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By Dr. Jean C. Kouam, Dr. Simplice A. Asongu, Bin J. Meh, Prof. Robert Nantchouang, Fri Asanga, Denis Foretia (Download Pdf version)

Determinants of the Quality of Business Support in sub-Saharan Africa


Note: This policy brief was written as part of the Social Entrepreneurship for Sustainable Development in sub-Saharan Africa project, conducted by the Nkafu Policy Institute between September 2020 and August 2022 and funded by the International Development Research Centre (IDRC).

1. Introduction

Business incubators are important in boosting the private sector for favorable externalities such as employment and growth opportunities that are relevant to the achievement of most sustainable development goals (SDGs) that are linked to growth, poverty and inequality (Millette et al., 2020). Accordingly, providing a measurement through which the quality of support for businesses in sun-Saharan Africa (SSA) could be examined is worthwhile. Therefore, beside the highlighted practical and policy importance of such an assessment, the corresponding scholarly importance is premised on an apparent gap in existing research that has for the most part been concerned with linkages between impact investing, business incubation, capital providers, and outcomes of sustainable development. This policy brief is a summary of Kouam et al. (2022) which has identified drivers of business support quality in Ghana, Cameroon and Burkina Faso. Furthermore, by examining 80 support structures from the attendant countries, Kouam et al. (2022) complement the extant literature within the remit of sub-Saharan Africa (SSA) on the one hand and on the other, provide more robust cross-country practical insights on the drivers of the quality of business support that can be relevant in preventing failure and consolidated business incubation management.

2. A Brief Overview of Business Support in sub-Saharan Africa

Today, contemporary priorities of development in SSA are informed by SDGs that are connected to the promotion of sustained and inclusive economic prosperity owing to at least two principal fundamentals in scholarly and policy circles. On the one hand, the majority of countries in the sub-region did not reach most millennium development goals targets, especially as it pertains to those linked to extreme poverty and inequality (Asongu, Biekpe & Cassimon, 2020). On the other hand, according to projections, in the absence of inclusive growth strategies that are robust in the sub-region, most countries in the corresponding region are not likely to reach the goal of limiting extreme poverty to a threshold of less than 3% by 2030 (Bicaba, Brixiová & Ncube, 2017).

The contemporary African-centric literature on business incubation has focused on the following: an overview of the disparities between private and state-run incubators in South Africa (Masutha & Rogerson, 2015); the links between incubation centers, unemployment, and youth prospects in southwestern Nigeria (Akanle & Omotayo, 2020); the relevance of governance in Nigeria in moderating barriers to technology-based business incubators (Obaji & Olaolu, 2020); some perspectives on the possibilities, threats and opportunities surrounding Africa’s transformation by means of knowledge work automation (Hanson, 2020); the nexus between clustered enterprise development and open development activities in the informal economic sector (Jegede, 2020) and case studies of emerging enterprises that are oriented towards economic integration, society and ecology in systems of sustainable food production (Malan, 2020)

Unfortunately, as documented in Kouam et al. (2022), the existing literature, which predates the advent of the SDGs is geared toward profit-oriented corporate performance indicators. Kouam et al. (2022), departs from the existing literature by focusing on African countries with a particular emphasis on the SDGs.

3. The Determinants of Support for Businesses in the Selected Countries

Identifying the determinants of business support in Cameroon, Burkina Faso, and Ghana, we used the data collected by the Nkafu Policy Institute in 2021 amongst Business support structures in the three countries. From the corresponding results, it is apparent that variables such as the gender of the founder, the duration of support, the gender of the current manager of the support structure, the number of women in the support structure, the number of businesses supported per year and the business model, the language spoken in the structure, the type of affiliation, inter alia, do not have a significant influence on business support quality and the performance level of such businesses in the selected countries. These non-significant variables are traceable to the quality of services offered in terms of training, access to financing, markets, networking, as well as to the internal technical capacity of the support structures and management.

