The ‘new generation of African entrepreneurs’: …users.clas.ufl.edu/aspring/publications/New African...The ‘new generation of African entrepreneurs’: networking to change

The ‘new generation of African entrepreneurs’:networking to change the climate for businessand private sector-led development

BARBARA E. MCDADEy and ANITA SPRINGzyDepartment of Geography, University of Florida, Gainesville, Florida, USA;

e-mail: [email protected]

zDepartment of Anthropology, University of Florida, Gainesville,

Florida, USA; e-mail: [email protected]

This paper discusses the entrepreneurial landscape in Africa and locates a new generation ofAfrican entrepreneurs and their business networks within it. Unlike others in that landscape(i.e. micro- or small-scale informal sector vendors, and traditional or multinational large-scaleformal sector firms), the ‘new generation’ entrepreneurs are business globalists who organizeda system of business enterprise networks consisting of national, regional, and pan-Africanorganizations. The study analyses interview data from 57 men and women network membersfrom 10 countries (Botswana, Ethiopia, Ghana, Kenya, Mali, Senegal, South Africa, Uganda,Zambia, and Zimbabwe). Some defining characteristics of these entrepreneurs are interactivesocial and business relationships, use of modern management methods and informationtechnology, trust among fellow members, transparent business practices, advocacy on behalfof the private sector, and commitment to increasing intra-African commerce. Their mission isto improve the climate for private sector business in Africa and to promote regional economicintegration. They pursue cross-national commercial ventures, maintain official observerstatus at established regional economic organizations, sign memoranda of understanding withmultilateral agencies, establish venture capital funds, and help to change government policies.The paper identifies characteristics of the ‘new generation’ entrepreneurs, evaluates goals andachievements of their networks, and concludes that despite limitations, these entrepreneurs andtheir organizations have created intra- and cross-national networks that strengthenprivate-sector-led economic growth in Africa.

Keywords: entrepreneurship; private sector; business networks; Africa

1. Introduction

The study of entrepreneurship and indigenous private enterprise is a significant com-ponent of research on economic development in Africa (Spring and McDade 1998,Bowditch 1999, Choudhury 1999, King and McGrath 1999, Kinunda-Rutashobyaand Olomi 1999, Agbaw 2000, Mshomba 2000, Fick 2002, Jackson 2002, McDade2003, Murinde and Woldie 2003, among others). Most research focuses on entrepre-neurs who operate micro- and small-scale enterprises in the traditional informal andformal sectors. Much less has been written about entrepreneurs who own and operatemedium- and large-scale businesses in the modern formal sector. This paper considersthis segment of entrepreneurs, specifically focusing on a new entrepreneurial groupin the landscape who founded a system of regional enterprise networks in response

ENTREPRENEURSHIP & REGIONAL DEVELOPMENT, 17, JANUARY (2005), 17–42

Entrepreneurship and Regional Development ISSN 0898–5626 print/ISSN 1464–5114 online# 2005 Taylor & Francis Group Ltdhttp://www.tandf.co.uk/journals

DOI: 10.1080/0898562042000310714

to liberalized economic and political conditions, which they perceive provideeconomic and professional opportunities in Africa. With donor funding assistance,they organized 31 national, three regional, and one pan-African business networksin West, East, and Southern Africa. The objective of these networks is to expand intra-African business activity and investment, and to help to create a more favourableclimate for the private sector. These entrepreneurs are highly educated men andwomen who have prior work experience in formal sector firms in Africa and elsewhere,and they have a global outlook. This study looks at this small, but potentiallyinfluential segment of the business community, who describe themselves as the ‘newgeneration of African entrepreneurs’.

In the interdisciplinary volume African Entrepreneurship: Theory and Reality (Springand McDade 1998), various authors examined a spectrum of entrepreneurs rangingfrom illiterate owners of micro-enterprises to wealthy founders of large manufacturingfirms and their MBA-educated managers (Hart 1972, Beveridge and Obserschall1979, Jalloh and Falola 2002). Then, in 1999 and 2000, several African entrepreneursattending a major trade and investment symposium in the USA identified themselvesas members of the ‘new generation of African entrepreneurs’. They used cell phones,laptop computers, international credit cards, and e-mail accounts. Most had earnedbachelor or graduate degrees, many had managerial or ownership experience in majorformal sector companies. Some were members of three recently established regionalenterprise networks of business people whose objectives are to exchange informationand facilitate business linkages among network members within countries, amongthe regions, and in the global arena. Many network members had travelled abroadto study and work, then returned to Africa to pursue business opportunities ratherthan remain in lucrative jobs overseas. A literature review revealed a paucityof publications on this segment (see below for a review). This paper expandsthe study of African entrepreneurship, identifies the characteristics (demographic,attitudes, practices) of the entrepreneurs, and evaluates their goals and accomplish-ments with respect to intra-Africa trade, advocacy for the private sector, and creationof venture capital funds. It analyses their efforts to improve the climate for businessin Africa and to increase regional business activity.

The entrepreneurial landscape in Africa is discussed in the next section, which alsointroduces the new generation entrepreneurs and their network organizations.The data collected and the methods used to analyse them follow in section 3.Sections 4 and 5 present findings about the characteristics of the new generationentrepreneurs and the national, regional, and pan-African enterprise networks,respectively. Section 6 reviews a comparative survey of network members; section 7assesses the entrepreneurs and their networks. Conclusions are given in section 8.

2. The entrepreneurial landscape in Africa

The entrepreneurial landscape in Africa ranges from a multitude of micro-enterprisesthat provide marginal employment for a single individual to a small number of largecorporations employing hundreds of people; an assortment of businesses spanthese extremes. The configuration includes informal and formal sector businesses,traditional and modern, indigenous and foreign-owned enterprises geographicallydispersed in rural and urban areas.

18 BARBARA E. MCDADE AND ANITA SPRING

2.1 Microentrepreneurs in the informal sector

Only 2% of all African businesses have 10 or more employees (Spring and McDade1998, Manu 1999). The majority are micro and small-scale enterprises (MSEs) thatconsist of one to three employees (Daniels et al. 1995, Kibera 1999, Jalloh and Falola2002), mostly in the informal sector. There is no conclusive definition of the informalsector, although the term has been in existence since the 1970s. Initially, it referredto unregistered, unregulated businesses, including service enterprises (e.g. hairdressing,commercial transportation, auto repairing, etc.), production activities (e.g. furniture,metal equipment manufacturing, etc.), and vendoring (e.g. food, clothing, medicines,etc.). Charmes (1999) estimates that the informal sector contributes 20% to 40%of total GDP in several African countries, and 40% to 60% of non-agriculturalGDP. However, in spite of support from donor agencies and non-governmental agen-cies (NGOs) over the past 30 years, the expected growth and transition of mostinformal sector MSEs into medium- or large-scale enterprises has not occurred(K’obonyo 1999, Spring 2002).

There are many studies of MSEs (MacGaffey 1987, Clark 1994, Arnould 1995,Robertson 1997, Aspaas 1998, Spring and McDade 1998, Jalloh 1999, Adenikinjuet al. 2002, Jalloh and Falola 2002) and of women marketers (see below). There arealso non-agricultural MSEs (e.g. manufacturing roof tiles, furniture, metal tools, etc.,in both urban and rural areas). Ownership of MSEs is overwhelmingly by blackAfricans (Schulpen and Gibbon 2001).

2.2 Micro- to small-scale enterprises in the formal sector

Recognizing the important role of the informal sector in providing goods and servicesfor the domestic market, governments and NGOs attempted to formalize themby providing sites (e.g. market spaces and industrial districts) and offering services(e.g. microfinancing, utilities, and skills training). Informal businesses were sometimesconveniently reclassified as ‘formal’ so that municipal governments could registerand tax them. These small enterprises face many obstacles to growth including:(1) difficulty in attracting investment capital and gaining access to markets;(2) isolation and lack of productive linkages with other businesses; (3) lack of businesstraining and expertise for both owners and employees; (4) severe competition; and(5) their customers’ low incomes. In Africa, half of the small-scale formal enterpriseswith more than 10 employees are owned by residents of Asian and Middle Easterndescent (Schulpen and Gibbon 2001).

