. Women dominate the small and micro enterprises (SMEs) sector, both as owners and workers. Paid employment is limited, and the entrepreneurial activities' overall contribution to family income is limited; often below minimum wage levels. Thus, most of these entrepreneurs will remain poor (Horn, 1995). Most of these activities are located in rural areas, where mortality rates are also high (Charmes, 1999; Mead & Liedholm, 1998). While Kallon (1990) reported that Sierra Leone rural firms were more profitable because of competition in the urban areas, Mead and Liedholm (1998) reported that rural firms suffer from high mortality rates especially during the first five years.

Commerce (trading, vendors) dominates this sector, but manufacturing and services are gaining prominence, especially in the rural areas. Successful firms are more likely in manufacturing, rather than trading or services. Productivity and the capacity to innovate, to introduce new technology, and to manage strategically are related to owner entrepreneurial competencies, enterprise size, location, and networking or clustering.

In summary, there is no shortage of entrepreneurs or people willing to take risks to start business activities. Most of these are very small one-person operations mostly in the easy-to-enter trading and service sector, which is also the least profitable. They provide only a limited range of services or products, and do not innovate either by way of new products /services or markets. The more the macroeconomic conditions worsen, the more of these micro enterprises open up because they are predominantly a push type.



To learn more about this author, visit Journal of Development Entrepreneurship's Website.

Like this article? Share it with your friends

Related Articles
1.0 What is known and what needs to be done: Entrepreneurs and entrepreneurship in Africa
	This article summarizes what is known about entrepreneurs and entrepreneurship in Africa using three broad categories: The Entrepreneur, The Entrepreneurial Firm, and The External Environment.
12.0 The Entrepreneurial Firm Corporate Governance: Entrepreneurs and entrepreneurship in Africa
	Very few studies of entrepreneurship concern themselves with corporate governance. This is particularly true in Africa where by far the majority of entrepreneurial firms are very small and operate in the informal se...
14.0 What Needs to be Done - Producing Useable Knowledge: Entrepreneurs and entrepreneurship in Africa
	The way forwarded should be guided by four key strategies. These include generating useable knowledge, producing better research, scaling up, and mainstreaming entrepreneurship. Each is explored below.
SME's - still a strong component in the South African economy
	Despite the educational crisis in South Africa, entrepreneurship is thriving, albeit not the way it could be!
18.0 Conclusion: Entrepreneurs and entrepreneurship in Africa
	Ultimately, the future of entrepreneurship in Africa must be in the hands of the Africans themselves.

---

Related Forum Posts
	Young Entrepreneur Organization - All You Need To Know
	Book: The Essentials of Entrepreneurship: What it takes to c
	What do you do to give back?
	My Favorite Entrepreneur – created by Armand Rousso
	Famous Entrepreneur Schedule
	Kiva
	Giving back
	Re: My Favorite Entrepreneur – created by Armand Rousso