Among the services offered, it appears that a 10% increase in the number of accelerator programs organized by the business support structures improve the quality of support by 0.7 point. The other determinants of the quality of support to businesses in increasing order are: training workshop (0.9 points), access to finance (1.15 points), Bootcamps (1.16 points), business process (1.16 points), gender and inclusion (1.17 points), mentorship program (1.27 points), advocacy and government interaction (1.4 points), market facilitation (1.53 points), entrepreneur engagement (1.7 points), networking events (1.87 points), entrepreneur connectivity (1.95 points), support to get technology to market (2.17 points) and B2B connections (2.26 points).

Regarding the internal capacity of businesses, our findings show that a 10% improvement in financial management will enhance the quality of support of the businesses by 0.8 points. The other determinants of the quality of support to businesses from their internal capacity are: facilities (1.01 points), graduation criteria (1.01 points), staff skills and consultants (1.19 points), financial health and funding model (1.32 points), selection criteria and process (1.46 points), pipeline development (1.62 points), communication and branding (1.63 points), strategic vision (1.74 points), human resource management (1.8 points), the leadership team (1.8 points), recognition and influences (1.84 points), monitoring and evaluation (1.89 points) and organizational culture (2.64 points). These findings show that when sustainable development objectives are taken into account in business support practices, such consideration would significantly affect the quality of the corresponding support. The results are consistent with those of Kamdem et al. (2011) who show that qualitative aspects (i.e., transfer of skills to entrepreneurs), should also be integrated by support structures especially because the attendant support cannot be limited exclusively to quantitative dimensions, particularly when it comes to increasing the number of support structures.

With respect to some authors, when the quality of support is considered to the detriment of the number of support structures, the underlying consideration justifies the reason some countries in sub-Saharan Africa such as Cameroon and Senegal are improving in terms of the establishment of training and/or funding programs by means of international collaborations as well as putting considerable emphasis on entrepreneurs’ relational networks. The underlying approach can be comprehensively clarified in the contemporary context that is characterized by changes that can disrupt the operating value systems and methods of companies and which entail some aspects of digital transformation (Storhaye, 2016). Within this premise, Alper and Miktus (2019) argue that establishing a level-playing field for female entrepreneurs is particularly relevant. In the same vein, Tsambou and Kamga (2021), upon assessing the effect of the adoption of innovations on corporate productivity, have concluded that the introduction of new commodities (i.e., products and/or services) that is accompanied by novel marketing and organizational methods, has a greater incidence on business productivity.

Moreover, the findings of Kouam et al. (2022) provide business support structures with the measures through which to avail effective support that are consistent with corporate realities and specificities. They thus provide confirmation of the existence of some key factors for business support success as well as the relevance of an appropriate strategy for this support. It should be clarified clarified that while many studies in the extant literature support the view that the corresponding business support should be specialized, very few insist on an assessment of the intrinsic quality of the support framework, which would ensure flexibility in the transition from a quantity-based to a quality-based approach.

4. Conclusion

The objective of this policy brief was to summarize the work of Kouam et al. (2022) who have identified the determinants of the quality of business support in sub-Saharan Africa. The study focused on three selected countries namely: Burkina Faso, Cameroon, and Ghana. Based on the data collected by the Nkafu Policy Institute, the determinants found by Kouam et al. (2022) are in line with the premise that taking sustainable development objectives into consideration in practices of business support would significantly enhance the performance of business in sub-Saharan Africa. The uniqueness of Kouam et al. (2022) stems from the fact that they consider specific SDGs (SDGs 4, 5, 8, 9, and 13) and, examine their contribution to improving support quality for companies, a research area that has not been critically engaged in the extant contemporary literature.

Based on these findings, some recommendations have been proposed to the actors of the entrepreneurial ecosystem. Thus, while the SDGs should be concretely integrated by the support structures, it is also relevant that policymakers put in place effective monitoring and evaluation systems for the companies that have received support.