2.3 The role of gender in the entrepreneurial landscape

African women entrepreneurs are the primary provisioners of domestic food suppliesin both rural and urban areas. Most women-owned businesses are micro- and small-scale enterprises in the informal sector (see, for example, Clark 1994, Horn 1994,House-Midamba and Ekechi 1995, Robertson 1997, Aspaas 1998, Snyder 2000,Mandel 2003). A study of 50 000 MSEs in Southern and Eastern Africa duringthe period 1990–98 showed that 48% were owned by women (Mead 1999).The percentage of women owners and managers in the formal sector was considerably

A NEW GENERATION OF AFRICAN ENTREPRENEURS 19

smaller (Agbaw 2000). Even in the modern formal sector, some women entrepreneursfeel impeded by the ‘gender divide’ that prevails in most African countries (Hagos2000). Snyder (2000) interviewed Ugandan women entrepreneurs who establishedand operated successful businesses that run the entire spectrum of the entrepreneuriallandscape. These entrepreneurs include market women (who sell everythingfrom water to curtains), manufacturers of leather shoes, owners of private clinicsand supermarkets, hoteliers, and tourism industry operatives. She concludesthat despite the positive impacts of women’s activism, the majority of Africanwomen face gender disparities across all socio-economic and political indicatorsof development.

2.4 Medium-scale African firms

A small, large-scale sector and a large, small-scale sector characterize most Africaneconomies. In between is the medium-scale sector (Olomi 1999), which has beencalled the ‘missing middle’ in African economies (Esbin 1994, Ferrand 1996,Kibiriti 1999, EnterpriseAfrica 2000: 10). However, a study of modern African entre-preneurs in six countries (Botswana, Cote d’Ivoire, Ghana, Kenya, Malawi, andTanzania) profiled medium-scale firms and concluded that ‘the middle is not missing’(Marsden 1990: 5). For example, it identified 5000 formally registered road transportcompanies in Tanzania, and reported that over 2000 Ghanaian businesses applied forloans from financial institutions where the average investment project funded was$1.5 million. These are not micro- or small-scale enterprises. Snyder’s study (2000)revealed a small but growing segment of women owners of medium-scale businessesin Uganda. Some of these women formed business associations to take advantageof the Ugandan government’s recent private sector-friendly policies. The AfricaProject Development Facility of the World Bank’s International FinanceCorporation (IFC) has funded medium- and large-scale African enterprisesfor more than a decade (EnterpriseAfrica 2000).

2.5 Large-scale enterprises in Africa

Medium- to large-scale formal-sector enterprises owned by Africans are an importantpart of the entrepreneurial landscape in spite of their small percentage. History showsthat in most African countries, colonialism stifled the growth of an indigenous formalprivate sector. After independence, some African governments limited the expansionof businesses owned by indigenous entrepreneurs. Government leaders were suspiciousthat a strong private sector comprised of their own citizens might threaten theirown powers and privileges (Business in Ghana 1996, Gray and McPherson 2001,Wohlmuth and Wauschkunh 2001, Jackson 2002, Murinde and Woldie 2003).Hence, during the 1960s to 1980s, many African states stepped into the role of businessowner. State-owned enterprises (SOEs) assumed the responsibility of buildingthe infrastructure of newly independent countries to meet the demand for goodsand services (Agbodeka 1992, McDade 2003). Most SOEs were unproductive andfailed, so by the late 1980s, many African governments abandoned this strategy.They turned to donor-driven policies that promoted private sector-led economicdevelopment (Arzeni 1997, Thornton 1999, Coulter 2000, Premaratne 2001).


The SOEs were sold to civil servants or businessmen, many of whom came to be knownas ‘business bureaucrats’, who depended on the patronage of governments to remainviable (Janssens-Bevernage 2002: 12). During the 1980s, donor mandated structuraladjustment programmes (SAPs) called for economic liberalization to open domesticfirms, both private and state-owned, to external competition.

Most large firms in Africa manufacture beverages, clothing, furniture, rubber,leather products, plastics, soap/toiletries, pharmaceuticals, or are in constructionand transportation (Todaro 2000, Schulpen and Gibbon 2001, Adenikinju et al.2002). Many of these large-scale firms in Africa are owned by ethnic minoritiessuch as Asians, Syrians/Lebanese and Europeans. There are also multinationalcompanies. Indigenous Africans own one-third or less of large industrial firms.The amount varies among countries. In Kenya black Africans own only 3.6%of large firms, whereas in Zimbabwe the percentage is more than 30%(Ramachandran and Shah 1999).

2.6 The ‘new generation of African entrepreneurs’

The new generation entrepreneurs in this study are members of enterprise networksthat began in 1993 with the formation of the West African Enterprise Network(WAEN), followed in 1998 by the East African Enterprise Network (EAEN) andSouthern African Enterprise Network (SAEN). Each regional network is comprisedof national networks. WAEN consists of national networks from 13 countries in WestAfrica, EAEN has seven in East Africa, and SAEN has 12 in southern Africa.1

A regional enterprise network was not established in Central Africa becauseof the ongoing conflict in the Democratic Republic of the Congo. In 2000, the pan-African Enterprise Network (AEN) was formed at the Millennium Conferencein Addis Ababa. The objectives of these networks are to strengthen private sectorregional co-operation in African countries, develop and expand formal commerceand trade among businesses regionally and globally, and to work with governmentsto change policy and regulatory environments through advocacy strategies (WAEN1993, Orsini et al. 1996, Orsinsi 2001, Wohlmuth and Wauschkunh 2001, Janssens-Bevernage 2002). Although the networks’ total membership is a tiny fractionof entrepreneurs in Africa, these entrepreneurs have influenced business practicesin their countries and trade and regulatory policies as discussed below.

These networks and their members are nearly invisible to most scholars who studyentrepreneurship and economic development in Africa. A literature review revealedonly six publications in which the networks were the primary focus of study: twoarticles (Orsini et al. 1996, Janssens-Bevernage 2002); two book chapters (Wohlmuthand Wauschkunh 2001, Spring 2002); and a book in which several members werefeatured (Fick 2002). Additional information about the networks and their memberscan be found in their newsletters (EAEN 1998, 1999, 2000, SAEN 1999); magazinearticles by network members (Kibiriti 1999, 2000); regional networks’ websites,2 andspeeches/reports from conferences and funding agencies (Courcelle and de Lattre1996, Orsini 1999, Orsini 2001, Light and Chibembe 2003).

Start-up funding to capacitate the national and regional networks was providedby the United States Agency for International Development (USAID) followedby the European-based Organization for Economic Cooperation and Development(OECD). Belgium, France, and Switzerland also contributed funds. A consultant


from USAID, who was later joined by another from OECD, co-ordinated the networkstart-ups. They met with young educated, formal sector entrepreneurs and identifiedpotential network members from workshops, business organizations, embassy lists,agencies, and personal contacts. Meetings and training workshops were heldin each country to recruit members and organize national networks (Courcelle andde Lattre 1996).3

3. Data samples and research methods

The purpose of this study is to: (1) identify the demographic characteristics,behaviours, and ideologies/attitudes that collectively distinguish these entrepreneurs,and (2) examine how they use the enterprise networks to accomplish their goals andobjectives. The data are based on the authors’ research consisting of interviews with57 network members from 10 African countries. This sample represents slightly morethan 10% of the total membership of the three regional networks. During the periodin which the interviews were conducted (2000 to 2004), the networks had about550 members. Additional information on the origin, organizational structure, andoperations of the regional enterprise networks was obtained from their newsletters,websites, as well as from interviews with officials and members of other businessand economic development organizations in the relevant countries.

