Community, Diaspora and Immigration
Tackling Factors Inhibiting the Development and Growth of African Diaspora’s Enterprises and Entrepreneurship
by Dr Effiong Akpan
In the United Kingdom, the development of African Diaspora’s entrepreneurship and enterprises have seen a steady increase during the last twenty years. There are a number of factors driving this steady progress including the inability to secure professional jobs, the desire to prove a point/be own boss, create personal wealth for self and family, general rise of entrepreneurship in Britain and the formal/informal access to entrepreneurial support.
On the other hand it is still a fact that only the minority of African Diasporas are actively engaged in enterprise development and entrepreneurship although the majority would like to do so.
This article explores opportunities that can be exploited by African Diasporas and the factors which prevent the majority from doing so. It also outlines some of the core actions that must be taken by African Diasporas and key stakeholders in order to smooth the path for increased participation of this group in enterprise development.
Entrepreneurship is defined as:
- The ability to undertake, pursue opportunities, to fulfil the needs and wants through innovation and creativity
- The act of creating and building something of value from practically nothing, a human creative act.
The following are the basic requirements for the Development and Growth of African Diaspora’s Entrepreneurship
- Commitment and motivation
- Willingness to take calculated risks both personal and financial
- Ability to take personal initiatives
- Being an independent thinker
Classification of Entrepreneurial Activities
In 2005 the Department for Business, Enterprise and Regulatory Reform carried out a study of entrepreneurial activities among different ethnic groups. In that study, entrepreneurial activities were classified into three main categories of Thinkers, Doers and Avoiders. It was found that those born in West Africa, Horn of Africa and Southern Africa are significantly more likely to be Thinkers than those born in the UK (table1).
The challenge therefore is to reduce the number of Avoiders and increase the number of Thinkers which ultimately can be converted into a substantial number of Doers. This can be achieved by increase in availability and quality of business support including access to finance to this group. Traditionally most businesses especially start ups owned by African Diasporas face serious difficulties in raising business finance. As shown below there are other factors which inhibit the development and growth of African Diaspora’s enterprises and entrepreneurship both in the UK and home countries.
Table1: Categorisation of Entrepreneurships by Ethnic Group
NO Thinkers Doers Avoiders
% % %
White British 11,831 11 13 76
White Irish 180 11 13 76
White other 711 17 18 66
All Black 1,042 25 9 66
Black Caribb 473 25 8 67
Black African 545 27 11 63
All Asian 1,715 15 11 74
Indian 603 15 12 74
Chinese 251 15 12 73
Source:Department for BERR 2005
Factors inhibiting the Development and Growth of Diaspora’s Enterprises and Entrepreneurship
As shown above, given the right enabling environment, Africa Diasporas can have an increased participation in enterprise development and entrepreneurship both in the UK and their homeland. Let us now examine briefly some the key factors which hinder the development and growth of African Diaspora’s enterprises.
Inadequate Capital- Many experience practical difficulties in accessing capital either for start up or for expansion. Even with the introduction of Government Enterprise Finance scheme, this group still experiences difficulties. The current financial climate makes it more difficult to raise money directly from banks especially when collaterals are not available. Traditionally raising business finance from friends and family members have never been strong with the African Diasporas. In times past availability of government and local authorities enterprise grants provided limited access to business start up and expansion capital.
Poor information on availability of opportunities- Information on what business opportunities are available are not readily available to this group, especially for those contemplating engaging in international trade with their homeland. This has killed morale and interests of many Thinkers who could have become Doers.
Poor knowledge of existing regulations- Knowledge of regulations which affect starting and running a business is crucial and the lack of this knowledge has had far reaching effects on African Diasporas enterprise. This is especially obvious for those interested in cross border enterprises which may often call for setting up a new business in their original homeland. In many of these countries, information on the requirements and process involved in registering and setting up a new venture are not easily accessible.
Inadequate essential business development skills- Essential business development skills are prerequisite for establishing and running successful enterprises both in the host and home countries. Many African Diasporas although maybe highly educated do lack many of the skills required.
Poor infrastructure in diasporas homeland- Lack of adequate infrastructure has frustrated the effort of African Diasporas who are interested in setting up businesses in their homeland and also establishing viable and sustainable international trade links. Those who have managed to start a business have had to cope with operational costs, translating into high costs of entry into their chosen market.
Poor knowledge of the market- A number of African Diasporas are prevented from developing new enterprises in their homeland because of not having sufficient knowledge of the market. Poor knowledge of the intended market increases the risk and many African Diasporas are risk averse.
Lack of cross border policy and strategy on diasporas enterprise and entrepreneurship development- An integrated cross border policy on diasporas enterprise development and entrepreneurship would encourage and provide a more enabling platform that would allow more African Diasporas to engage in enterprise development.
Key Actions for Promoting and Encouraging African Diasporas Enterprise Development and Entrepreneurship
There is no doubt that African Diasporas have a huge potential to contribute to enterprise development and prosperity of host and home countries if necessary support is provided to overcome some or all of the barriers identified above.
The following key actions are recommended to aid in stimulating the development and growth of African Diasporas enterprises and entrepreneurship.
- Develop European Union/UK policy & strategy on Diasporas entrepreneurship/ enterprise development
- Encourage home countries to have diasporas friendly investment policies in order to attract investments from Diaspora community
- Provision of tax incentives for cross border Diasporas investments
- Encourage the setting up of Diaspora’s micro finance banks to service the access finance requirements of the Diaspora community
- Encourage the development of an integrated cross border information bank, including publishing investment opportunities
- Encourage the setting up of, and use of Business Development Agencies to provide support to Diaspora entrepreneurs
- Encourage the setting up of joint ventures and co-operatives by Diasporas both in the host and home countries
In particular African Diasporas should consider the following actions which are crucial to their achieving their entrepreneurship objectives.
- More Positive and Dynamic attitude/approach
- Think Global- Consider viable business opportunities in Africa and elsewhere
- Be Better informed
- Develop better networks/become well connected
- Consider adopting Consortium/Partnership Approach for Synergy
- Take positive steps to identify resources internally and external.
Exploiting Opportunities in Diaspora’s Homeland
There are numerous business opportunities which Africa Diasporas can consider in their home countries either individually or in partnership with others and companies in host and home countries. The following specific areas have been identified.
- Joint ventures
- Small and large scale manufacturing
- Agriculture/Food production
- Oil and Gas
- Business Development/Consultancy
- Building Construction/maintenance
- Education/human capital development
No doubt, there is scope for African Diasporas to participate fully in enterprise development and entrepreneurship both in host and home countries with beneficial economic results. They can only achieve this with a clear vision, absolute commitment, a willingness to take calculated risks backed up by an enabling platform and a tripartite strategic partnership involving the host and home countries and diasporas themselves.
Effiong Akpan, Chief Executive, London Business Development Corporation