The challenge here is to assess the changing needs of entrepreneurs. It is therefore essential that governments put in place administrative, legal, and fiscal frameworks based on sustainable development objectives (i.e., including those considered in this study) that would foster innovation and entrepreneurship. In such a context, companies must have recourse to support structures that provide pragmatic local solutions to many unsolved or partially solved problems.

References

1. Akanle, O., & Omotayo, A., (2020). “Youth, unemployment and incubation hubs in Southwest Nigeria”, African Journal of Science, Technology, Innovation and Development, 12(2), pp. 165-172.

2. Alper, C. Emre, and Miktus, Michal, Digital Connectivity in Sub-Saharan Africa: A Comparative Perspective (September 2019).Available at SSRN: https://ssrn.com/abstract=3482294 or http://dx.doi.org/10.2139/ssrn.3482294.

3. Asongu, S. A., Biekpe, N., &Cassimon, D., (2020). “Understanding the greater diffusion of mobile money innovations in Africa”, Telecommunications Policy, 44(8) September 2020, 102000.

4. Bicaba, Z., Brixiová, Z., & Ncube, M., (2017). “Can Extreme Poverty in Sub-Saharan Africa be eliminated by 2030?” Journal of African Development, 19(2), pp. 93-110.

5. Jegede, O. O., (2020). “Open development and scaling-up of clustered enterprises in Nigeria’s informal sector”, African Journal of Science, Technology, Innovation and Development.DOI: 10.1080/20421338.2020.1718363.

6. Kamdem, E. S., Nkakleu R., Ongodo M. F., Biboum A. D., & Ikellé R. (2011), Accompagnement des entrepreneurs : genre et performance des très petites et petites entreprises en phase de démarrage dans les villes de Douala et Yaoundé (Cameroun). Edition du Codesia.

7. Kouam, Jean & Asongu, Simplice & Meh, Bin & Nantchouang, Robert & Asanga, Fri & Foretia, Denis, 2022. “A Synthetic Indicator of the Quality of Support for Businesses in Burkina-Faso, Cameroon, and Ghana,” MPRA Paper 114062, University Library of Munich, Germany.

8. Masutha, M., & Rogerson, C.M. (2015). “Business Incubation for Small Enterprise Development: South African Pathways”. Urban Forum, 26, pp. 223–241.

9. Millette, S., Eiríkur Hull, C., & Williams, E. (2020). Business incubators as effective tools for driving circular economy. Journal of Cleaner Production, 266, 121999. http://dx.doi.org/10.1016/j.jclepro.2020.121999.

10. Obaji, N. O., &Olaolu, D., (2020). “Evaluation Study on the Barriers to Success of Technology Business Incubation Programme in Nigeria – The Moderating Role of Government Policy” SSRN Paper No. 3518205.

11. Storhaye P. (2016), Transformation, RH et digital : De la promesse à la feuille de route, EMS – Avril 2016.

12. Tsambou, A. D. &Fomba Kamga, B. (2021). Adoption d’innovations et productivité des entreprises en Afrique subsaharienne francophone : cas du Cameroun, de la Côte d’Ivoire et du Sénégal. Revue d’économie industrielle, 173, 107-160. https://doi.org/10.4000/rei.9920.

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Jean Cedric Kouam is the Deputy Director-Economics Affairs Division and the Head of Fiscal and Monetary Policy Sub-section at the Nkafu policy Institute. He holds a doctorate in economic policy and analysis (monetary and financial macroeconomics) from the University of Dschang in Cameroon.

Bin Joachem Meh is a Research Assistant in the Department of Economics Affair at the Nkafu Policy Institute. He is a Ph.D. Fellow in Labour and Development Economics in the University of Bamenda. He is multidisciplinary, as he holds a B.Sc. and M.Sc. in Economics and Financial Engineering from the University of Yaounde II Soa and M.Sc. in Banking and Finance from the University Rennes 1 France.