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Chapter Outline: Introduction History and development of entrepreneurship. Entrepreneurship as a process. Entrepreneurship as a state of mind or series of attributes.

Forms of entrepreneurship. Social entrepreneurship Intrapreneurship Extrapreneurship Opportunity vs. necessity entrepreneurship Evolution of Entrepreneurship in Ghana. Role of entrepreneurship in the development of a countrys economy. Challenges facing Ghanaian entrepreneurs. Factors favouring entrepreneurship. Why become an entrepreneur? Overview of entrepreneurial cycle. Case study: Sedina Attionu Questions for case discussion.

Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship

Chapter 1 Introduction to entrepreneurship Chapter Outline: Introduction History and development of entrepreneurship. Entrepreneurship as a process. Entrepreneurship as a state of mind or series of attributes. Forms of entrepreneurship. Social entrepreneurship Intrapreneurship Extrapreneurship Opportunity vs. necessity entrepreneurship Evolution of Entrepreneurship in Ghana. Role of entrepreneurship in the development of a countrys economy. Challenges facing Ghanaian entrepreneurs. Factors favouring entrepreneurship. Why become an entrepreneur? Overview of entrepreneurial cycle. Case study: Sedina Attionu Questions for case discussion.

Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship

Introduction In this chapter, we introduce the concept of entrepreneurship to lay the foundation for the discussions that follow in the later chapters. Before suggesting our own definition of entrepreneurship, we consider some long standing definitions of entrepreneurship and the development and usage of the word entrepreneur, from which entrepreneurship is derived. The word entrepreneurship is often used in everyday language to connote certain behavioural and physiological attitudes and attributes, some of which we shall explore in this chapter. The chapter also discusses the various forms of the concept of entrepreneurship. As the primary focus of this book is on Ghanaian entrepreneurship and Ghanaian entrepreneurs, in this introductory chapter we set the definition and the concept of entrepreneurship in a Ghanaian context by first tracing the evolution of entrepreneurship in Ghana and then considering the challenges faced by Ghanaian entrepreneurship. We then consider the role entrepreneurship plays in a countrys development as well as the factors that favour entrepreneurial development. Many entrepreneurs who we spoke to admitted that entrepreneurship is a fulfilling, challenging but hugely rewarding career. For a book primarily targeted at undergraduate university students in Ghana, we explore in detail why someone might become an entrepreneur as opposed to working in what we call Corporate Ghana. The chapter ends by providing an overview of the entrepreneurial cycle, the main focus of the rest of the book. This cycle begins with the identification of opportunities from ideas through to mobilising resources to implement and nurse these ideas into profitable enterprises. History and development of entrepreneurship The term entrepreneurship does not lend itself to easy definition. An understanding of the evolution and development of entrepreneurship is a necessary first step in appreciating the concept of entrepreneurship and its contextual usage over time. The word entrepreneurship evolved from the 17 th Century French word entreprendre. The
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word entreprendre is a combination of two French words entre which means between and prendre which means to take. The two words were combined to create the word entreprendre meaning to undertake or more literally a between-taker or a gobetween). The word entrepreneur was thus used to generally describe individuals who undertook the risk of new enterprises and bore the risks of profit or loss. In earlier usage, the word entrepreneur referred to a middleman or a director of resources owned by others (for example landowners and other resource owners). The entrepreneur/middleman intervened by converting resources such as land, labour or capital belonging to other people but not in use economically. These resources were transformed into useful activities like the production of goods and services that yielded profit for the benefit of both the entrepreneur and the resource owner. The word entreprendre was also used more loosely to refer to anyone who undertook significant projects such as the building of cathedrals or castles contractors who bore the risks of profit or loss. The concept of entrepreneurship was further extended to tax contractors. These were individuals who paid money to a government for the license to collect taxes in their region and for which they were given an agreed percentage. In 1734, the French economist Richard Cantillon, in his seminal work Essai sur la Nature du Commerce en Gnral (The Nature of Trade in Generali ) maintained the meaning of the word entrepreneur as a middleman by describing the entrepreneur as a person who pays a certain price for a product to resell it at an uncertain price, thereby making decisions about obtaining and using resources while consequently assuming the risk of enterprise. According to Cantillon, entrepreneurs were one of the three main agents in every economy, the other two being the landowners (providers of primary resources) and the hirelings (those who rented the services of the entrepreneurs). Cantillons definition is believed to be the first attempt at formalising the term entrepreneur. His definition gave the term entrepreneur a distinct identity though the definition has evolved since. Jean Baptise Say is credited with popularising the word entrepreneur. In A Treatise on Political Economyii , he defined an entrepreneur as one who consciously moves economic resources from an area of lower productivity into an area of higher productivity and greater yield.

Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship

During the industrial revolution in the eighteenth century, the term "entrepreneur" referred to inventors of new techniques who borrowed money from banks to develop their inventions so as to earn profits from those inventions. . The period from the nineteenth century to the mid1970s saw waves of financial institutions, technological progress and the birth of corporations and businesses. With this emerged leaders of industries who stimulated the development of industrial capitalism and became the new entrepreneurs. In the mid 20th century, Joseph Schumpeter referred to an entrepreneur as a necessary destabilising force bringing economic growth through the disequilibrium of constant change and innovation. Schumpeter referred to the entrepreneur as an innovative generator of ideas who reformed or revolutionalised patterns of production and existing ways of doing things to create goods and services that are valuable to the society.iii The meaning of entrepreneurship has since evolved greatly in practice and academia. Hisrich, a modern day authority defines entrepreneurship as the process of creating something different with value by devoting the necessary time and effort, assuming the accompanying financial, psychological and social risk, receiving the resulting rewards of money and personal satisfactioniv. Entrepreneurship as a process We define entrepreneurship as a process. It is the process of risking resources based on an idea (or series of ideas) to develop the idea(s) into goods and/or services that people perceive as valuable and are willing to pay for, in such a way as to maximise return for the enterprise. In this context and throughout the book enterprise includes sole proprietors, partnerships and companiesv of all sizes. We agree with Hisrichs definition that entrepreneurship involves some element of adding value. The entrepreneur must add some value to the initial primary inputs to create the goods and services that people are willing to pay for, although the extent of value addition differs from entrepreneur to entrepreneur and from enterprise to enterprise and may range from the immaterial to the material. Entrepreneurship as a process starts with an idea around which an opportunity is developed. Alternatively it may start with an opportunity which acts as a catalyst for the development of an idea. In both scenarios, the entrepreneurial process ends with profits (or losses). The idea must be tied to an opportunity in the following sense: significant numbers of people should be willing to pay for the product or service that stems from the idea to enable the
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entrepreneur generate revenue from the idea.

Let us consider an example. In 1974, while working as a computer programmer at the Volta River Authority (VRA), Mrs. Elizabeth Villars, founder and managing director of Camelot Ghana Ltd came up with the idea of designing customised payslips with the computer (then a novelty) for her employer. She realised there was such a demand for her product that she soon left VRA and set up Camelot to provide the customised payslip product to as many employers as possible. Today Camelot is a leading security printer in Ghana with sixty (60) employees providing services for governments, and multinationals companies in ten (10) West African countries with a subsidiary in Nigeria. The company is also listed on the Ghana Stock Exchange with a stated capital of GH168,664. The opportunity that the idea seeks to tap into, rather than the idea in itself, should be the key consideration. As in the case of Mrs. Elizabeth Villars, there must be significant numbers of individuals and corporate entities that perceive the relevant product or service as valuable and are willing to pay more for it than it costs to produce. Whether the product or service is perceived as valuable will depend on whether or not it fulfils a customer need, and to what extent it does so. For example, many would consider shopping at a fee for busy people in Ghana a good idea. However, due to the possible lack of Ghanaians willing to pay for this service (given the oversupply of cheap domestic labour) the entrepreneurial idea may not be profitable or worth pursuing. For an entrepreneurial venture to be viable, the relevant product or service at the heart of the venture must remove an existing pain i.e it must meet an unmet need or improve an existing solution in such a manner that enough potential customers exist to create a market for the venture. This thought will be developed in more detail in Chapter 11 but suffice to say that for now, successful entrepreneurial practice has moved away from the sentiments captured in Henry Fords famous statement that if you build it, they will come (meaning as long as the entrepreneur makes a determination on what product or service to provide, he will find a market) to trying to figure out what customers want and/or need before deciding what to build to satisfy those needs or wants. It is generally accepted that if the opportunity is attractive enough and the idea to exploit the opportunity is realistic, resources will be found. As Johnsonvi explains, creation [that is development of the idea] is opportunity driven rather than resource driven.

Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship

The key resources risked in creating and sustaining an entrepreneurial venture are time, human and capital resources. These resources might be risked by an individual or corporate entity acting alone or in concert with others. In many cases, the entrepreneur(s) will establish a separate entity through which to risk the resources to provide relevant products and services that the entrepreneur hopes will generate profit. In other cases, the entrepreneur will carry on as sole proprietorship without a separate legal entity. We will discuss in chapter 6 the different forms of business organisation open to an aspiring entrepreneur. Entrepreneurship as a state of mind or series of attributes The word entrepreneurship is also used to describe the characterization of attributes that enable people to exploit opportunities for financial reward. These attributes (which we discuss further in Chapter 2) include passion, willingness to take risks, ability to seize opportunities and salesmanship. In this sense, entrepreneurship can be described as the state of mind that motivates an individual (alone or with others) to start a new activity and to take steps to realize a desire or dreamvii. Entrepreneurship is also viewed as a pattern of behaviourviii that enables individuals to recognise, pursue and exploit opportunities regardless of the resources that they actually control. In a similar vein, Timmonsix views entrepreneurship as the ability of an individual to create and build a vision from nothing. For an individual to create and build such vision, he must possess certain attributes such as opportunity obsession, tolerance of ambiguities, a sense of mission as well as commitment. In Timmons view, entrepreneurship is a human and a creative act of applying energy to initiative and building an enterprise or organization, rather than just watching or analysing. The individual involved in entrepreneurship requires a willingness to take calculated risks both personal and financial and do everything possible to reduce the chances of failure. It should not be assumed from the foregoing discussion that entrepreneurship is exclusively limited to starting a new enterprise or to commercial enterprises. As we will see in Chapters 3, 5 and 6, entrepreneurship also covers the acquisition of an existing business and in some instances; it may cover the inheritance of a business.

Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship

Forms of entrepreneurship Entrepreneurship comes in different forms. The factors that result in the establishment of an entrepreneurial venture influence the form that the enterprise will take. Social entrepreneurship Social entrepreneurship is the process of using entrepreneurial principles to organise, create and manage a venture in order to create a social change. Mission-related or social impact (rather than wealth creation) is the purpose of social enterprise. Social entrepreneurship identifies an idea in the form of a social problem and then seeks the requisite resources to develop solution(s) to the problem. Social entrepreneurship is more likely to be concerned with situations of creating wide-scale social change (for example a cure for HIV) than with financing narrow objects that might only benefit a small number of people (for example South Labadi Residents Community Bank). In each case, social entrepreneurship is concerned with creating social impact that benefits society generally (a significant subsection thereof) rather than individuals. The spectrum of social entrepreneurship includes not-for-profit organisations that set up profit making initiatives or ventures to support the not-for-profit aims of the organisation. Such notfor-profit organisations identify ideas and opportunities they can exploit to generate profit to support the overall not-for-profit objectives. Also included in social entrepreneurship are business ventures (i.e. for profit ventures) set up with a social purpose. Examples of these types of social enterprises include the establishment of the Grameen Bank in Bangladesh in 1976 by Muhammed Yunus and the establishment in Ghana in 1994 of Sinapi Aba Trust which provides micro-financing to small and micro enterprises that are unable to access financial assistance from the formal banking institutions due to lack of collateral amongst other reasons. Through this, Sinapi Aba Trust aims to fulfil its mission of providing opportunities for enterprise development and income generation to the economically disadvantaged to transform their livesx. Sinapi Aba Trust operates financial institutions all over Ghana through which it mobilises savings and makes loans to its target groups. Although Sinapi Aba Trust itself is set up as not-for-profit, it is important for meeting its objectives that its savings and loans arm makes a profit. Another example may be a mission hospital that charges fees for its services as will the Teachers Fund Financial Services which is focusing primarily in the provision of low cost loans to teachers and other workers in the country.

Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship

Intrapreneurship Intrapreneurship refers to the formation of new ideas or innovations within already existing (typically larger) organisations. Intrapreneurship occurs when individuals (intrapreneurs) or teams within these organisations develop new products, services, formats or channels, sometimes outside the scope of the organisations core business. The individual intrapreneurs or teams usually use the resources of the organisation to develop their entrepreneurial ideas. In many instances, intrapreneurs develop within a large and bureaucratic establishment. When an intrepreneur or team of intrepreneurs develop a new idea or opportunity which forms the basis of intrapreneurship, a smaller spin off or separate division may be developed as a regenerate enterprise through which resources are risked and through which the relevant services or products are provided. The intrapreneurs will often be motivated by a desire to overcome the shortcomings of the larger organisation, which are inconsistent with entrepreneurship, (such as bureaucracy, risk-averseness, lack of innovation, slow response rate), organisational structure Intrapreneurship has become more relevant as technology and increased opportunities have created a more aggressive breed of entrepreneurs posing enormous challenges for traditional corporations. We submit though that Intrapreneurship should be seen as a potential win-win for the companies that pursue it as it enables them to retain their brightest staff who might otherwise be tempted to start their own entrepreneurial ventures. It enables companies that pursue it to benefit from a wider myriad of ideas for new products and services than any formal approach to new product development may have produced. The intrapreneur who is the originator of the idea however does not typically, own the entrepreneurial concept which will belong to the company for which the intrapreneur works as an employee. As a result, for the intrapreneur, financial and personal rewards may be limited as these go to the company or the wider organisation supporting the intrapreneur(s). However, the intrapreneur has access to resources which may have been unavailable outside the organisation. Also, in an increasing number of instances, the intrapreneur is able to negotiate with his employers such that he profits directly from the success of his
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and therefore prefer to spinoff the

division and develop a separate division or entity rather than add to the existing

intrapreneurial effort. It is no wonder that some of the worlds leading companies actively encourage intrapreneurship. Google employees are encouraged to spend 20% of their time on independent projects, exploring ideas that interest them most.xi Similarly, 3M a multinational manufacturing company, provides a platform that encourages the development of small teams and a plethora of employee ideas. This initiative has been at the forefront of the companys innovation and the development of innovative products such as the Post-it notes, translucent dental braces and Tipex. It could be argued that Hewlett-Packard [HP] might have been a pioneer in the personal computer business if it had recognized and exploited the opportunity presented it by its (then) employee Steve Wozinak with whom it could have partnered to compete in the personal computer space. Instead, due to lack of interest and support from his employer, Wozinak left Hewlet Packard to start Apple Computers with Steve Jobs. In Ghana, we have also seen some examples of intrapreneurship emerge. At Metropolitan Insurance Company Limited, MET2U, a direct format for taking personal insurance directly to the customer positioned largely on convenience was developed by an employee who was figuring out ways to meet his business targets. Once he told management about the idea, he was given the requisite resources and support to develop it. MET2U has become a key part of Metropolitan Insurance Companys strategy of selling insurance products to individuals For intrapreneurship to work, top management must be committed to it. It must be willing to encourage entrepreneurial behaviour and a culture where failure is tolerated amongst its ranks. Divisions should also be kept small. The success of the intrapreneur is disproportionately dependent on his or her interpersonal skills. To succeed, the intrapreneur needs to be able to work with and through people to obtain the requisite support and resources from management. Extrapreneurship Extrapreneurship arises when individuals or groups in an organisation break off or spin-off from the parent organisation to establish their own enterprise typically with support from the organisation it broke away from in the form of financial and social capital. Sometimes the
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organisation seeks out an entrepreneur and supports him/her with space and other resources to start a business which will trade on the network of the supporting company. The new organisation may be in the same line of business as the one it broke off from or may become a customer of or a supplier of a product or service for the organisation it broke from. The extrapreneur may break-off as a result of the factors listed earlier as hindering intrapreneurship or because he has identified a peculiar opportunity which will not fit the overall strategy of the organisation. Extrapreneurship also includes management buyouts. This occur in situations where managers are confident about their ability to turn a business around and so acquire it from its owners and run the business that previously employed them, but this time as entrepreneurs and not employees.

Incubation In ordinary English usage, incubation (in the context of rearing chickens) refers to the process of warming the eggs either by the mother hen sitting on them or by a mechanical process until they are hatched. Incubation in the entrepreneurial context is a similar notion it involves nurturing start-up business with an enabling environment, material and intangible resources to grow their business to the stage where they can stand on their own. Typically, the investee company is provided with subsidized offices, access to a network of portfolio companies and coaching and advice. As Hansen, Chesbrough, Nohria and Sull notexii these services are intended to maximise the chances of success of the young companies, to provide sufficient resources for the companies to grow and also to accelerate growth and expansion with new markets. Business incubators play an important role in creating and supporting entrepreneurs. Typically, the incubators set entry criteria for the entrepreneurs they admit. Incubations may be set up by universities or high tech parks amongst others. In Ghana theres a notable absence of incubators. An example is Busy Internets Incubation Program which started in early 2005 with support from the infoDev Program. Since its establishment, it has worked with young enterprises by providing them with the opportunities to survive.

