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Thinking Development

By Christopher Guta, PhD

I found myself in a very embarrassing situation in South Africa in 2006 that required intervention of the Malawi High Commissioner to that country. It all started with an unintentional action that appeared as if I intended to steal a pair of sandals from a high-street shop, name withheld. Without my knowledge, the teller I presented my selections to had not checked the sandals. Unknowingly, I took my carrier bags out. The security alarm was triggered as I passed through the exit doors! I was assumed to be a thief.

If I had to go into a court of law, I could have been convicted if it were proven that I had the intention to steal which, surely, I did not.

This week’s entry is about entrepreneurship. So, what is my point? The point is that, in most cases, certainly in the case of entrepreneurship, action cannot occur in the absence of intention.

Indeed, for individual or corporate citizens to become entrepreneurs, they must have the intention to take actions that exploit opportunities. While this is the case, entrepreneurship is enhanced by important conditions, two of which I attend to below.

The first condition is desirability. Perceptions by individuals and corporates regarding the desirability of exploiting entrepreneurial opportunities are important pre-conditions for intentions to do so to emerge. The potential for positive outcomes, especially regarding profitability, is at the heart of entrepreneurial actions. Thus, the question that needs to be answered by the Democratic Progressive Party (DPP) as the winning party at the just-ended elections is: What propositions in the DPP manifesto provide individuals or corporates perceptions regarding the desirability of enterprise? Are there propositions in the manifesto that make individuals see opportunities that are exploitable? Put differently: Are there propositions in the manifesto that present threats for individual and corporate actions towards entrepreneurship?

The second condition that enhances entrepreneurship is feasibility. As opposed to desirability, feasibility has to do with the extent to which it is possible to surmount all potential obstacles that lay in the way towards successful entrepreneurship. This beckons the capability of individuals and corporates to undertake action to exploit entrepreneurial opportunities. From an institutional perspective, feasibility of enterprise is facilitated by a range of factors. One such factor is availability of finance. I have addressed finance in past entries, especially when our Parliament debated the Interest capping bill. To repeat briefly, it is important to establish financial institutions that provide sources of affordable, long-term financing. The second factor is human capital with educational attainment measured in terms of years of education, years of experience; and previous experience with entrepreneurship as important contributors. The third factor is social capital which emerges when there are synergistic linkages and interactions in society.

When one’s parents are in business, it is likely to have entrepreneurial children. Indeed, as we say in Chichewa: ‘Mwanambuu make mbuu’. The same applies if an individual has a circle of friends who are entrepreneurs: ‘Birds of the same feathers flock together’. Another condition for enhancing feasibility of enterprise is the extent to which the regulatory environment protects property and makes it easy for enterprises to emerge. The last factor I will appeal to is the level of corruption, understood here as the misuse of public power for private benefits including biased allocation of public funds. Corruption rears its ugly head by creating perceptions that to be successful, all you need is to be linked to a benefactor. Effort is of little or no importance.

With respect to desirability of entrepreneurship, Malawians have the historical disadvantage of low ceilings reinforced by low expectations regarding personal well-being. As DPP continues with programmes such as Farm Input Subsidy and malata subsidy, the extent to which they impact negatively on the desirability of entrepreneurship needs to be considered.

Regarding feasibility, we should look for actions to further reform the regulatory environment governing entrepreneurship with the promise to review the micro, small and medium enterprises policy and enact an appropriate bill as an example. Let us also look forward to the strengthening of the Malawi Agricultural and Investment Corporation Bank as a tool for making finance accessible on better terms. I hope DPP will draw lessons from past efforts as action is taken to “capitalise the Malawi Enterprise Development Fund with K20 billion to cater for the SMEs and cooperatives to increase access to finance at affordable rates:”. More importantly, we should expect that such access will not be biased towards a particular section of Malawi society. This would limit synergistic linkage and interaction across the nation, thereby attenuate social capital.

Rather than complaining, think of how to propel the egalitarian development of Malawi forward.

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