African Business Strategy Highlights Need for Reform

Six. This is the average number of businesses owned by 189 successful entrepreneurs from Ghana, Nigeria, and Kenya surveyed by IMANI, a think tank in Ghana. In spite of an economic climate characterized by bureaucracy, corruption, and the lack of rule of law, African entrepreneurs are profiting from a business strategy recently coined as “parallel entrepreneurship.”

Parallel Players,” an article in a recent edition of The Economist, cites the Liberian businessman, Cyril Allen II, whose businesses include cocoa, coffee farms, cleaning businesses, and real estate. Allen attributes this success to a “wealth of opportunity,” citing needs in the community that aren’t yet being met by businesses.

As every business person knows, work and trade are rooted in relationships. Having the reputation of being reliable opens the door to starting businesses in other sectors of the economy while maintaining a consistent customer-base. Also, as noted in The Economist article, the unpredictability of bureaucracy “deters businessmen from putting all their resources into one basket—out of fear that the market could be the target of onerous regulation.” Having multiple businesses in different sectors functions as a kind of insurance against over-regulation by the government.

The success stories of people like Mr. Allen serve as victories for innovation and enterprise and give hope to African entrepreneurs. And yet, in celebrating the ability of a small coalition to successfully navigate the system, we must recognize how inherently flawed the system is. Many African governments are characterized by corruption and the lack of both rule of law and clear, private property rights. In a way, the ability to maneuver the system acts as a medicine that masks the symptoms of a disease.

What's really needed is a cure. By promoting government regulations that value justice and protect economic liberty, more entrepreneurs will have the opportunity to participate in the global market, enhancing it with their God-given creativity.

Jul 252012
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