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Necessity of entrepreneurship policies

By Henry Bwisa | January 27th 2017 at 00:00:00 GMT +0300


Necessity of entrepreneurship policies

To the extent that entrepreneurs create new businesses, they are important. It is the path-breaking offerings by entrepreneurs, in the form of new goods and services, that result in new employment, which can produce a cascading effect on the economy. The stimulation of related businesses or sectors that support the new venture add to further economic development.

The message therefore is that African countries can ignore an entrepreneurship policy at their own peril. There is an inaccurate belief that the existing SME (small and medium enterprise) policy is an entrepreneurship policy. If an SME policy focuses on the firm then an entrepreneurship policy or E-policy focuses on the individual. If the scope of SME policy is on the existing businesses then an entrepreneurship policy goes beyond existing firms.

Entrepreneurship and SME policies aim at causing two effects on the economy. Entrepreneurship policy is focused on the key actors in the business, the entrepreneur, while SME policy seeks to increase the competitiveness of the firm. Entrepreneurship aspires to increase the level of supply of entrepreneurs, while SME policy hopes to increase the number of competitive firms.

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The best way to visualise the entrepreneurship policy is via the MOS model by Lundström and Stevenson where M stands for Motivation, O stands for Opportunity and S for Skills.

Research on the MOS model shows there will be higher levels of entrepreneurial activity in economies where people are aware of entrepreneurship as a feasible and viable option and willing to explore it (Motivation); have access to opportunities to gain the knowledge, skills and ability to be able to pursue it (Skills); and can gain ready access to the start-up supports they need.

To operationalise “Motivation” Lundström and Stevenson include the social value placed on entrepreneurship and its desirability and feasibility as a career and employment option. The level of these elements could be heightened through awareness, information, exposure, role models and actions to increase social legitimacy.

When The Standard newspaper covers agricultural success stories on Saturdays it is not only creating awareness but also displaying agripreneurial role models. It is also giving necessary information to the populace and in effect training those who could not afford formal structured training.

A policy that would reward The Standard newspaper and other media channels that create similar awareness would be an entrepreneurial policy but unfortunately it does not exist yet.

“Skills” is operationalised in terms of technical, business and entrepreneurial skills and know-how. This could come through the education system, experience working in a small business and running an enterprise or professional networks.

Most entrepreneurs learn to do what they do through trial and error. In Kenya there is no entrepreneurship education at primary and secondary schools. The business studies at secondary schools produce business-oriented but not entrepreneurship-oriented students. The difference is summarised in the statement, “all entrepreneurs are business people but not all business people are entrepreneurs”. In Kenya we have more business people than entrepreneurs.

A tested avenue for operationalising the “skills” component is by created business incubation centres. A good attempt at this was the creation of Kenya Industrial Estates but unfortunately it is anchored on the SME policy. _“Opportunity” is operationalised by Lundström and Stevenson in terms of the support environment for entrepreneurship - the availability of information, advice, capital, contacts, technical support and business ideas, as well as the ease of access to these resources.

It also encompasses the regulatory environment and processes of Government administration. In order to create more Opportunity conditions, governments can reduce or eliminate obstacles in the regulatory, administrative, legislative and fiscal systems that may act as inhibitors to business entry.

They can also reduce the penalties associated with bankruptcy, and the resulting “stigma of failure”. In addition, labour market and social security policies and systems may impose hidden barriers or “quiet disincentives” to the self-employment versus paid employment decision; these must also be examined.

When we observe farmers who keep on planting maize on their farms even when the sizes of the farms are dwindling due to population-led subdivisions and making their maize farming uneconomical, it is because there is no entrepreneurship policy to make them innovative. With an appropriate entrepreneurship policy such farmers would switch to horticulture and start to practice vertical farming that adds lots of value to their meagre plots.

An entrepreneurship policy would motivate school children to answer differently the question... what do you want to be when you grow up? Rather than say, “I want to be a doctor” they would say, “I want to own a hospital” If the former is a mind-set of one who wants to be an employee the latter is for one who wants to be an employer.

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