Unleashed:
Building Entrepreneurial Capacity in African Countries
by John I. Akhile Sr.
In African countries, the formal sector is mostly owned by non-indigenes, and that is a huge problem. It is the reason African countries tend to become frustrated when they find that investments are not happening at the right pace, and in the right areas. In the 1970s, that was the reason that “radicals” in developing countries railed against “multinationals.” When you look back, the absurdity of it is laid bare by the success of Singapore that largely relied on multinationals for its economic miracle and by the enormous success of multinationals from Asian Tigers that have flourished in Western economies. To paraphrase Lee Kuan Yew, we did not care about the politics of protesting against multinationals. We did not have raw materials for them to exploit, but we were very interested in their bringing plants because of the jobs they will provide for our people. While I have paraphrased, it is nevertheless the substance of his conclusion. The success of newly developed societies built on a variation of the free enterprise model shows that anyone can participate if they can compete.
As for the response of Western countries to multinationals from newly developed countries, it shows that they are not exclusionary. On the contrary, the evidence is that when a great company from a developing country earns its way into the hearts of western consumers, they do the same thing in western societies that western multinationals were being accused of doing in developing countries. It makes protesting against western business activities in African countries or any developing country for that matter a baseless exercise in futility. Asian businesses that have done just that (i.e. succeed in Western countries) are numerous. They include the seven companies that comprise Japan’s great Sogo Shoshas (trading houses) but an upstart that has captured the imagination of global consumers with its innovation and technological prowess is Samsung. The company is an example of an enterprise that was built to spearhead a patriotic capitalism through mercantile activity. On its own, Samsung creates about 20% of South Korea’s GDP.
Economic success that can endure and is the foundation of African prosperity can come from the model of guided capitalism that the late Park Chung Hee used in South Korea. It is a model that created Samsung, Hyundai and other Chaebol, the South Korean version of Japan’s Sogo Shosha. History shows that Singapore used a variation of guided capitalism as well. African countries have to develop indigenous entrepreneurs to spearhead their ascent. They can use the same concept of guided capitalism to build patriotic mercantile capitalists in their societies. It requires first and foremost having visionary leadership. Both countries I have referred to here, South Korea and Singapore, had leaders of vision and purpose. The other is following a disciplined process. Countries have to institute a vast aggressive process of educating its citizens about how to start, finance, and manage businesses. In my book, Unleashed: A New Paradigm of African Trade with the World, I shared some insight into how to do it in African countries. Countries also have to commit to building an infrastructure that supports business, including a fair and balanced judiciary process. The second part can be done by every country if the first part, which is visionary committed leadership, is there. If it has worked and is working for Asian countries, it should work for African countries too. The history and success of Asian mercantile companies should be required reading for every manager in the public sector of African countries. It will show that the field is one of open competition, and no one is restricting African countries from participating other than "competitive ineptitude.”
One of the reasons America is such a good model for entrepreneurship and development is the resilience of the free enterprise system that Americans practice. At the heart of the system are American people, just your regular everyday people with dreams and vision. In the financial crisis, a huge amount of equity—resources, value—went up in smoke, puff, like it never existed. Many people (including the current head of the IMF who was then the Finance Minister of France) were predicting the end of laissez faire. Some went as far as to predict the end of America’s economic hegemony in the world. Well, that was then, and this is now. The report card is that the U.S. economy has roared back and recovered a significant portion of the lost equity and values. The U.S stock market has recovered all the value and gained more, attaining record highs in recent months. U.S unemployment is down from 10.8% percent to almost pre-recessionary (5%) numbers at about 6.0%. As good as the numbers indicate there are many that are of the mindset that things would be even better for the America economy, but for the ugly divisiveness of present-day American politics. It is arguable that if the economy has managed to achieve the strides it has made in the current political climate, a functional partnership with Congress, especially the republican house will have produced better results for America.
The point is Americans have absorbed the economic blow, picked themselves off from the floor, dusted themselves off and charged-off to create new businesses. It is a perpetual process, and that is why it is never wise to discount or bet against the regenerative power of America’s free-enterprise system. The centerpiece of the system is its people. Every day, thousands are going about America, with a vision of the enterprise they want to establish; meeting with prospective partners, pitching their idea to potential investors and raising capital in order to bring the idea to fruition. That is the key. It is an activity that is going on each and every day. Every day, thousands of new businesses are formed, and a few become iconic companies in the hospitality, food service, social media, genomics, medicine, construction, manufacturing, financial services, investments, etc.
The key to developing an entrepreneurial culture is for African leaders to recognize the value of and in their people. Appropriately motivated individuals and innately imbued with material and non-material resources can change society for the better. That is the premise of the success of the greatest free enterprise nation in the world, and it can be a reality for every African country. Unleashing the individual through developing entrepreneurial capital is one of the keys to African countries developing economically and destroying the scourge of poverty. The power of Africa is not in the commodities that African countries export. Rather it is in Africans who populate the continent and live in the vast global diaspora. Among them are great: investors, corporate managers, educators, business people and high achievers in the United States, South America, and Europe as well as other parts of the world. Together, they are the power of Africa, and they repose the capacity to bring about great cataclysmic reformation and transformation of African societies. The missing ingredient in the equation is committed “shepherd” leaders who will marshal the vast power of the human resources within their reach for the purpose of bringing about revolutionary economic change in the fortunes of their countries.
African governments and their representatives have failed to study and learn from the greatest free-enterprise prophet-nation in history. It is the country that helped to build modern Japan, Germany, South Korea, Singapore, Mexico and yes, modern China. The message of AGOA, Africa Growth and Opportunity Act, is that America—its government and people—is saying we want to help you the way we know how. We want to give you unfettered access to our markets so you can sell your wares to our people. Africans have failed to grasp the meaning or strength in the gesture. Sure there is underlying political motivation to counter the success of China, and some provisions are onerous but the benefits are undeniable. Its basic premise is that America has extended a willing helping hand to African countries to become export merchants making and selling products to American consumers. It worked for the Asian Tigers, why has it not worked for African countries? The evidence that it has not worked is the volume of business that has directly emanated from AGOA and also the fact that the U.S. government is taking a very unusual step of holding information sessions to share how African countries can benefit from the act. Anyone who is familiar with American politics knows that the idea of the government getting involved in private business is reprehensible to half the political spectrum and therefore precipitant of acrimonious debate. After more than ten years, the effect of AGOA on African trade is a paltry 10-12 billion. It should by now have reached $500 billion to 1 trillion given the number of countries participating. Developing entrepreneurial capital will enable African countries to compete on the world stage and grow patriotic mercantile companies that can sell African goods and services to the world.
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