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Survival and Entrepreneurship: The Forest Products Entrepreneurs of
Southern Malawi
By E. Brad Hager, Ndalapa Mhango, and Tom HammeB
Current Topics in Forest Products MarkeEng Research Forest Products Society 65th InternaEonal ConvenEon
Portland, OR ‐ June 21, 2011
Outline
• Background • Study goal and objec5ves • Methods • Implica5ons • Future ac5vi5es
“The Warm Heart of Africa”
Challenges • Poverty (53%) • Least Developed Country Status • HIV/AIDS Pandemic
Forest Products
• Important source of income • Much hidden in informal sector • Low technology‐inefficiency • Na5ve tropical hardwood resources exhausted
Goal of Project Determine if entrepreneurship exists in Malawi’s very distressed economic environment and if so, what are the characteris5cs.
ObjecEves 1. Iden5fy
– Driving Mo5ves – Key Success Factors – Current Marke5ng Prac5ces – Major Challenges/Obstacles
2. Develop Recommenda5ons
Entrepreneurs Sub‐Saharan Africa
• Nature of entrepreneurship varies by socio‐cultural context
• Informal sector or hidden economy
Methods • In‐depth interviews
– Story telling – Average 42 minutes
• Respondent‐Driven Sampling – Access “hidden economy” – “Include” key groups rather than a “representa5ve sample”
Forest products parEcipants (15 of 35)
• Sawyer/5mber suppliers (4) • Furniture manufacturers (4) • Coffins and cabinets (3) • Wooden fishing boats (1) • Toys and cra^s (3)
Categorizing by MoEves 1. Necessity‐driven: forced into self‐
employment by necessity 2. Opportunity‐driven: drawn into
self‐employment by desire 3. High ExpectaEon: opportunity‐
driven; poten5al for large impact
Clusters (all par5cipants)
Clusters (forest products producers)
MoEves • Mo5ve based entrepreneur types “cluster” by educa5on level and business experience
• Vast majority have primary level educa5on; most entrepreneurs are likely necessity‐based
Key Success Factors • Honest business prac5ces • Nego5a5on skills • Adequate finances • Financial management skills • Voca5onal training
MarkeEng PracEces • Promo: On‐site signs and word of mouth (reputa5on is crucial)
• Place: Must be near customers as public transporta5on difficult
• Price: Nego5a5on/price sensi5ve • Product: Must meet basic needs without unnecessary features
General Challenges • Access to start‐up capital • Business training desired by lending ins5tu5ons unavailable
• Customers have lible disposable income in distressed markets
• Bureaucracy and local corrup5on
Wood‐Related Challenge 1. DeforestaEon (mountain was forested five years ago)
ImplicaEons: • Rapid increase in wood costs • Need to use less desirable species
Wood‐Related Challenge 2. Lack of Wood Drying Technology: Use of green or poorly air‐dried lumber in furniture produc5on
ImplicaEons: • Poor product quality limits access to more lucra5ve markets
• Wood lost in drying process
Wood‐Related Challenge 3. Lack of Basic Power Hand Tools: Much of the manufacturing u5lizes basic hand saws, planers, etc.
ImplicaEons: • Again poor product quality limits access to more lucra5ve markets
• Inconsistent products characteris5cs
Response to Challenges InnovaEon: Use of electric fan motor, leather belt, and hand file to create a lathe (improvise)
Response to Challenges InnovaEon: Learn to u5lize and plant non‐indigenous species
Ques5ons?
Comments?
Thank you!
Tom Hammeb Virginia Tech [email protected]