The Endogenous African Business: Why and How It Is Different, Why It Is Emerging Now and Why It Matters
- Post by: Gilbert
- May 8, 2020
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Africa is currently undergoing a transition that is unprecedented in its history. For the first time, the demand of urban populations pulls business development, thus creating economies with higher levels of specialization than before. For the 20th anniversary of the Journal of African Business, Paul T.M. Ingenbleek, strategic marketing expert at Wageningen University in the Netherlands, wrote an essay that highlights the phenomenon of the endogenous African businesses that are arising in the process of African business growth. He also presented his ideas in a key note address at the AABD conference in Dar Es Salam in 2019. African endogenous businesses tap into Africa’s natural resources and the social, economic and cultural systems that build upon them. These resources and systems make the African business environment different from business environments in other parts of the world. As such, if they can be used to create advantages over competitors, the competitive advantage is likely to be sustainable and it can therefore remain when the current growth peaks start to flatten and businesses can’t rely on unsatisfied demand only. Examples can be found in any African country. The wildlife that is the basis of successful business models in among others South Africa and Kenya, is just one example. In a country like Burkina Faso a company emerged that successfully exports dried tropical fruits to other African countries as well as to importers of organic foods in Europe. As people have experience in producing and trading mango’s and other fruits for many generations, it is not surprising that these businesses emerge here.
Ingenbleek got the idea for his concept of the endogenous firm from the many projects he did with his African PhD candidates and postdoc researchers in interdisciplinary projects on value chain development in African countries. In each country he was asked to develop or do research on new value chains: “ It struck me that in fact all the chains we were asked to work on were in essence based on a natural resource advantage, like shrimp production in the lagoons on the coast of West Africa or the livestock production in Ethiopia. Companies to take the lead in the development of the chain and marketing towards consumers were however always rare to find.”
Reliance on Africa’s natural endowments and traditions is not enough to create competitive advantage in the global marketplace. Ingenbleek is however of the opinion that the additional skills and competences that are needed are increasingly within reach: “The endogenous businesses have access to knowledge on how to manage modern businesses in the formal sector of the economy. A growing number of Africans is trained with modern business skills, management books are published with a specific focus on Africa, and many Africans now have access to the Internet where they learn some essential business skills sometimes remarkably fast. If they manage to use these skills to create value from traditional resources, the recipe for competitive advantage is there.”
More work on African endogenous businesses will appear in 2020 in the special issue of the Journal of Macromarketing on African systems. Endogenous African businesses are important because they have potential to fuelling economic growth, to revitalize rural areas, contribute to food security and healthy diets, and provide role models of which Africans can be proud. “Hence, these businesses deserve our attention in the next two decades of scholarly research and education on African business. A lot of work remains to be done before we understand how we can make African businesses survive and thrive,” Ingenbleek argues.