The national networks included in this study are those of Ghana, Senegal, Mali,Ethiopia, Kenya, Uganda, Botswana, South Africa, Zambia, and Zimbabwe. Theywere selected for the following reasons. In West Africa, Ghana formed the firstnational network and served as regional headquarters; Senegal was the siteof the regional secretariat; Mali is an active network with strong connectionsto the secretariat. In East Africa, Ethiopia’s network served as regional and pan-African headquarters, Kenya is the economic hub of East Africa; Uganda wasthe first EAEN regional headquarters. For southern Africa, Botswana was initiallythe regional headquarters; and South Africa is the regional trade giant. The authorsvisited these seven countries to interview network members. One of the authorsinterviewed members from the Zambian network (the subsequent regional headquar-ters) and the Zimbabwean network at a pan-African Network conference in Ethiopia.A colleague of the author’s in Mali interviewed two network members. Table 1 showsthe number of network members interviewed out of the total national membershipby country. Most interviews were conducted from 2001 to 2003. Additional informa-tion was obtained from interviews in 2004 with members from Botswana, Ghana andEthiopia.

Network members were contacted by mail, fax, and telephone. Telephone landlines were often non-functioning, so cell phones provided direct access to businessowners. Names and businesses of most network members were obtained from eachnetwork’s website while they were operational. Others were referred by members.Data on individual entrepreneurs and their businesses were obtained from personalnarratives. Table 2 lists the open-ended topics on personal/professional backgroundsand entrepreneurial strategies that guided the interviews. Heads of the country/regional secretariats were interviewed for their perspectives on structure, operationalactivities, and organizational constraints. Data from the narratives were analysedusing WINMAX� (a software programme that organizes qualitative data intodesignated categories) to construct profiles of network members and the regional


networks.4 Profiles are based on demographic characteristics, business activities,behaviour, and network relationships. To understand the business climate in thecountries involved, other business persons and financial and donor personnel wereinterviewed.5 Secondary data were collected from publications and the Internet.

4. Findings: profiles of network members

4.1 Demographic characteristics of network members

This section considers age, education, international experience, ethnicity, gender, andfamily background. Most new generation entrepreneurs were relatively young(late 20s to 40s) when the networks were established. Network members are highlyeducated. In the sample, 92% attended college and half earned advanced degrees(MAs, MBAs, JDs, and PhDs). The majority (85%) were educated abroad and somehad held professional positions at firms in the USA, UK or Europe. They returnedto Africa during the past 10 years in what has been referred to as a ‘reverse Diaspora’to start their own firms (Orsini 2001: 22). Although they profess a global outlook,network members’ personal and professional orientation is focused on ‘making it’in Africa. Some observed the struggles of parents or other African emigrants livingas ‘foreigners’ overseas, and thought that in spite of the economic conditions in Africa,they would have an advantage in their own countries. A Kenyan network memberwho studied in India and the UK was anxious to return to Nairobi to start a businessafter receiving his MBA. A Ugandan network member received a permanentresidency ‘green card’ through the US State Department’s diversity lottery butresides in Kampala and uses her visa to facilitate business travel to the USA.Another disregarded his father’s advice against returning to Ghana during difficulteconomic conditions in the mid-1990s but reported that he had never regrettedcoming back.

Table 1 Network members interviewed (n¼ 57) by business position, acquisitionand business enterprise.

Country

n¼ 57 Members

interviewed

National network

membership

Business position Business acquisition Business enterprise

Owner Manager Self Family SOE* Single Multiple

Botswana 6 14 6 6 4 2Ethiopia 3 7 2 1 1 1 2Ghana 13 45 13 9 3 1 9 4Kenya 11 11 11 10 1 8 3Mali 2 17 1 1 1 1Senegal 5 18 5 5 3 2South Africa 6 10 5 1 5 5Uganda 8 10 8 6 2 6 2Zambia 1 10 1 1 1Zimbabwe 2 8 2 2 2Total 57 54 3 46 6 2 39 15Percentage 95 5 85 11 4 72 28

Source: Authors’ data.

*State-owned Enterprise.


There is no database on racial or ethnic categories of network members.The majority are black Africans; we met an Asian (Indian) in each of the Kenyaand South African networks, one white in South Africa, and an Arab Sudanesein the Ghana network. Members view themselves as part of an urban communityof business and professional people rather than of a particular ethnic groupor geographical area. One member from Uganda said that, contrary to traditionalAfrican views, each person has a rural village to call home, ‘Most of us were born herein Kampala and will live and die in the city’. As populations in capital cities haveincreased dramatically, the middle and upper classes, as well as the urban poor,are several generations removed from their rural villages. Most middle and upper

Table 2 Interview narrative discussion topics for network members.

Narrative questions category Topic

1. Identification NameTitleAddress

2. Demographic information GenderAgeEducationFamily backgroundMarital status

3. Business profile/description Business typeLocal/national/internationalBusiness history

4. Member’s business background Previous business experienceOther businesses owned

5. Principal business transactions Management methodsEthicsTrust

6. Business constraints LocalNationalRegional

7. Business enablers LocalNationalRegional

8. Business support operations AdvertisingMarketingInternet usage, websites

9. Regional enterprise How started in national/regional networkNetwork membership Direction of national /regional network

Expansion of national /regional networkObjectives and activitiesAchievementsFuture goals

10. Professional connections/networking Local/nationalRegionalInternational (outside Africa)

11. Membership in other organizations ProfessionalBusiness

12. Women’s and gender issues Interactions with other membersCredit and financingLeadership

13. Future business goals Directions and plansVisions


class urban residents attend universities, live cosmopolitan lives, and haveprofessional occupations. Network members fall in this category. Those members inagribusinesses may work in offices on their farms, but they reside in the nearby cities.Social and professional relationships among members form across kinship, ethnicand spatial lines.

Women comprise 23% of total network members. Our sample consists of 33%women members because we sought out women members to learn of their businessexperiences. The number of women in the networks varies from 40% of the 45members in Ghana to none among Ethiopia’s seven members. The nationalchairs of several country networks are women (Botswana, Kenya and SouthAfrica). Women members say that their gender is not disadvantageous to theirstatus in the networks or their business relationships with other members.All of the women network members own or manage formal sector companies.Women, they note, face different issues in society at large such as childcareresponsibilities, restricted access to credit and land ownership, and gender bias.Network members try to address these issues. They act as spokespersons forwomen’s issues in their countries, sponsor training courses for women entrepreneurs(from micro- to medium-scale businesses), and hire female managers. Othershave assisted women market traders with bookkeeping skills (Spring 2002).However, their primary focus, like their male counterparts, is on innovating andexpanding their own businesses. Some women confided that one of the benefits ofjoining the networks is the opportunity to interact with other business women whoshare similar views and experiences.

Female network members complain that donors and even scholars do notdifferentiate the segments of the entrepreneurial landscape in Africa. Instead, theylump new generation entrepreneurs with micro-entrepreneurs in the informalsector. For example, a woman from Uganda declined an invitation from adonor agency to join a weekly forum with traditional micro-enterprise womenentrepreneurs. It is likely that the advice and assistance that she sought toupgrade and expand her business would not be found in this group. The enterprisesof these network members fall into a gap that is served neither by donors nor byfinancial institutions. Donor agencies provide small loans (e.g. US$50–$100) tomicro-enterprises; banks loan multimillions to large corporations; but the medium-sized loans (US$50 000 to $1 million) that they seek are hard to obtain.Women network members sympathize with micro- and small-scale entrepreneursin the informal sector but suggest that there are many organizations that focuson this segment. Some network members work with female micro-entrepreneurs.For example, in Ghana and Uganda, female network members helped to revisemunicipal zoning regulations to benefit market women. In Uganda, a networkmember buys wholesale products for her company from village women. Networkmembers, in general, recognize the important role that the large informal sectorplays, and realize that improvements in the business/economic climate will benefitall levels of businesses.

About 75% of both male and female network members are married and havechildren. Their spouses own other businesses or share ownership in the samecompany. About one-third (31%) have parents who are/were business owners,and 17% have parents who are professionals. Parents of the others are/were civilservants, government officials, and politicians.


