Growing Micro, Small and Medium-Sized Enterprises in Africa:

A Knowledge Management Approach

By Ugwushi Bellema Ihua

Introduction
There is absolutely no doubt in the fact that all over the world, the micro, small
and medium-sized enterprises (SMEs) sector have been acknowledged for playing
major roles in the economic development of many countries, especially in the so-
called first-world nations. SMEs constitute the largest proportion of businesses
and play tremendous roles in employment generation, provision of goods and
services, creating a better standard of living, as well as contributing significantly
to the gross domestic products (GDPs) of all developed countries (OECD 2000). In
this article, our aim is to simplify the concept of Knowledge Management (KM) to
entrepreneurs, promoters, managers and other stakeholders in the small and
medium-sized enterprises (SMEs) sector in Africa. Although the concept of KM has
been around for over a decade, nevertheless, it is still relatively new, still growing
and has gained significant recognition all over the world.

Our focus here is to demystify the “myth” beclouding the general understanding
of the concept of knowledge management and to discuss the enormous potential
benefits awaiting African SMEs who choose to adopt a ‘deliberate’ KM initiative
into their overall organizational strategy. We would also examine the symptoms
and crucial need for a KM project, the building blocks of KM, the modes of
knowledge transfer, and provide hands-on tips for SMEs interested in designing
and implementing an effective KM programme within their organisations.

Why the Focus on African SMEs?

Over the last few decades, it has been observed that despite the enormous
potentials of the SMEs sector and its immense contribution to the economic
development of the developed countries, the performance of the sector still falls
short of expectation in many developing countries especially in Africa (Arinaitwe,
2006). This has obviously contributed to further widening the gap between the
developed and developing countries, resulting into requests for more aids, grants
and policy formulations in support of developing countries.

The Africa Growth and Opportunity Act (AGOA) project of America, Millennium
Development goals (MDGs) and other international trade policies of the World
Trade Organisation (WTO) such as the policy against trade dumping are all
targeted towards supporting the sustainable economic development of African
countries and stimulating their export potentials. However, whether or not African
businesses and SMEs choose to take advantage of such policies and opportunities
is entirely up to Africans and not the developed countries.

There is an old adage which says “knowledge is power”, and not just knowledge,
but “the application of knowledge.” Nevertheless, many of managers still wonder
why some businesses tend to succeed and others fail, or why some businesses
make huge profits and others make abysmal losses. It is neither an issue of size
nor an issue of capital; it’s more often about how knowledge is being managed
within organizations. The question that then comes readily to mind is: what really
is knowledge? Although there appears to be no single definition for the term
knowledge, nonetheless, it simply refers to the consciousness/awareness that
provides any sort of advantage/benefit over the lack of such
consciousness/awareness.

What is Knowledge Management?

Having looked at a simple definition of knowledge, what then is Knowledge
Management (KM)? On the first sight or hearing of KM, people readily think it is
one big fad that has to do with the introduction of massive computer systems,
very high volumes of data, too much grammar, and requires the help of external
consultants, gurus and so on. This first-timer perception towards KM is further
worsened by the fact that, just as there is no universally accepted definition on
what is ‘knowledge’; there is also no single definition for KM. This does not mean
that some KM initiatives do not involve the use of computer systems or the aid of
experts and external consultants (especially within large organisations), but our
focus here is to understand the central meaning of the concept of KM, its
fundamental principles and how it can be applied to SMEs.

In this light and for the purpose of this article, we prefer to adopt a simplistic
perspective of the concept of KM in order to aid our understanding for SMEs.
Simply put, the concept of KM refers to how businesses can leverage on the
experiences of their managers, employees, customers, competitors and other
stakeholders; and the understanding of their product and service offerings,
markets/business environment to their best advantage; thus generating greater
value.

Putting Knowledge Management to Work

The concept of KM can be better understood with the aid of analogies, stories and
case studies. To give us a better picture and understanding into how the concept
can be put to work in a small to medium-sized enterprise in the African context,
let us examine two case studies. The first case is that of a small-sized hairdressing
salon with the madam (owner) and six other hair stylists (employees) in Ahoada,
Nigeria. The second case is that of an experienced baker in a medium-sized
bakery in Bukoba, Tanzania.