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Opportunity entrepreneurship vs. necessity entrepreneurship The discussion so far has been that the starting point of an entrepreneurial venture is either an idea based on an opportunity or an opportunity which acts as a catalyst for an idea. In some cases however, the process may not be as straightforward as has been suggested in the preceding paragraphs. The Global Entrepreneurship Monitor (GEM)xiii differentiates between two types of entrepreneurship: Opportunity entrepreneurship and necessity entrepreneurship. Opportunity entrepreneurship occurs when an individual develops an idea to exploit an existing opportunity. . According to the GEM, opportunity entrepreneurship is characterised by growing a business to take advantage of a unique or perceived market opportunity. Necessity entrepreneurship, however results from lack of options. Necessity entrepreneurs are people (typically, but not always, the poor and displaced in society) who venture into entrepreneurship out of necessity, either because it is the best option available to them or because there are no other options available to them. Necessity entrepreneurs are thus pushed into entrepreneurship. Necessity entrepreneurship may also arise as a response to changing conditions (migration, middle age crises, divorce or loss of job) in an individuals environment. Given that a changed condition requires such an individual to respond as an entrepreneur; they then work their way backwards to find some idea or opportunity that will give them enough to live on.

Evolution of entrepreneurship in Ghana Entrepreneurship in Ghana was fairly developed before the first arrival of Europeans. Our ancestors identified opportunities for trade with other tribes and risked resources to produce or procure the relevant items for trade. They worked precious minerals into jewels, implements and weapons. They manufactured bows, made their own mats and wove cloth such as Kente and other fabrics. Although our ancestors initially produced these materials for their own immediate needs, as they advanced on the path of civilization, they exchanged products with their neighbours and later, carried over the trade to larger areasxiv. Early entrepreneurial activity in Ghana was characterized by barter in items such as trinkets, ornaments, weapons (including guns and gunpowder), alcohol and leather. Gold dust and cowries were used as the initial forms of currency, leading to the creation of gold weights and then to nickel coins towards the close of the nineteenth century.
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We can also classify the early European explorers who arrived in the Gold Coast as entrepreneurs. In the face of peril and uncertainty, they risked significant resources for the purpose of achieving profit by identifying trading opportunities with the indigenous people of the Gold Coast. The first Europeans to set foot in Ghana the Portuguese, in 1471, engaged in trade with the people of Edina (now Elmina). The Dutch and English governments after forcing the Portuguese out of Ghana issued Charters to trading companies to strengthen their operations (including the deplorable slave trade) along the West African coast. When the slave trade was abolished, both local and European entrepreneurs participated in 'legitimate trade'. Reynoldsxv reports that many of the pre-colonial entrepreneurs were slave traders who used their experience from dealing with foreigners during the slave trade to profit from legitimate trade. After being colonised, the Gold Coast became a raw material producer for industrialized European countries feeding the factories of European entrepreneurs as well as providing a market in which European firms could sell their finished goods. This spawned a further set of Ghanaian entrepreneurs large-scale farmers and exporters of cash crops, predominant among them, the Ashanti cocoa farmerxvi. As receipts from export of gold and cash crops led to a demand for imported textiles, beads, wines and spirits, there emerged yet another group of indigenous entrepreneurs. Some of the indigenous entrepreneurs formed limited liability companies to import these products. They sought funding from the newly established Bank of British West Africa in the form of advances and overdrafts to finance their trade although it appears that Bank of British West Africa and its successors paid more attention to foreign businesses operating in Ghana rather than local entrepreneursxvii. The policies of the colonial government largely focused on protecting British overseas interests. As a result, Ghanaian entrepreneurship was discouraged. For example, Ghanaians whose lands contained diamonds were prevented from mining unless they were prepared to use native or crude methods. This undermined entrepreneurial development as this mode of operation was tedious and did not encourage large scale mining. Consequently, instead of the Ghanaian entrepreneurs of the time channelling their energies and resources into productive ventures, they concentrated on fighting the exploitative colonial system. An example of such an entrepreneur according to Gockingxviii was Nii Kwabena Bonne II, a chief who made a call to boycott European and Lebanese merchandise like cotton, textiles, canned meat, flour and spirits in 1947. The boycott was meant to express their displeasure of
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the persisting developments that were focused on protecting British overseas interests to the detriment of the Ghanaian entrepreneur. The immediate period after independence witnessed the introduction of a mixed economic system. On one hand, the system encouraged private and foreign participation in the economy and on the other it ensured government participation in enterprises through companies owned either solely by the state [State Owned Enterprises] or in joint partnership with the private sector. Nkrumahs government initially supported private enterprise but in 1960, Nkrumah announced that his government would place greater emphasis on Ghanaian cooperatives rather than encourage Ghanaians to start private sector business enterprisesxix. Hakamxx argues that Nkrumah did this because he did not want to create indigenous capitalists who would be difficult to control politically. He was apparently worried that they might develop into a powerful capitalist group that could threaten his socialist regime. Thus, instead of encouraging domestic enterprises for the expansion of the economy, the government granting them incentives encouraged the development of foreign entrepreneurs by owned enterprises. The National Liberation Councils (NLC) government, which overthrew Nkrumahs