4.2 Attitudes of network members

Network members were queried about their visions for the future, attitudes towardtheir professional lives and network membership, their perspectives on businessenablers and constraints, and on Africa’s economic prospects. A discernible qualityis their almost palpable optimism: they are enthusiastic about their businesses andeconomic development prospects. This was somewhat of a surprise to the authorsgiven the existing economic conditions in Africa. The network members wereoptimistic about the mission of the regional enterprise networks. However, by 2004,concerns over distribution and control of donor funding clouded WAEN’s andEAEN’s relationship with the donors. As a result, funding for the regional secretariatsceased (McDade’s personal communications 2004). SAEN continues to be funded andactive although some of its constituent national networks are now inactive. The entre-preneurs, for the most part, have continued their professional and business relation-ships with each other despite the demise of official activities in the regional networks.

The following themes emerge from an analysis of the interview data: (1) the import-ance placed on financial transparency and ethical business behaviour; (2) thepractical significance of organizational management; (3) initiatives to obtain informa-tion and update technology; (4) trust of fellow network members; (5) the desireto expand intra-Africa and South-South trade and investments; (6) the consistencyof members with optimistic, ‘can-do’ attitudes; and (7) establishing co-operativerelations with government, but abstaining from patronage and rent-seeking.Network members say that these are guiding principles that they try to incorporatein their business and professional activities.

Compared to network members, other African entrepreneurs interviewed seemto be just as hard-working and committed to success, but they express more pessimism(or certainly less optimism). They anguish over business constraints such as the pov-erty in their countries, poor infrastructure, political and/or regulatory instability,inadequately trained work-force, effects of HIV/AIDS on employees, and corruption,among other things. They say that they feel powerless to change these conditions.Network members, by contrast, express an attitude of empowerment and confidencein their ability to help to improve these conditions. They do not discount the problemsthey face. Rather, they have challenged and changed these conditions.

Network members have a global business outlook while maintaining an inwardfocus that interprets Africa’s economic crises not as hopeless, but as fertile groundfor business opportunities. They view the role of business on a broad scale: the abilityto address the unmet demands for goods and services throughout the continent.Although they are interested in developing markets outside Africa (e.g. utilizingrecent US trade initiatives such as the Africa Growth and Opportunity Act/AGOA), their main focus is on increasing trade and commerce within Africa.

4.3 Business experience and ownership

Forty (70%) of the network members interviewed worked in managerial positionsin other firms before starting their own enterprise. Of these 42% had been employedas managers or other executive positions in major national firms in their own coun-tries; 25% had worked in a family-owned business before starting their own enterprise;23% had been employed in managerial positions in a foreign firm before they returned


to Africa; and 10% worked (two were still employed) in the Africa officeof a multinational firm. Before returning to Ghana and starting his own financialservices company, a WAEN member received his MBA in the USA, and workedfor several years for a Fortune 500 financial services corporation in New York(also written about in Fick 2002: 24–25). Before returning to Kenya, an EAENmember owner of a speciality bookshop in an upmarket mall in Nairobi worked fora major non-governmental organization (NGO) in Atlanta, Georgia. A SAEN mem-ber and architect in Botswana worked at an architecture and real estate developmentfirm in Wales before returning to Gaborone to start a similar business. A UgandanEAEN member is the co-owner of a housing construction company in Florida.

Table 1 shows that 95% of the network members are business owners, while 5%are managers in large private corporations (often at the level of chief executive officer,CEO, or chief operating officer, COO). Network members acquired their companiesin a variety of ways. Most (85%) started the business themselves; 11% acquiredthe family business; 4% acquired a state-owned enterprise (e.g. a thread companyin Ethiopia, a glass factory in Ghana).6 They financed their business start-upsin a variety of ways. Some used savings from professional jobs or revenues generatedfrom another business. Others received loans and gifts from parents, other familymembers, and spouses. Some were able to secure start-up financing and lettersof credit from banks because of their professional reputations.7 None received start-up funding from government or donor agencies, but a few received grants for productdevelopment and marketing from NGOs, government business promotion units, anddevelopment agencies.

4.4 Business practices and activities

Network members incorporate modern management practices in their businessoperations. They carry out market research to expand their customer base, use datafor planning business ventures, provide training to develop staff capacity, and delegateresponsibilities among employees. Network members also share services in kind:a Ugandan member designed a marketing promotion campaign for another member’sradio station. A Senegalese member created business feasibility studies for networkmembers in Mali. They also travel for business activities: 62% travelled outside Africaon business. A study conducted during the Millennium Conference by On TheFrontier (OTF, an international consulting firm) showed that network members,on average, made more trips abroad than entrepreneurs in a previous OTF surveyof five non-African countries. The OTF study (section 6) noted that 62% of respon-dents spent $500 or more annually on resources to help them find solutions to theircompany’s problems. The owner of a multi-location automobile service enterprisein Kenya hired a Canadian consulting firm to organize a personnel developmentretreat to upgrade employees’ management skills, improve team spirit, and formulatea collective company vision.

4.4.1 Focus on one business

Ownership of several businesses to spread financial risks in uncertain economicenvironments is common practice among entrepreneurs in Africa. This practice variesamong the network members interviewed. Table 1 shows that a large majority (72%)own only one enterprise, while 28% own several companies. Some network members


add an auxiliary operation to augment or expand their firm’s functions. For example,the owner/partner in an architectural firm added land development survey services(Botswana); an electronics equipment manufacturer added design and installationof electronic conference displays (Kenya); and an auditor/accountant added realestate services (Senegal).

4.4.2 Employee hiring based on skills

Network members said that their hiring decisions are based on the prospectiveemployees’ skills and experience rather than on kinship. They may employ familymembers but the relative must be qualified or trainable. Network members areconcerned about the insufficient supply of job applicants with high-level skills. A fewnetwork members addressed this by setting up commercial schools that offeredtraining in business management and computer skills. A Ghanaian network member,for example, provided on-site training for her employees. Another started a computertraining school; he plans to hire employees from among its graduates. The ownerof a coffee processing factory in Ethiopia started a school to improve English languageskills. The OTF study found that although network members were most concernedabout developing effective strategies to identify and target customers (which is alsothe first concern of entrepreneurs in its five-country sample), the second most pressingissue was finding skilled employees.

4.4.3 Trust among members and ethical business practices

Network members say that they are committed to ethical behaviour in their businessand professional lives. Business transparency and ethical behaviour were twoof the most important criteria for evaluating prospective members. A Senegalesenetwork member chairs that country’s chapter of Transparency International8 thathas 300 members. He helped to write and implement a code of financial and account-ing practices that was adopted by businesses in 20 Francophone countries. The net-works foster trust among members within a country and between members in differentcountries and regions. For example, another Senegalese network member declaredthat when she travels to Nigeria, ‘I won’t even get off the plane unless I am metat the airport by another network member’. This sentiment is consistent amongnetwork members who believe that a major advantage of the networks is to buildtrust among African business persons. A Ugandan network member feels comfortablewith his decision to venture into Zambia and Tanzania; he trusts the recommenda-tions for prospective partners and advice about business conditions he received fromnetwork members in those countries, even though he had not met them. One of thefounding members of WAEN said that his involvement in the network prompted himto create a regional investment fund that could be accessed by WAEN membersin various countries. He said that the fund was possible because of trust builtamong WAEN members.

To ensure fiscal transparency, most network members use accountants andindependent auditors to maintain business records. They do not co-mingle businessand family funds, practices often reported among entrepreneurs in Africa. To main-tain the environment of trust, the network membership is selective. Prospectivemembers are identified through social and professional contacts. Before an individualis invited to join, a background check is done. The person’s reputation and informa-tion about his/her business activities are important. Additional membership require-ments include: company owner or employed as the company’s CEO or COO, personal


and professional integrity, willingness and ability to contribute time and financialresources to the network (membership dues9 and costs of attending conferences).For example, the head of the Ethiopian Enterprise Network said that he advanced$100,000 from his own funds toward the cost of the pan-African Enterprise NetworkMillennium Conference. Reimbursement for this expense from the donor agency took10 months.