Consider the case of a professional hair stylist in Ahoada Nigeria, as a knowledge

worker. She does more than ordinary plaiting, braiding, washing and styling
customers hairs. In the process of washing, braiding and beautifying clients’ hair
and when asked, the professional stylist will provide some useful advice and tips
to clients such as “make sure you use pink oil/conditioner on your hair each time
you re-touch or don’t carry your braids for too long in order to prevent your hair
from breaking-off and so on.” Accurate advice may lead to a handsome financial
tip at the end of the hair-do session for such a stylist. On the other hand, the
client who has derived immense benefits from the stylist’s tips is more likely to
use the services of the Salon again. If the professional stylist is willing to share
what she knows with other stylists, then all the other stylists could eventually
become more professional and earn bigger tips.
How would a KM initiative make this happen? The owner of the Salon can decide
to reward stylists for sharing their professional tips with others, by offering them
incentives. Once the best tips are gathered, the manager/owner would discuss
the tips with all her stylists. She can also type-set and distribute hard copies of
the tips to all of them. The end result of a well designed KM initiative is that
everybody benefits- bigger tips, more hair dressing deals and better professional
out-look for stylists; clients are made to look more beautiful with better
maintained hairs, due to the collective knowledge of stylists; the Salon owner also
wins because there would be several repeat sales from satisfied clients, who could
even act as a medium of advertisement to friends and relatives in Ahoada and
surrounding towns.

In addition, consider the case of an experienced baker who started working in a

bakery at the age of eleven due to financial constrains in his family and possesses
very little formal education. Over the past thirty-five years he has worked in all
sections of the bakery and is highly skilled at every stage in the production
process. Mtembe Foods Ltd recently took-over a medium-sized bakery in Bukoba
Tanzania, for the production of bread and has engaged the services of this
experienced baker. The new manager of the bakery is finding it difficult to plan
the work schedules for the experienced baker, thereby overloading him with all
sorts of unnecessary work. Also, the manager plans to introduce new varieties
into the production line, however, because the experienced baker has little formal
education it is difficult for him to conduct lessons for the other less experienced
employees.

How can KM solve this problem? The manager needs to understand that he can
still get the experienced baker to transfer his knowledge through other means. If
the baker is willing to share his experience and if the manager decides to reward
the baker for sharing, four other apprentice bakers can be placed to shadow the
operations of the experienced baker. Thereby gaining knowledge through
repeated practice of what they see from the experienced baker. The manager
should allow for a flexible work environment that allows for free flow of discussion
and chats in the process of working at the bakery. This is known as socialisation
and it is a mode of transferring tacit knowledge, to be discussed below. At the
end of the day, the bakery would have improved its production quality and
turnover, introduced new varieties, trained its employees; the experienced baker
would have been rewarded, and the residents of Bukoba and its surrounding
towns would derive more satisfaction from the new bread varieties; everybody
would be happy.

A well designed and implemented KM programme always produces win-win

outcomes to all its stakeholders. The two above case studies are practical
examples of how KM can be put to works in SMEs. In a nutshell, two basic lessons
can be learnt from the above cases: firstly, that KM initiatives have to do with
people i.e. it involves the use of human resources/capital; secondly, management
plays a very crucial leadership role towards ensuring the success of the
programme.

Benefits of Adopting a Knowledge Management Initiative

There are vast potential benefits awaiting African SMEs who choose to adopt a KM
initiative as part of their overall strategy. These benefits include:
• it enhances improvement in turnover rate and increases profitability by
facilitating the production of new appropriate products and services suited to
meet the needs of the market;
• it can brings about improvement in an organisation’s customer service
management;
• it enhances a higher employee retention rates by recognising the value or
employees’ knowledge and sharing ability;
• it streamlines company operations and leads to reduction in costs by
eliminating redundant or unnecessary processes;
• it enhances organisational learning and improves the creative abilities within
the organisation;
• it fosters the free flow of ideas, thereby stimulating timely product/service
development and innovation;
• It creates a sense of identity, security, loyalty, responsibility and commitment
in employees since they know the company values them and their contribution
towards its success;
• it strategically positions a company and offers readiness for penetrating into
new markets; and
• it results into improved organisational efficiency and effectiveness etc.

