Monday, August 01, 2011

Entrepreneurial Africa - Irish Times, May 2011

The Irish Times - Tuesday, May 10, 2011

Out of Africa: A continent of entrepreneurs

We’re used to seeing Africa as poor and helpless, and it certainly has its problems. However, it’s also a hotbed of entrepreneurship, where phone-fixers, DVD hawkers, clothes sellers and internet start-ups are thriving. MANCHÁN MAGAN visits Mozambique and finds a country more suited to investment than pity

IT WAS the scene where Leonardo DiCaprio walks through a bustling African market in the movie Blood Diamond that finally opened my eyes to the surge of entrepreneurial spirit that is sweeping through Africa. I had been seeing evidence of micro-business in Africa for years – bright-patterned mamas selling everything from sunglasses to samosas, phone-fixers poking soldering irons at mobile phones, scribes standing by laminating machines – but I tended to edit them out in favour of more predictable images of children begging, women fetching water or men ploughing.

It suits our tendency towards simple categorisation, as well as the agendas of aid agencies, to see Africa as poor and helpless. The truth is far more complex.

The continent is in fact in the throes of an entrepreneurial revolution. Eight African countries are in the top 20 fastest-expanding economies of 2010. Every village, town and city I visited in Uganda, Zambia, Ethiopia, Kenya and Tanzania over the past two years is humming with entrepreneurial zeal to a degree that wasn’t even imaginable on my previous prolonged journey across the continent 20 years ago.

To examine the issue more closely I travelled to Mozambique, one of the world’s poorest countries with a per capita income of only $350 a year and a ranking of 175th out of 179 countries in the Human Development Index. It’s considered one of the 10 worst countries in the world for doing business in, having emerged from a disastrous Marxist dictatorship and the ravages of 16 vicious years of civil war with a largely uneducated population and virtually no infrastructure.

First impressions were not encouraging. It was a Sunday and Maputo, the capital, was abandoned; no traffic, no shops open and nobody on the streets. The buildings were dilapidated, the pavements crumbling, the post-boxes had their fronts smashed open and there were few cars visible.

I began to doubt my initial rosy optimism; but, at dawn, a transformation occurred – the shuttered windows and caged-in doors morphed into an array of travel agents, restaurants, banks, supermarkets, internet cafes and clothes shops. Buses choked with workers clogged every street. Pavement-sellers draped from head to toe in sandals, scarves, silks, etc were singing and shouting. Men pushing fruit carts and women carrying buckets of samosas were offering breakfast to be-suited commuters. Children were selling plastic brooms, buckets, pirated DVDs and mobile phone credit. The businesses didn’t look glamorous, but they were thriving.

Beyond the worn-out staircase and tangle of electrical wires in each building was a jumble of new enterprises, most consisting of simply a desk and a mobile phone, with perhaps a second-hand computer. They look less imposing than the white-marbled offices of the multinationals, but they are far more in tune with the market and, often, more profitable too. While the scanners, shredders, printers and air-conditioners of the multinationals lie idle during power cuts and surges, the lean African businesses keep going.

They are teaching us a new form of entrepreneurship suited to a world of dwindling resources, where it’s all about service rather than facade.

THE REASONS FOR THIS swell of commerce are numerous, but principally it is because there is profit to be made. The socialist regimes that spread throughout the continent after independence have given way to market economies and the growing network of micro-loan banks and government initiatives to support private sector enterprise are enabling people to set up in business for themselves.

Non-government organisations (NGOs) are moving away from crisis management and towards supporting private-sector initiatives and helping entrepreneurial education programmes. The Mozambique government, with support from Norway and the UN, has introduced an entrepreneurship curriculum at schools to teach children how to help themselves to generate income.

Ireland has been working with Mozambique to overhaul its stifflingly bureaucratic system for issuing business licences, which are compulsory for every start-up. Irish Aid, the State development agency, has teamed up with Technoserve, a pro-business NGO, to fund small factories and businesses and to move away from the large-scale projects such as dams and industry that we focused on in the past.

Technoserve believes that by helping an entrepreneur to create a business with a social consciousness, the surrounding community benefits directly, rather than trying to change an entire government or country.

Frank Sheridan, the Irish ambassador to Mozambique, notices a marked improvement in living standards in the area surrounding a cashew nut-processing factory supported by Irish Aid in Inhambane. Attendance at the local school has increased dramatically, as families can afford books and uniforms, and mothers use the school as daycare while at work.

Assessing the true extent of entrepreneurship in Africa is difficult. Governments tell you what you want to hear, and NGOs often push their own agenda. I decided to go on a journey around the country to see what locals would tell me. My first epiphany was at the bus station – a seething mass of business with everybody selling something and money changing hands so quickly and so often that it was impossible to keep track.

In the space of 10 minutes, an entire mobile shopping mall passed me by – men, women and children with trays, buckets, platters, bags and baskets balanced on their heads, tied to their arms, strapped around their foreheads, offering everything and anything for sale, from things that I might need on the bone-juddering trip ahead (food, drink, fans, cushions, sleeping tablets, raincoats), to things that I might have forgotten to buy at the market (fire-irons, bras, sugar, washing-up liquid). It was one of the most concentrated displays of micro-business I’ve witnessed.

Over the following fortnight, I wandered around the country from the eastern villages abutting the Limpopo National Park to the southern coastal border with Swaziland, talking with everyone I met: internet pioneers, tribal fisherwomen, chili farmers, necklace makers, hip-hop clothing merchants and South African property tycoons. They all agreed that Africa was in the grips of an economic surge and there were fortunes to be made, but they stressed that there remained vast hurdles to overcome – principally, the lack of proper transport and communication infrastructure; inept bureaucracy; corruption; high inflation; unskilled labour force and difficulties accessing capital.

In a country where bank interest rates are a crippling 20 to 30 per cent and the bureaucratic framework displays the worst elements of Portuguese inefficacy, socialist inertia and African prevarication, it’s amazing that any business succeeds at all.

That’s what is most striking about burgeoning market towns such as Xiexie, Mozambique, or Fort Portal, Uganda, or Morogoro, Tanzania – that their transformation is happening with at least one hand tied behind their backs. A generation of young, savvy entrepreneurs is imbuing them with the excitement that Vancouver or San Francisco must have had a century ago. The lure of virgin markets with little or no competition, cheap labour and minuscule rents trumps the drawbacks.

To see this in a democratic country such as Mozambique – where even 10 years ago a functioning telephone would have been hard to find and a bank loan required powerful connections or payment of a large bribe – is unprecedented. This is a country that never had the indigenous entrepreneurial expertise Kenya, Tanzania or Togo got from their educated and wealthy colonial masters. Mozambique was colonised predominantly by illiterate Portuguese peasant farmers, and their exodus after independence left behind no emerging entrepreneurial class.

It would be wrong to downplay the obvious difficulties facing Mozambique or Africa at present, but it may be time to update the image of poor starving children that our parents shamed us with over unfinished plates when we were young.

Hunger and poverty are all too common in certain areas, but what is equally common is future Rockefellers, Macys, and Sainsburys busily staking their claim. Rather than polishing off our dinners to help Africa, perhaps it is time to invest our savings there.

This article was supported with a grant from Irish Aid’s Simon Cumbers Media Challenge Fund