4.4.4 Sharing information

Network members keep in touch with their counterparts via cell phone, e-mail, andfax, attend meetings, and participate in inter-country conferences. They openlydiscuss their business operations to identify strategies that may resolve problems.They are generally not secretive, as has been reported for other entrepreneursin Africa (Kallon 1990, Ukaegbu 1998). They regard their colleagues, evenin the same industry, as collaborators rather than as competitors, and they shareinformation. The OTF study concurred that members prefer to discuss solutionsto problems among themselves. Members help others to make business connectionsand they reach out to others for advice and assistance. They are willing to shareinformation about their lifestyles, network activities, and business operations, in gen-eral, and were co-operative in responding to our questions. When a Ugandan memberdecided to do product sourcing in South Africa and Kenya, he contacted EAEN andSAEN for information and advice. EAEN set up a ‘Book Bank’ offering business andentrepreneurship publications for members to reference. SAEN’s website (http://www.saen.info) displays information (dated to 2002) about ‘what is happeningin the southern Africa region’.

According to one Senegalese network member, the main asset of the network is‘the ability to pick up the phone and get the information you want from a networkmember; and that is forever, it does not go away’. A network member from Kenyasays that she regards the network as a way to make friends with people with whom sheshares interests. Only through the networks has she come to meet people from all overAfrica. Her family lives in western Kenya, near the Uganda border. When she visitsthem, she drives to Kampala to have lunch with network members. She says that suchrelationships have been more valuable to her than money. Network relationships havepersisted after the end of donor funding and the dissolution of the formalorganizational structure in some countries.

4.5 Types of businesses

The majority (70%) of network members own service firms. The services includeadvertising, computer training, consulting services, financial services (such as bankingand investments), information-technology, legal services, printing, public relations,and travel planning. There are fewer manufacturing firms. In the sample, 16%own factories: 3% are involved in textiles production (e.g. a thread factory inEthiopia) and 13% manufacture products such as furniture, finished wood, andglass containers (Ghana), electronic and solar equipment (Kenya), electrical controlsystems (Uganda), and diamond jewellery (Botswana). Some 8% of those interviewedare in agribusiness: coffee and cut flower exports (Ethiopia); poultry farming andagro-processing (Ghana); horticulture and flower exports (Kenya). A few networkmembers (6%) own retail stores, and one operates a construction company.


Among network members’ firms, even when the product is ‘traditional’ suchas an agricultural commodity, the way in which it is produced or marketed is inno-vative.10 Growing ornamental flowers for European markets was not a major exportproduct in Africa until the mid-1980s (Kimenye 1996). While there are non-networkmembers in these enterprises, the largest rose growers in Zambia and Ethiopia(a woman and a man, respectively) are network members. In Kenya, a femalenetwork member grows roses on 20 hectares in controlled-environment greenhouses.After cutting, they are packaged and sent the same day by airfreightto the Netherlands. In Ghana, a printing company established by a female networkmember uses state-of-the-art computerized machinery, and has ventured into thehighly specialized process of printing government securities and financial documents.An EAEN member and television station owner in Uganda produces investigativereporting features for local news programmes (see also Fick 2002: 207–209),occasionally purchased by global broadcasters BBC and CNN. The WAEN memberowner of a large-scale poultry processing plant began selling refrigerated dressedpoultry parts, an innovation for Ghanaian consumers, accustomed to buying wholelive chickens. Another Ghanaian WAEN member started a factory to manufacturewindow frames and ornamental wooden doors. These products add value and increaserevenues, compared to the raw timber that his father had exported.

Size of businesses as indicated by number of employees and revenues varies widelyamong network members. Number of employees ranged from three in a newly-established travel agency in Kenya to over 400 at the Ghanaian poultry processingplant. Revenue data were not requested in the interviews, although owners sometimesvolunteered them. During site visits, an estimate of the value of company assets andrevenues was made by observing physical facilities and equipment, types of productor service, and reported marketing and distribution strategies. The nationalco-ordinator of WAEN reports that revenues of members’ businesses range fromUS$300 000 to US$10 million annually. Orsini (2001) reports that network members’businesses have five to 50 employees, and an average annual turnover ofUS$1 000 000.

5. Findings: goals and achievements of the networks

The primary goals and objectives of the regional enterprise networks are:(1) to expand regional (intra-Africa) trade; (2) to improve the business climate withincountries by maintaining ethical standards among members and serving as advocateson behalf of the business communities with government and other institutions; and (3)to increase capital accumulation for business and investment through the creationof venture capital funds (VCF).

The networks have developed alliances with older institutions to deepen regionalintegration. These include regional economic institutions such as the EconomicCommunity of West African States (ECOWAS), Union Economique et MonetaireOuest-Africaine (UEMOA), Southern African Development Community (SADC),East African Community (EAC), and the Common Market for Eastern andSouthern Africa (COMESA). SAEN signed a ‘Declaration of Intent’ withCOMESA in 1999 for cross-border trade, agribusiness, tourism, telecommunications,human resources development, business and financial services, light manufacturing,trade, and joint ventures for privatization (SAEN 1999: 1, Southern African


Development Commmunity [SADC] 2000). WAEN gained observer statusat ECOWAS meetings in the 1990s.11 A Kenyan member expressed his excitementabout the revival of COMESA, because it could stimulate trade among the countriesin eastern and southern Africa. He said, ‘Kenya has a market of only about 30 millionpeople but with COMESA, my market will include the 200 million peoplein this region’.

To put the need for the regional networks into perspective: from the 1970s to thelate 1990s, intra-African trade was only 4% of African exports and imports, increasingto 7% from 1998 to 2000, and to 10% by 2002 (Dicken 2003). By comparison,the percentage of intra-regional trade in other world regions is 67% in WesternEurope, 50% in Asia, 40% in North America, and 15% in Central America.

5.1 Goals and achievements: expanding regional (intra-African) trade

Regional enterprise networks want to enlarge the markets for African businessesby expanding beyond local borders. With the exception of Nigeria, South Africa,and Ethiopia most sub-Saharan African countries have small populations witha limited consumer base. The former head of AEN, based in Ethiopia, said thatthe enterprise network concept has made members more attuned to cross-culturaland cross-country issues within Africa.

Now, they think at the macro-level and not just fixate on local issues. Macro issues havebeen introduced by the network members to other entrepreneurs in Ethiopia, who nowconsider selling and sourcing within the region instead of looking only to Europe, the USA,or Asia. They are beginning to realize that there is a lot of dynamism in Africa. You seeyour own business within a regional context.

Since joining the enterprise networks some members are doing business with firms inother African countries. However, other members contend that there is more ‘talking’than actual business being transacted.

A Kenyan network member says that a Tanzanian network member helped herto obtain a business licence in Tanzania in less than a month, a process that can takeup to a year. A Ugandan network member said that he joined EAEN to do businessand observed, ‘Now when I go to another country like Kenya, Zambia, or Burundi,my entry points are better. It is almost like having a family member to deal with;we can use their offices when we are there’. As a result, he now exports day-old chicksto Burundi and plans to expand to Ethiopia. A Ghanaian member complained aboutnot receiving much help from the network in facilitating her transactions in Coted’Ivoire, but acknowledged being more comfortable travelling alone to this countryand others, because ‘you can always call the network’. A network member fromUganda said that knowing network members in other countries increasedthe productivity of his business travels to neighbouring countries.

Other examples include a magazine publisher in Uganda who negotiated the bestdeal for printing through a network member in Nairobi. A Kenyan network member’sadvertising and public relations firm completed interior design projects in Ugandaand Tanzania, and designed corporate trade exhibitions in Tanzania. A Ugandannetwork owner of an advertising/PR firm negotiated contracts for public relationswork at branch offices in Kenya. He also collaborated with a Kenyan network mem-ber to design animated electronic outdoor displays and indoor exhibitions. Members


share information and provide business opportunities for each other within their owncountries. Through his network member contacts, a lawyer in Kampala expanded hisclient base to other parts of Uganda. Members say that their experiences show thatthe networks are more effective than traditional business organizations such as cham-bers of commerce and manufacturers’ associations (to which only a few of thembelong). Even though they are eligible, most network members neither join suchchambers nor attend their meetings.12 They also belong to professional associations(e.g. architects) and sometimes to employers’ federations.

