The environment for African entrepreneurs
African entrepreneurs operate in diverse environments and face a multiplicity of challenges. This complicates the already difficult task of starting and running a business. The rest of the chapter discusses some of the characteristics of environments in African countries that entrepreneurs must deal with.
The political environment
While African countries show some diversity in their political characteristics, there are elements that are common. Except for a few conflict-ridden countries (e.g., DR.C, South Sudan, Congo), there is an increasing trend toward a higher degree of political stability and accommodation in most countries. This is primarily due to a growing acceptance of democracy by the elite and increased political activity of ordinary citizens. Bucking this trend is a situation in a few countries where leaders try to change constitutions to enable them to continue to stay in power. This has often led to civil unrest. For the most part, however, there appears to be a consensus among the political elites about the benefits of stability. Despite this stability, many countries are still experiencing high levels of political polarization. In many cases entrepreneurs, especially large and medium-sized ones, are "forced” to associate with one side or the other. Changes in political fortunes often lead to negative consequences for such entrepreneurs.
One area of political consensus in many African countries is a need to support entrepreneurs and small businesses. Thus, many countries develop programs and institutions to support their development. Ghana, for example, at various times under two different ruling parties, established a Medium and Small Loans Centre (MASLOC) to implement microfinance programs for microenterprises in 2006, the National Youth Employment Program (NYEP) in 2006, Local Enterprise and Skills Development Program (LESDEP) in 2010, and the Ghana Youth Enterprise and Entrepreneurial Development Agency (GYEEDA) in 2013 to replace NYEP. Despite all those initiatives, a popular feeling is that these have been set up to channel easy money to party faithful. Similarly, Nigeria established a Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Youth Empowerment Scheme (YES), and Industrial Development Centers (IDCs).
Insecurity arising out of civil wars and other types of armed conflict has had major negative consequences for entrepreneurial activities in several African countries. Classic examples are the situations in Northern Nigeria (Boko Haram), Burkina Faso and Mali (Islamic State in Iraq and Syria or ISIS), DRC, and Cameroon (English-speaking part). The net effect of such insecurity is to reduce economic activity, leading to loss of infrastructure and lack of safety for both consumers and businesses.
The political and public policy aspects of the environment are therefore critical for entrepreneurial development in Africa. Yet the literature is rife with descriptions of the failure of many African governments to create enabling environments. Entrepreneurial development is going to require dramatic and committed change from African governments (Sriram and Mersha, 2010).