When most African countries became independent during the 1960s, joining the political class was more appealing and rewarding than going into the private sector. So highly educated Africans did not hesitate to go to where the money and the prestige were. It was only those who could not be part of the ruling class that had to make do with being entrepreneurs and capitalists. Even then, it was recognized as the gateway to the political class. In other words, most Africans who moved into the private sector did so with some sense of reluctance, and wanted to join the political class as soon as they could.
It’s no wonder that most African entrepreneurs lacked the understanding of what it would take to be successful entrepreneurs, lacking the necessary technical and management skills and the independence and confidence. They lacked consistent personal ambition and willingness to delegate authority for fear of sharing ownership, and failed to form partnerships to pool finance and managerial skills.
If the desire to financially support others is a valid impetus for establishing businesses, African entrepreneurs exaggerated it, as they used it for employing immediate family members and more distant kinsmen. This kind of personal preference for a paternalistic labor system brought severe problems, such as lack of cooperation, pilfering, and low productivity. Another element of African business philosophy that contributed to the failure of indigenous capitalism is the tendency to hand over the business to a son or a family member — even when the training, experience, and passion required were lacking.
The tendency for entrepreneurs to use business profits for luxury purchases — whether for fancy housing, cars, or expensive public donations to demonstrate wealth — caused not only financial problems related to the financing of day-to-day operations but also early collapses and exits from business. Capital shortages, low rates of return to investment, and poor capital accumulation served as a major barrier to the advancement of business.
Another blunder was the notion that by setting up several small-scale, relatively uncomplicated businesses, entrepreneurs could both expand their assets and still retain close personal control over all their activities. But by shutting out the benefits of growth through concentration, they in fact ended up with total assets of a lower net value than might otherwise have attained. Other obstructive tendencies associated with corruption, governmental hostility and indifference, and endless regulations and bureaucracy at all levels of government also limited the emergence of a strong African capitalist class.
This picture forces one to wonder if all hope is lost. Is there anything that could be done for African entrepreneurs to catch up with their counterparts elsewhere? Or can Africa compete in today’s global market without a proven army of entrepreneurs and capitalists? There is no doubt that the present situation is a great concern. But despite the widespread failures and difficulties, the African entrepreneur can emerge from the debris of his own ruin to reclaim his competitive edge in the new global race.
On the part of African governments, they, rather than viewing local entrepreneurs and capitalists as social threats and passive owners buffeted by external forces, should see them as potential creators of wealth as well as potential transformers of the same environment in which they struggle to survive. Governmental leaders who genuinely wish to encourage a productive local capitalistic economy should adopt national development strategies that could generate an investment climate conducive to long-term business activities. Only such an environment could attract a flow of much better educated professionals, administrators, and technicians into private businesses.
In addition, African entrepreneurs must set high standards of personal achievements and gain intrinsic satisfaction from striving to attain these standards. Not only should they exercise considerable ingenuity and skill and be prepared to take tremendous risks in experimenting with new ideas, but they should also be ready to move away from the present “profit-for-self-and-family” mentality to the “profit-for-business-growth” philosophy.
If African entrepreneurs are to have any hope of carving out a leading place in African economy, they must surmount three main hurdles. First, they must utilize higher levels of technology with proper training and specialization. Second, they must obtain greater degrees of organizational competence, and delegate authority and establish more impersonal systems of control. Third, they must establish wide-ranging market outlets based on an elaborate sales network and distribution system.
There seems no reason to doubt that one day a small class of able, determined and probably privileged capitalists will not emerge to impose their will on African economic life in the future. In the meantime, African entrepreneurs and capitalists can at least begin to take advantage of the present political and economic gains emerging from outgrown national limitations. Finally, the African capitalist should no longer be perceived as the bearer of an alien culture instrumental to destroying indigenous cultures. Rather, he should be embraced as a potential mediator and innovator in the process of adaptation.