Symptoms of a Knowledge Management Need

In most organisations today, especially in SMEs, it isn’t very difficult to identify
when a KM initiative is highly needed. This because there are certain symptoms
and pointers that can be evidently noticed from how organisations undertake their
operations. These symptoms are:
1. A company where decisions cannot be taken in the absence of one or a few key
persons. This is seen in many SMEs, where they absence of the entrepreneur or
manager tends to cripple the operations of the firm;
2. A company where tasks in their ordinary cause of operation gets frequently
duplicated due to communication gaps;
3. A company where employees say costly mistakes tend to be repeated every
now and then;
4. Where employees are not willing to share their knowledge and good ideas are
rarely generated and shared;
5. Where employees are restricted from being creative and trying new ideas, and
all ideas for innovation and development come from the top;
6. Where consumer relations have become strained and customers tend to
complain frequently as a result of being dissatisfied with a product or service
offering;
7. Where a company competes on only price and cannot keep up with the market
leader in the industry;
8. Where employees do not feel any sense of loyalty or commitment to the
company;
9. Where a company’s rate of launching new products and services is very slow;
and
10. Where the customers, processes or technologies of a company are only
understood by a few key employees.

The Crucial Need for a Knowledge Management Initiative: Forms of

Knowledge
Generally speaking, the concept of KM is still a growing field of management, and
it has been suggested that many managers irrespective of the varying sizes of
their firms, still do not understand the principal essence of the concept due of its
broadness and its subjectivity to a range of interpretations by speakers,
consultants and writers; making KM uneasy to be purchased as a service or
completed within a year (Orlov, 2004).

Nevertheless, the fundamental need for KM within organisations is underpinned

by two key factors. Firstly, it is no news that more and more companies are losing
their staff members due to resignations, retirements and so on, after spending
huge amounts of money training and developing them. Delong (2004) noted that
in far too many organisations, knowledge is in the danger of disappearing along
with the employees who acquired it. SMEs are the worst hit in these cases
because they lack enough money to pay high salaries, thus limiting their capacity
to retain their staff members for long because most of them are often seeking
greener pastures within the larger organisations. It would appear to be a waste of
scarce resources for an SME, if an employee the company has spent money to
train and develop suddenly decides to leave for a bigger/blue chip company
without sharing his or her knowledge with other staff members.

Secondly, the need for KM is underscored by the two broadly identified forms of
knowledge, vis-à-vis the explicit knowledge i.e. the codified or hard knowledge as
it is sometimes referred to, which remains within the four walls of an organisation
at the end of a normal work-day in the form of manuals, regulations, handbooks,
information on databases etc; and the tacit or soft knowledge, which leaves the
organisation at the end of the work-day, i.e. knowledge gained from experience
leading to certain intuitions, insights and hunches comfortably seated in the
heads and minds of employees and other stakeholders. As such, the crucial need
for a KM initiative and the challenge for every company is to ensure that as tacit
knowledge goes home to sleep or out of the organisation due to retirements,
resignations and in search for greener pastures; there are spare copies stored in
organisational databases, handbooks, manuals and in the heads and minds of
other staff members.

