Entrepreneurship: Do we go SME or mega corporations?

In the heat of the job and employment debate as universities churn out graduates, two interesting schools stand out: the improvisation school, and the developmental state school.
Charcoal stove dealers attend to their stall. Have we misunderstood the job-creation concept? (Net)
Charcoal stove dealers attend to their stall. Have we misunderstood the job-creation concept? (Net)

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Matsiko Kahunga

In the heat of the job and employment debate as universities churn out graduates, two interesting schools stand out: the improvisation school, and the developmental state school.

The former has become the pet subject for virtually everyone advising fresh graduates and other youth. you just need to listen to any speech on graduations, school open days, or the condemnation of ‘theoretical subjects’. Even the market-place side of education has caught into this, with ‘producing job-creators’ now a popular marketing tagline for schools and educational institutions.

This school of thought is right and wrong. It is right in the narrow sense of looking at jobs and employment as an end in and of itself. The improvisation school will lead us into a generation of mediocrity, where the primary pre-occupation is only seeking survival. Thus, if a roadside meat roasting business can earn six times a teacher’s monthly salary, why not run to that ‘green’ pasture? Green it may look but will only leave us in vicious cycle, nothing beyond survival. This is where the improvisation school loses out. 

The antithesis to the improvisation school comes from Ali Mufuruki, the chairman of Infotech Investment Group in Tanzania. This is the developmental state school.

In a recent interview on Citizen TV’s African Leadership Dialogues series hosted by Julie Gichuru, he referred to the outputs of the improvisation school as nano-economies. Nano in ordinary English means very small, very minute…almost invisible. Not only are these individual enterprises nano, they are disparate (scattered), disjointed with an abnormally high mortality rate.

Exceptions and outliers granted, where some small and even micro enterprises have flourished, the normal distribution is that these survival improvisations either perennially limp or totally die out. They cannot be the vehicle to transform Africa nor empower us to own and claim the 21st century. Therefore, if we are to be what we aspire to be, Mufuruki roots for mega factories, which besides creating jobs and employment, have a transformative multiplier impact on the economies.

Corporate leadership is nurtured in such large companies. Fresh graduates, full of great ideas and energy, have the knowledge but they need the wisdom (practical skills). It is from these large corporations that they will drink on the fountains and be ready to move.

This is what management guru Charles Handy refers to as the ‘elephant-flea’ relationship. The large corporations are the elephants onto which the fleas hold to gain the essentials, then drop off and become independent.

Even in such professional practices as law, a fresh graduate will not open chambers straight from university. They work under the practical tutelage of senior counsels, acquire the requisite exposure and experience (read wisdom) to be able to stand on their own. The same must apply in the corporate world.

The way out: the Eva business creed

Entrepreneurship and the business world, in general, is ruled by two goddesses: goddess Eva and goddess Rose. Eva means Economic Value Addition, while Rose refers to Returns on Shareholder Equity. Worshippers of Rose have the profit motive as their principal driver, while those worshipping at the altar of Eva have the larger economic benefits in perspective.

This is the raison d’être of most parastatals (government-owned companies). Whereas they are meant to be run profitably and efficiently, their policies are at times influenced by the considerations beyond balance sheet profitability.

The state in this case, becomes a surrogate entrepreneur, providing investment capital, imparting skills and ensuring market. This must be beyond the small national markets, though without necessarily hankering after the ever-elusive European markets.

Our regional markets, Mufuruki maintains, are enough to provide us demand for what we produce in virtually all sectors. Small innovation enterprises then become input and component suppliers to state-owned mega corporations. Cottage industries are organised as units of the mega corporations, though they are independently-owned and run by different entrepreneurs. A mega factory producing shoes, for example, will only do the final stitching, branding, packaging, and distribution  using components sourced from cottage-level industries spread across the country.

And it is only developmental states that can spearhead this. In East Africa, Kenya has had a long history of these Eva-driven enterprises. Companies like Uchumi Supermarkets were started to provide ready market for Kenyan products at a time when they were discriminated against by the Rose-driven stores.

Kenya Co-operative Creameries had to be bought back by government from a private investor who had bought it, to ensure dairy farmers have a market. Mechanical tea harvesters were rejected in Kericho because they would render citizens jobless. The debate needs a total refocusing. The improvisation school is only a palliation and perpetuation of poverty.

The author is a partner at Peers Consult Kampala and CET Consulting, Kigali.

bukanga@yahoo.com

 

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