Entrepreneurship and Wealth Creation

Published on 31st May 2005

Recent years have seen the mushrooming of small business undertakings known in Zambia as Tuntemba, which find their home in the informal sector, where they are unregulated and largely outside the long arm of the taxman.

The Central Statistic Office defines formal sector employment as jobs where workers are entitled to pension, gratuity or social security, paid leave and are working in establishments with more than five workers.  Accordingly, informal sector employment means jobs outside these parameters.

Although there are no official statistics readily available, it is estimated that out of a potential labor force of 3.5 million, in Zambia between 1.5 million and 2 million are engaged in some income generating activity in the informal sector.  They earn their living and support their families from what they are able to realize from running their small businesses.  This phenomenon is not nly unique to Zambia but also other countries today, especially developing countries.

Reports of studies undertaken in other countries, all point to the Micro Small and Medium Enterprises (MSME) sector as the new engine of employment and wealth creation in both developed and developing countries.  For example, a 1998 study showed that MSMEs accounted for 45% of UK employment and 40% of sales turnover out of all UK firms.

Clearly the MSME sector offers the greatest promise for employment creation in a world where the structure of industry and employment has changed drastically, as a result of advances in technology, especially in areas like IT.

The majority of people in the informal MSME sector in Zambia, are driven there because they have no choice in the absence of jobs.  Starting a ‘Kantemba’ or a small enterprise is the only alternative available to earn a living and support their families for many of them.  However, there are others who venture into starting their own small enterprises out of conviction that this is what they want to do in life.  Such people will even go to the extent of opting to walk out of a decent and well paying job by everyone’s standards, in order to satisfy a burning desire to do something on their own.  Sometimes they will do this at great financial risk to themselves and their families.  Such people are the true entrepreneurs.  They are a class unto themselves and without them society would not develop at the pace it has.  Just imagine what would have happened if we did not have the Bill Gates of this world.

The Oxford Advanced Learner’s Dictionary defines an entrepreneur as ‘a person who starts or organizes a commercial enterprise, especially one involving financial risk.’

Entrepreneurs are unique individuals in any society.  Through the ethos of entrepreneurship, they will identify a business opportunity, develop a vision for it and using their initiative, skill, talents in an environment of hard work, self discipline and perseverance, exploit that opportunity by starting a business or commercial undertaking and, if it succeeds, create wealth and employment, thus contributing to the development of their communities, societies and nations.

A nation may have abundant natural resources like land, water, minerals forest etc but unless it is also endowed with a critical mass of entrepreneurs, the abundant natural resources will not mean anything.  They will remain in their unexploited condition and of no value or benefit to anyone.

The debate whether entrepreneurs are born or can be grown through training is as old as mankind itself.  In my view that is not important.  What is important is exposing society, especially young members of society, to attributes and qualities that go to make up a successful entrepreneur.  If these attributes and qualities can be learned, well and good.  If not, at least, those that are born entrepreneurs will have an opportunity to sharpen the attributes and qualities they already have, and thereby become even better entrepreneurs.

Given the above scenario, it goes without saying that societies which have nurtured the growth of entrepreneurship by providing an enabling environment for its promotion, have developed much faster than those societies where entrepreneurship has not been given the requisite support and encouragement to prosper.

Although, MSMES have been recognized in Zambia as a priority sector for growth and development, there is still a lack of a clear developmental agenda and a program of action. The growth of the sector continues to be adversely affected by a host of problems including technology transfer, human resources development, finance, regulatory red tape, and access to markets, to name but a few.  Although these issues are not unique, and affect large firms as well, they nonetheless affect MSME to a much greater degree.

The establishment in Zambia of the Small Enterprise Development Board (SEDB), formerly SIDO, was meant to provide an institution for the promotion of this important sector.  But the agency has not performed well due to a host of problems, including poor funding and, one might add, lack of political will.

Private membership organizations like the Zambia Chamber of Small and Medium Business Associations (ZCSMBA) have emerged to try and fill the gap.  But they are too weak to exert the required and sustainable pressure to make a positive difference. Most are donor dependent and therefore vulnerable.  Besides the task is mammoth and requires a national agenda.

Zambia must not just preach about what its budding entrepreneurs can do to contribute to wealth and employment creation and, in so doing, assist in poverty alleviation.  It must act and not only provide an enabling environment for the Zambian entrepreneur to flex his muscle, but go further and emulate countries like India that have provided sustained practical support to this sector of their national economy, resulting in substantial benefits to their communities.

Adapted from Zambia institute for Public Policy Analysis (ZIPPA) Newsletter. May 2005.





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