Building Blocks of Knowledge Management: A Basic Framework for SMEs

For a KM initiative to be effective and for any organisation to benefit from an
effective KM programme, there needs to be strict adherence to at least one basic
framework. Some authors have described this as the streams of knowledge or the
stages of KM. Whatever it is termed, SMEs need to understand the basic model
for designing an effective “tailor-made” KM programme. They are discussed
below:
• Needed Knowledge: irrespective of the size of any company, the very first
stage in designing a KM initiative is in identifying what knowledge is needed for
the organisation to meet its goals, aims and objectives. This would require an
SME to undertake a strategic analysis of its industry, and it would involve some
form of environmental scanning, interviews with customers, suppliers and
other stakeholders. It would also involve some brainstorming and the
development of a number of scenarios of the emerging trends and likely future
occurrences within the industry.
• Available Knowledge: after identifying the needed knowledge, the next step is
to determine what knowledge is presently available within the organisation.
This would require carrying out an analysis of the organisation’s strengths,
weaknesses, opportunities and threats (SWOT), core competence and business
position. These analyses would consider issues such as the organisation’s
personnel profiles and experience, understanding of the relevant laws and
regulations, its industry, organisational culture, corporate image, products and
services, customers and other stakeholders.
• Knowledge Gap: this is basically the difference between the “Needed
Knowledge” and the “Available Knowledge”. This is a very salient aspect in the
design of a KM programme because a sound insight into the knowledge gap
 would help the organisation understand how best to strategically close up the
gap in order to gain competitive advantage.
• Knowledge Creation: at this stage, knowledge is created and developed based
on the gap identified from the difference between the needed knowledge and
the available knowledge. Here, several techniques of knowledge creation
would be used such as researching, training, and studies into customers buying
patterns and satisfaction.
• Knowledge Base: after knowledge have been created and developed, there
needs to be a systematic and structured manner through which the knowledge
is stored/locked i.e. kept on board. This involves the creation of a “knowledge
base” whereby knowledge can be determined and made available for everyone
to access. Knowledge bases could include setting up computer databases,
installing internal communication networks and keeping project files and other
hard or physically accessible documents.
• Knowledge Sharing and Transfer: this is another core aspect of the KM process
because after knowledge have been created and stored, it should be
communicated, transferred and shared amongst employees, between
managers and employees, as well as between departments. This heavily
depends on the structure and culture of the organisation, because it requires a
flat structure and culture that encourages free flow of communication, mutual
knowledge sharing and ensures that the appropriate knowledge gets to the
appropriate person at the appropriate time. Knowledge can be communicated,
shared and transferred in several ways which would be discussed below.
• Knowledge Application: it is at this stage that “knowledge” is usually referred
as “power”. Here, insights from the knowledge created, locked and shared can
now be strategically utilised to give the organisation a particular leverage in
order to gain a competitive edge within the industry. This stage forms a
principal element in the knowledge management process and should
prominently be driven by the management of the organisation.
• Evaluation of Applied Knowledge: this stage is also very important in fine-
tuning and streamlining the KM process. Here, an assessment is carried out on
the effectiveness of the KM programme and the result generated from the
 applied knowledge. This assessment can be carried out using several
techniques such as internal and external audit, project evaluation, customer
and employees’ satisfaction and benchmarking. This evaluation forms a
critical part of identifying the new knowledge gap for further improvements;
and the strengths of the KM initiative that can be further maximised and
horned for better competitive advantage.

From the building blocks of KM discussed above i.e. the Needed Knowledge stage
through to the final Evaluation stage, it can be seen that the KM process is an
unending process because it drives continuous improvements within the
organisation. This process can be broadly categorised into three phases which
can simply be termed as the “Circular Trilogy of Knowledge Management” as
represented below:

Fig. I Circular Trilogy of Knowledge Management

Knowledge
Creation &

Organisation Embody
al Knowledge
Knowledge in New

Modes of Knowledge Transfer, Sharing and Communication

In every organisation, it is the responsibility of managers to ensure that
knowledge created within the organisation is properly disseminated and utilised.
According to Nonaka and Takeuchi (1995), the emphasis here is not on individual
knowledge but organisational knowledge, because if individual knowledge is not
shared, it will have very little effect on the organisational knowledge base. The
onus on managers is therefore to facilitate the sharing, transfer and
communication of knowledge and its movement from one part of the organisation
to another. As mentioned earlier, there needs to be a knowledge base or lock,
where explicit knowledge is collected and allowed to interact with tacit
knowledge. Again, Nonaka and Takeuchi (1995) termed the interaction between
the two forms of knowledge as “knowledge conversion” and their model known as
the SECI 4-mode process remains one of the most acceptable models of
knowledge conversion:
A. Socialisation: this refers to the conversion from tacit to tacit knowledge i.e.
converting new tacit knowledge through shared experiences. Individuals can use
new experiences to recount old ones. This interaction can be one-to-one, one-to-
many, many-to-many e.g. oral reports, meetings between employees and
customers, mentoring of younger employees, training sessions and getting less
experienced employees to shadow more experienced ones. The case of the
experienced baker in the Bukoba bakery above is a good example of socialisation.
B. Externalisation: this conversion is from tacit to explicit knowledge through
emails, books and manuals, tapes etc. This can involve the presenting of practical
experiences of employees that can be codified and put into a book form or
computer database for easy access. A good example of this is the case of the hair
stylist in Ahoada discussed above.
C. Combination: this conversion is from explicit to explicit knowledge through
more structured, complex and systematic arrangements such as the use of
computers, intranets, internets and websites which are mainly found in large
organisations. It can also be through workshops, seminars and trainings too for
both large companies and SMEs.
D. Internalisation: this is conversion from explicit to tacit knowledge and it
depends on an individual’s ability to make sense out of the explicit information.
Organisational libraries and computer applications can help people recognise
patterns and aid their understanding.