Removing trade barriers that exist between the Francophone and Anglophonecountries is a goal adopted by WAEN. Senegalese network members note that somebusiness persons in the Francophone countries still prefer trading with France, butnetwork members in Senegal want to see more business partnerships with firmsin non-Francophone countries. To this end, the Senegalese owner of a water bottlingcompany collaborates with network members in Ghana and Ethiopia who ownrelated businesses. NetForce is a sub-network of accounting firms within WAEN.Spearheaded by a women member, NetForce standardized accounting practicesand formats at the largest accountancy firms in eight Anglophone andFrancophone West African countries.

Through SAEN, a venture capitalist from Zimbabwe invests in a manufacturingproject in Malawi. The SAEN website notes that cross-border achievements include:Malawian and Zambian network members together formulated the legal structureof the Malawi Stock Exchange; Mauritius network members created a database forinvestors in the region; Mozambique network members staged a forum withthe private sector and government; Namibian and Zimbabwean network membersfinalized a joint venture project in the Democratic Republic of the Congo(http://www.saen.info/saen/frameset.htm).

5.2 Goals and achievements: advocacy with governments and

regional/international institutions

One of the basic tenets of network membership stated in newsletters and otherpublications is that the national networks are ‘strictly apolitical’ (WAEN 1993,EAEN 1999, SAEN 1999, Orsini 2001). The networks do not support or campaignfor particular parties or politicians. However, ‘apolitical’ as used by network membersdoes not mean steering clear of public engagement. They do not believe in ‘cronyism’and political patronage; and they do not take kickbacks or engage in practices suchas bribery and giving gifts to influence government officials.

A Senegalese network member meets with the president and other governmentofficials in his role as head of a national professional association. The governmenthired him as a consultant on urbanization projects, for which his company providedtechnical expertise. He said that he would not ‘rubber stamp’ projects that wouldbe contrary to the public good just to gain an advantage for his own business.The Senegalese member of the WAEN secretariat said that the larger issues of globalstrategies and informed economic policies are more important than simply brokeringbusiness deals. Network members in Uganda gained a seat on the board that regulatesimport taxes. They use this position to advise private sector entrepreneurs onhow to manage and schedule their tax obligations. The Uganda network is amember of the Private Sector Foundation (PSF) that lobbies for better business


regulations, equitable tariffs, etc. When asked about a Ugandan network memberwho was running for parliament, Uganda network members explained that businessinterests should be represented in parliament. In 2000, Botswana Enterprise Networkmembers who own information technology firms formed an organization that advo-cates for indigenous technology companies, Citizen-Owned Businesses in InformationTechnology [COBIT]. They share strategies to compete for government contractsagainst foreign-owned firms (COBIT 2000). Their goal is to be allocated a percentageof all government contracts.

Network members and national chapters have used network conferences to serveas forums to communicate their interests, as well as to listen to their heads of state.President Museveni spoke at the EAEN workshop in Kampala, Uganda in 1999;Ethiopia’s Prime Minister Meles opened the Millennium Conference in 2000;President Santos (also president of the African Union that year) opened a regionalmeeting in Angola in 2002 (EAEN 1999, 2000, AEN 2000, SAEN 2002).

A Ghanaian network member said, ‘We want to achieve a voice and do businesswithout being an appendage to government’. Hence, they see no contradictionin stating that ‘African entrepreneurs must join together with government and civilsociety to ensure that corruption is stemmed’ (EAEN 1998: 2). Regional enterprisenetworks want to redefine the rules and manner of engaging government officials, andincrease public-private sector communication in an open, ethical manner. They feelthat this will improve the conduct of business and benefit the private sector as a whole.This contrasts with how ‘business politics’ is usually played, i.e. to benefit specificbusiness owners.

The regional enterprise networks advocate for business-friendly laws and regula-tions, government policies, and programmes. From an analyst’s viewpoint, this mayseem ‘political’ because network members participate in government dialogueat the highest levels. However, the concept of being ‘political’ in Africa usuallymeans to engage in political cronyism, rent-seeking, bribery, and corruption. Theseare activities that the networks work against. Network members point out that theyreject government patronage. They initiate and maintain dialogue with those officialswho have the power to reform the regulatory environment, but members are open andtransparent in their activities.

5.3 Goals and achievements: national and regional venture capital funds

Another goal of the national and regional networks is to raise investment capital.In 2000 a Kenyan network member organized an international conferencein Nairobi that was co-sponsored by the World Bank’s International FinanceCorporation (IFC). Network members, representatives of major donor agencies,and officials of Kenyan banks participated. WAEN established the West AfricanEnterprise Fund (WAEF) in 2000 and raised $15 million of private capital to promoteregional trade and investment (Orsini 2001, Ofori-Atta 2003). WAEF invested capitalin a bank in The Gambia, The Trust Bank Ltd. This investment was the first cross-border listing on the Ghana Stock Exchange. A Zimbabwean network member spokeat the Millennium Conference on strategies to create successful venture capital funds(EnterpriseAfrica 2000: 32–34, Spring 2000). Zimbabwe network members investedVCF contributions in a national money market account that paid a 60% returnin 2000 (high inflation meant that this was not a large amount). The Zambian


network has an investment fund, and the Ugandan network created a fund whichmakes short-term, non-collateralized loans to members. Future studies can evaluatethe impact of these VCFs as they mature.

6. Comparative data: findings from the On the Frontier(OTF) survey

On the Frontier (OTF), an international consulting company based in Washington,DC, conducted a survey of network members at the pan-African Network’sMillennium Conference in 2000. Data were collected on age, gender, education,type of business, number of employees, business practices, Internet usage, networkingbehaviour, and travel. Sixty surveys were completed, analysed, and the findings werepresented at the conference.13

OTF compared its data from network members with data from its previous surveyof 1364 entrepreneurs from five countries: Brazil, India, Mexico, South Africa, andVietnam (OTF 2000). The average age of network members in the OTF study wasolder than the entrepreneurs in their five-country study: 10% were 20–29 years old,43% were 30–39 years; 40% were 40–49 years, and 7% were 50–60 years. Comparedto entrepreneurs in the five-country study, network members travelled abroad moreoften (40% make five or more trips/year; 30% make three to four trips per year; 17%make one to two per year; 8% travel less frequently; and 5% reported that they hadnever travelled abroad). OTF found that network members’ number one businesspriority is to develop effective marketing strategies. The second most pressing issueis to find skilled employees. In the OTF study, 62% of the respondents reported thatthey spent $500 or more annually on resources to help them find solutions to businessproblems. Compared to the entrepreneurs in the five-country study, network membersspent more on problem solving.

We compared OTF data with our study data. Of the 60 network membersresponding to the OTF survey, 62% had undertaken graduate study, 32% werecollege graduates, and 6% had some experience of college. This is consistent withour data showing high levels of education among network members. The OTF studyof network members had a preponderance of managers (90%), versus owners/presi-dents/CEOs (10%). This contrasts with our data in which most (95%) are ownersrather than managers. However, we targeted network members who owned their ownbusinesses, whereas the OTF survey was passed out to all network members attendingthe Millennium Conference. For types of businesses, the OTF study recorded 78%in services, 12% in manufacturing, 2% in agriculture, and 7% in ‘other’ businesses.This is similar to our data reported in section 4.5. The majority of companiesin the OTF study are small to medium (62% had fewer than 25 employees; 20%had 25–50 employees; 10% had 50–100; 5% had 100–200, and 3% had 200–500employees).