Tips for African SMEs on Designing and Implementing an Effective KM

Initiative
1. Entrepreneurs and SME-managers should firstly understand that every KM
programme needs their full and concerted support to be effective.
2. Leadership is very crucial to the success of any KM initiative. The role of the
entrepreneur or SME manager must shift from being the sole source of knowledge
to managing and networking its flow and how people use it. Leadership should no
longer perch at the top of the organisation, but at the centre. This is because true
leadership hinges on the ability to grasp the value-creating potentials within the
firm as opposed to having an “I know all” mentality and handling the whole work
load alone (Bukowitz and Williams, 1999).
3. SMEs should imbibe a culture that encourages the continuous learning and
development of all employees and engenders the ability of “learning to learn”
from their experiences and experiences of others. Periodic training and
development needs to be incorporated into their operational system so that
employees can learn new skills, update their professional knowledge and have the
freedom to creatively play around with new ideas.
4. SME managers should learn to structure a base within the firm where
knowledge can be collected; and then encourage transfers and sharing of the
stored knowledge. Managers should beware of barriers of knowledge transfers
such as insecurity that brews among employees.
5. Entrepreneurs and managers must have the sense of duty to reward employees
who choose to share their knowledge with others. This is because when
employees feel they are giving more than what they are getting, it gives them the
opportunity to seek greener pastures where their contributions will be better
appreciated.
6. Since KM is about people and ideas, entrepreneurs should give employees a
sense of identity within the SMEs, their mission and vision; and also allowing them
to learn from mistakes.
7. SMEs should learn to leverage on social networks in order to expand their
customer base. They should also create strategic alliances that can help improve
their market position.
8. Entrepreneurs and SMEs need to understand that knowledge management is
not a one-off project in the life of a firm, but a continuous project that helps an
organisation to re-invent itself towards better performance.
It is no longer news that we presently live in a knowledge-driven world, and it has
become clearer that the so-called ‘thin line’ that differentiates business successes
from failures is “knowledge”. The central point is in understanding the knowledge
gap, create and store the appropriate knowledge and embody the knowledge in
their products and services. This is because the slogan for businesses today is
gradually becoming “manage-your-knowledge or die.” Finally, for African SMEs to
take advantage of the available opportunities and compete with their
counterparts in other parts of the world, they need to deliberately install an
effective KM initiative within their organisations.

I hope you have been able to derive a better understanding into the world of KM
from this article. You too can begin to think of your own small or medium-sized
business in the light of the above analogies, building blocks and tips; and see
what you can put into perspective. Furthermore, it is salient to mention that the
concept of KM is relevant and practicable to every field of human endeavour and
to every strata of the society, from public to private sector, profit making to non-
profit making, religious bodies, and large to medium, small and micro-sized
organisations. Until next time, keep managing your knowledge effectively.

References
• Bukowitz, W. R. and Williams, R. L. (1999). Looking Through the Knowledge
Glass. CIO Enterprise Magazine [online] Available from:
http://www.cio.com/archive/enterprise/101599-book.html [Accessed: 02 Feb.
2006]
• Delong, D. W. (2004). Lost Knowledge: Confronting the Threat of an Aging
Workforce, USA: Oxford University Press.
• Nonaka, I. and Takeuchi, H. (1995). The Knowledge-Creating Company: How
Japanese Companies Create the Dynamics of Innovation. Oxford: Oxford
University Press.
• Organisation for Economic Co-operation and Development (OECD) (2000),
“Small and Medium-sized Enterprises: local Strength, global reach”, OECD
Policy Review, June, pp.1-8.
• Orlov, L. M. (2004). When You Say ‘KM’, What Do You Mean? CIO Enterprise
Magazine [online] Available from:
http://www2.cio.com/analyst/report2931.html. [Accessed: 02 Feb. 2006]

This piece is a modified version of two articles published by the author in the
Business Connect Newsletter of the Abuja Enterprise Agency.

This article was updated in January 2008.

Bell’ Ihua, a Nigerian born researcher and consultant writes from Canterbury,
United Kingdom.