The OTF study found that 64% of its sample was involved in export trade.The responses indicated that these network members were more export-orientedthan the entrepreneurs in the five-country study. The majority of network membersin our study also want to export to other countries and increase intra-African trade.In terms of contacts between network members, the OTF asked about the frequencyof contacts by phone, fax and e-mail. The data showed that 35% had a few/week;27% had a few/month; 22% had one or more/day; 10% had one/month; 3% had less


than one/month; and 2% had one/week. The study asked about the useof the Internet: 95% used it for educational purposes; 91% thought it importantto their business; 88% considered it to be a good source of business advice; and86% said that it was a worthwhile expense. E-mail and accessing market informationwere the most common activities carried out on the Internet by the members sampled.One-third had a web site for promotional purposes. The OTF data supportsthe emphasis placed on networking and communication by the 57 network membersin our study.14

7. Discussion and assessment of network membersand the regional enterprise networks

7.1 Characteristics of network members

Most of the members of the enterprise networks are relatively young and welleducated. They chose to go into business for themselves rather than to becomeemployees. The tendency of young educated people to start businesses appearsto be a global phenomenon. A 1997 poll of Generation Xers in the USA (men andwomen born between 1961 and 1981) revealed that twice as many wanted to starta business as wanted to become executives in a large corporation, and four timesas many preferred self-employment over holding an important position in politicsor government (Miniter 1997). In Europe, young people are reversing the deeplyingrained cultural aversion to risk-taking. A poll in Sweden showed that 32%of business students want to own their own companies within three to 10 yearsfollowing graduation (Kahn 1999). China is also witnessing an emergence of youngentrepreneurs in its privatizing economy. A study showed that the average ageof first-time Chinese entrepreneurs in 1999 was 37 years, and for women it was 34years (Pistrui et al. 1999).

7.1.1 Women’s representation in the networks

An equitable gender representation is a noteworthy goal because African women areinvolved in all aspects of the entrepreneurial landscape from owners of traditionalmicro-enterprises to owners/CEOs of medium and large firms. Most networks havewomen members and some have women chairs. However, from its establishmentin 1998 the seven-member Ethiopian network had no women members. This wasin spite of the fact that the head of the 7000-member Ethiopian Chamberof Commerce in 2000 was a woman, and there are a number of large businessesowned by women (e.g. a construction company, a transport company, and a retailsupermarket chain). In 2002, the Ethiopian network finally invited one woman(an attorney who headed an NGO) to become a member, but she declined.The Uganda and Senegal networks had two or three women (18% and 17%, respect-ively, of their total membership), while women in the Ghanaian network were 40%of its membership.15

7.1.2 Attitudes of network members

Are the network members developing their own economic strategies for themselvesand their countries, or have they merely accepted the donors’ promotion of Western-style capitalism? Although donors began the process of capacitating the


networks, new generation entrepreneurs had already adopted ideas and strategies theyobserved to be successful in other countries and adapted them to the conditions intheir own countries. According to network newsletters, a small group of entrepreneurswere already meeting to construct a different business ethos in the early 1990s beforethe bilateral and multilateral donors helped to initiate the networks (WAEN 1993,EAEN 2000). This group was the precursor to the Regional Enterprise Networks andtheir business and economic development ideologies were adaptive, rather thanmerely adoptive of ideologies from developed countries.

The membership of the networks is small considering the large number of entre-preneurs in each country. Criteria for membership are selective and, accordingly,the networks seem to be like elitist clubs with exclusive membership practices.Network members argue that their commitment to ethics, transparency,accountability, and trust requires strict scrutiny of prospective members and thatthe evaluation process is not quick. Orsini (2001: 8) explains that maintaining a highlyselective membership promotes strong cohesion among members, and this offsetsthe ‘traditional lack of trust among entrepreneurs who are not from the same family’or ethnic group. Murphy (2002) reports that entrepreneurial networks helpto establish trust and stimulate business activity.

Are these network entrepreneurs elites? When applied to Africans, the label ‘elite’is usually inferred as being negative. African elites are viewed as pursuing their owninterests without regard to the public good. Their pursuit of material possessionsin societies of scarcity is decried as predatory. However, the network members believethat they have improved business practices, which will benefit African economies.Network members are upwardly mobile entrepreneurs who are interested in economicand political reform. Their business ethics embrace profit-making not profiteering.Their aim is to conduct business and advocate for policies that may contributeto economic equity. They are not elites in the more standard way (i.e. militaryor government leaders, aristocratic backgrounds, wealthy traders, etc.), althougha few have such family backgrounds. Network members are ‘elites’ in Africa becausethey are among the tiny minority who have acquired college/graduate degrees andoperate successful companies. Whereas well-educated persons in African societies mayhave previously entered government service or worked for large corporations, the newgeneration considers self-employment to be an attractive opportunity, rather thanan option of last resort. Studies show that educated entrepreneurs generally havemore successful businesses in terms of revenues and longevity (McDade andMalecki 1997, Goedhuys and Sleuwaegen 2000). Network members emphasizeworking hard, being self-starters, having business savvy, using network contacts,being transparent, and refusing political patronage.

7.1.3 Business experience

As noted in section 4.3 almost one-half (42%) of network members worked previouslyin major national firms in their own countries, one-third (33%) worked in foreignfirms overseas or multinational corporations in Africa before starting their owncompanies. The other 25% worked in family-owned firms. However, their experiencesat firms in advanced economies (with secure financial institutions, sufficient capital,surplus of qualified employees, reliable communication, transportation, and otherinfrastructure) may not be adaptable to conditions in most African economies.However, network members are not complacent with these experiences, so theymake efforts to update their knowledge. The enterprise networks fulfil some of these


needs by organizing short-term courses and workshops, along with sharing of informa-tion among themselves. The knowledge and experience of the owner of a small firmare particularly significant because the personal characteristics of the entrepreneurimpact all aspects of the firm’s operations. It is even more significant than for a largefirm where the personal characteristics of the president or managing director havea lesser effect on overall operations (Olomi 1999). Competitive advantage and successof firms lie in their utilization of human capital (Manu 1999). This underscoresthe relevance of the high level of education and previous career experience amongnetwork members in this study.

7.1.4 Business practices

The educational background and prior business experience of network membersinform the way in which they conduct business. They emphasize ‘modern’ manage-ment practices obtained from formal education such as writing a detailed businessplan; hiring employees based on experience and formal qualifications rather thankinship; hiring consultants to conduct employee relations workshops; using mediaadvertising and public relations campaigns to reach a larger consumer market; adopt-ing standard accounting and auditing methods for record keeping. They struggle topromote transparency and ethical business behaviour. However, conducting businessin this manner is a challenge in an environment where a legacy of behind-the-scenesdeals, cronyism, and political patronage is entrenched. Their influence on the businessclimate might be more extensive if network members and the new generation formedstronger linkages with owners of micro and small informal and formal sectorenterprises that comprise the vast majority of the entrepreneurial landscape.

Network members are amenable to increasing their business activities withmembers in other countries, but they are challenged by institutional constraintssuch as Francophone and Anglophone divisions, government regulations and tariffs,and inadequate transportation and communication infrastructure. They counterby using technology (cell phones and Internet) and travelling to foster in-personcontacts. However, the necessity of travel because of inadequate communicationsinfrastructure adds to their cost of doing business.

7.1.5 Types of businesses

A criticism of the networks is that the selection of members and their businesses is notrepresentative of the diversity of businesses in their countries. Few of the businesses aremanufacturers and that limits opportunities for backward and forward linkages. Somemembers want only a few types of businesses in each network to avoid competition,while members in other national networks want to have a critical mass of businessesin a few specialities so that they can collaborate. As membership increases, it is likelythat there will be an increase in the variety of businesses in the networks.

7.2 Discussion and assessment of regional enterprise networks

7.2.1 Lack of integration with the larger traditional and informal business sectors

Network members view themselves as different from the majority of small-scale formalbusiness owners and all informal sector entrepreneurs, and they are. Networkmembers regard these sectors as inefficient, even referring to them as ‘backwards’.However, these ‘backwards’ enterprises supply up to 90% of the goods and services


in the domestic economies of most African countries. In a few instances, networkmembers have utilized them as sources of primary inputs, but they have not takenthe lead to establish linkages that could upgrade these enterprises. If the objectiveof the networks is to strengthen business linkages within Africa, this is where theirefforts could be most productive.

7.2.2 Idealistic versus realistic goals of the networks

Network members advocate and, indeed, try to adhere to their concepts of an ethicalbusiness environment. Some may appear to have a ‘holier than thou’ attitude towardconventional business practices. However, their stance is more pragmatic thanideological; they truly believe that transparency and honesty promote efficiency andstrengthen the business community. They are concerned with results, not justideology. Future studies should query whether or not African entrepreneurson a broader scale perceive the need to change business practices and behaviours.

8. Concluding remarks

This study evaluates challenges that the networks and their members face. Theseinclude: (1) the country, regional, and pan-African networks are small; (2) somecountry networks have few or no women members; (3) network members’ businessesare not representative of the diversity of businesses in the economy; (4) networkmembers have not established linkages with traditional formal or informal sectorsmall-scale entrepreneurs, which comprise most of the entrepreneurial landscape;(5) network members have not generated a large volume of business activity; and(6) their impacts are difficult to measure.

Currently, the end of donor funding led to the closing of WAEN and EAENregional secretariats, and inter-regional conferences have ceased. In a specialarrangement with SAEN, donor funding continues along with intra-regional meetingsand conferences. Most network members maintain their social and professionalrelationships in spite of the cessation of official activities in some of the national andregional networks. They continue to engage in commercial and investment activities.In addition, they continue to advocate on behalf of the private sector with govern-ments. Major expansion of regional trade and regional economic integration remainsa future goal rather than current reality. However, this small but growing segmentof the African entrepreneurial landscape may serve as a catalyst to improve economicconditions and stimulate private sector-led development.

Acknowledgements

The authors wish to thank the University of Florida’s Center for Business Educationand Research (CIBER) and Opportunity Fund Grant Program for providing fundingfor research trips to Botswana, Ghana, Ethiopia, Kenya, South Africa, and Uganda,and the Center for African Studies for one author’s trip to Senegal. We would also liketo acknowledge the assistance of Dr Delores Koenig who conducted the interviewswith network members in Mali.


Notes

1 WAEN is comprised of 13 countries: Benin; Burkina Faso; Cape Verde; Chad; Cote d’Ivoire;The Gambia; Guinea; Mali; Mauritania; Niger; Nigeria; Senegal; and Togo. EAEN has seven countries:Burundi; Djibouti; Ethiopia; Kenya; Rwanda; Tanzania; and Uganda. SAEN has 12 countries: Angola;Botswana; Lesotho; Madagascar; Malawi; Mauritius; Mozambique; Namibia; South Africa; Swaziland;Zambia; and Zimbabwe. Each Regional Enterprise Network is headquartered in the capital of one of theconstituent countries (WAEN in Accra; EAEN in Addis Ababa; and SAEN in Lusaka). The pan-Africannetwork (AEN) was in Addis Ababa.

2 The original regional enterprise networks websites were: WAEN (http://www.waenonline.com), EAEN(http://www.ugandacapitalmarkets.co.ug), and SAEN (http://www.saen.net). WAEN and EAENwebsites have not been active since 2002. SAEN now uses (http://www.saen.info), although the mostcurrent information is from 2002.

3 The networks receive support from a consortium of donors: USAID; Canadian InternationalDevelopment Agency (CIDA); French Agence Francaise pour le Development; Belgian InternationalDevelopment Agency; Swiss International Development Agency; the World Bank, and OECD(Orsini 1999, 2001, Light and Chibembe 2003). The approximate amounts and duration of donorcontributions were: WAEN, US$3 250 000 (1992–2000); EAEN, US$855 000 (1998–2000); andSAEN US$970 000 (1998–2000), with an additional US$500 000 for SAEN after 2000 (Orsini 2001: 25).

4 In using the WinMax� programme, the analyst selects key phrases from the inputted text and assignsthem to predetermined categories. The profile of network members is modelled from the demographiccharacteristics in the age, gender, education, and kinship categories. The business profiles of the networkmembers are derived from these categories: type of business; history and longevity; business transactions;business culture (ethics and practices); constraints and enablers; and future goals.

5 Representatives interviewed from these support agencies are as follows: Botswana: Empretec, CitizenOwned Businesses in Information Technology (COBIT); Ethiopia: Association of Women Exporters;Ghana: Empretec, Amex, Women’s World Banking, Association of Ghana Industries, GhanaianAssociation of Women Entrepreneurs; Kenya: International Finance Corporation (IFC) and AfricaProject Development Facility (APDF) of the World Bank, Micro-enterprise Support Programme(MESP), K-REP Holding (financial services and business development), US Commercial Service,USAID; South Africa: Enterprise Florida, Business Women of South Africa, Transnet, Whiphold,Johannesburg Stock Exchange and its electronic trading coordinator, Strate; Uganda: US CommercialService, USAID, Uganda Women Entrepreneurs Ltd (UWEAL), Private Sector Foundation, UgandaExport Promotion Board, Uganda Small-Scale Industries Association (USSIA), African DevelopmentFoundation (US-funded), Uganda Manufacturing Association. Also included were officialsin government agencies, industry and manufacturer associations, chambers of commerce, banks andlending agencies (NGOs), professional associations, and other international agencies(e.g. African Development Fund, World Bank agencies). Various individuals provided personal andagency assessments of business conditions in the respective countries. They were identified throughreferrals from network members, donor agencies, membership lists of businesses and other organizations,previous encounters at conferences, etc. Also consulted were publications from the above and otheragencies, including the US Department of State’s US Commercial Guides and Country Reports,US Government Economic Outlooks for Ghana, Kenya, South Africa, and Uganda.

6 The thread company had been a family business until the 1970s when it was appropriated by a socialistregime. The glass factory was purchased from the national government during the 1980s as partof the SAP divestiture scheme.

7 Some earned high salaries in firms such as Morgan Stanley and Goldman Sachs before returningto Ghana or Kenya to start their own businesses. A few are currently employed with established foreignor domestic firms in Africa, and plan to use their savings to establish their own enterprises.

8 Transparency International (TI) was founded in 1993. Headquartered in Germany, it has chapters in 85countries. It claims to be the only international non-governmental organization devoted to combatingcorruption. In the international arena, TI raises awareness about the damaging effects of corruption,advocates policy reform, works towards the implementation of multilateral conventions and monitorscompliance by governments, corporations and banks. At the national level, chapters work to increaselevels of accountability and transparency, monitor the performance of key institutions and pressingfor necessary reforms in a non-party political manner.

9 National networks charge annual dues of US$250–500 per member, and each national networkcontributes $2500 annually to its regional network.

10 Pedersen notes that ‘an important part of the business services in developing countries serves agriculture’(1998: 1). This promotes product specialization by adding value to the primary commodity. Networkmembers add value to primary agricultural commodities with business services such as brandingornamental flowers for niche markets; packaging processed poultry parts rather than whole birds forsmaller urban households; supplying chicken feathers to bedding manufacturers; and crafting wood doorsand home decorations instead of exporting raw timber.


11 SAEN is working closely with key strategic allies such as COMESA, SADC, and the United Nations’Economic Commission for Africa (ECA) to help to fulfil its mission. It also works closely with nationaleconomic agencies and many donor agencies, including the OECD, the World Bank, USAID, the AgenceFrancaise de Developement, Canadian International Development Agency (CIDA), the SwissCooperation, the Belgian Cooperation, and the European Union (EU). SAEN also has business tiesto investor organizations worldwide, including the US Corporate Council on Africa, the GermanAfrika Verein, the British-African Business Association, the Malaysian South-South Corporation, andthe Singapore Trade Development Board (http://www.saen.info).

12 An exception is in The Gambia where a network member chairs the Chamber of Commerce.13 It is not known if the presenters made other uses of these OTF data.14 When compared to OTF surveys of entrepreneurs in other regions, the OTF reported that network

members responded ‘yes’ more often to the question, ‘I often find it helpful to exchange business ideaswith other business people from inside my industry’. The network members responded ‘no’ more oftento the question, ‘I prefer to do as much problem-solving as I can without turning to other sourcesfor help’.

15 SAEN 2002’s mission statement specifically addresses gender, although there is no assessment of progress:‘SAEN is a pro-active and dynamic private sector institution that in line with its vision seeks partnershipswith the public sector, civic society and the international community, to improve the business climateand economic productivity. Further SAEN, through its Women’s cluster and HIV/AIDS cluster seeksto contribute to redressing gender imbalances and contributing to the fight against the HIV/AIDSpandemic that is rapidly eroding the regions human resource base’ (http://www.saen.info).

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The ‘new generation of African entrepreneurs’: …users.clas.ufl.edu/aspring/publications/New African...The ‘new generation of African entrepreneurs’: networking to change