including generous customs duties and tax relief packages for these infant but foreign

government, showed concern for local entrepreneurs when in 1968 a policy document titled The Promotion of the Ghanaian Business Enterprise was published. The policy sought to put stability above growth and return the economy to one characterised by privateenterprises and decentralised system. This was to be achieved within a framework of marketoriented economy backed by a nationalistic agenda through a policy of Ghanaianisation (i.e. creating a preference for Ghanaian enterprises). Under the NLC however, several small scale enterprises went bankrupt due to the credit squeeze and the devaluation of the Ghanaian currency, a consequence from adhering to conditions attached to International Monetary Fund (IMF) loans the government had taken out to restore the countrys economy. It is important to note that Busias government was the first (at least post-independence) to extensively draw policies and establish bodies to aid in developing the Ghanaian entrepreneur. The government had an entrepreneurial development plan that sought to
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foster growth of private industry and enacted the Aliens Compliance Order to get rid of foreigners in the country who were believed to have taken up most of the small and medium scale enterprises which should have been in the hands of Ghanaiansxxi. In the same period, the government established the Ghana Enterprises Development Commission and Small Business Credit Scheme to help Ghanaian manufacturing enterprises obtain credit for their operations. Provisions were also made for Ghanaians to purchase the businesses owned by foreigners. Acheampongs government (a military one that overthrew the Busia led government) specified areas reserved for state ownership, joint state/foreign ownership, private Ghanaian/foreign ownership and purely Ghanaian ownership. This resulted in the mushrooming of many small businesses. The policy of Operation Feed Yourselves and Industry which Acheampong implemented benefited Ghanaian entrepreneurs because importation of certain products were banned leading to Ghanaian production of such goods. After two years of sustained economic stability, a decline set in and by the mid 1970s, there was discontentment among Ghanaian entrepreneurs because a few of their own colleagues were gaining undue advantage of others because of their social and political connections. The Rawlings government initially appeared to be opposed to entrepreneurship. Properties worth millions of cedis including a number of private manufacturing companies were confiscated on grounds of alleged financial and economic malpractices. A National Public Tribunal was set up where several high profile entrepreneurs such as B.A Mensah (International Tobacco Company Limited), J. K. Siaw (TATA Breweries Limited) and Dr. Safo Adu (Industrial Chemical Limited) were prosecuted and lost their businesses in unclear circumstancesxxii. However, in an ironic twist of events, due to conditions attached to aid sought from the West, the Rawlings government had to embark upon the depiction and implementation of the Economic Recovery Program (ERP), the second stage of which sought to encourage small scale industries and liberalise the economy. The open and uncontrolled importation of finished goods however put many local industries out of business. Under the Structural Adjustment Programme (SAP), a successor policy to the ERP, the
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government embarked on a divestiture implementation policy where it sold its interests in a large number of state enterprises such as West Africa Mills, Ghana Agro-Food Company, The Coca Cola Bottling Company of Ghana Limited and Golden Tulip Hotelxxiii to the private sector. Typically though, given the size and the scale of the investment required, the Ghanaian entrepreneurs who were able to participate and benefit from the government's divestiture programme, constituted a small number with deep pockets or who were able to partner foreign investors. To encourage Foreign Direct Investment (FDI) into Ghana, the Ghana Investment Promotion Centre (GIPC) was established by parliament in 1994. Between 1994 and June 2002, GIPC registered 1,309 FDI compared to [ ] in 1983. The Kufuor Government which came into power in 2001 sought to make the private sector the engine of growth in the economy and embarked on a number of policies with the aim of driving and encouraging entrepreneurship in Ghana. It also sought to take the liberalization of the economy (started by Rawlings) one step further by deregulating the petroleum sector and seeking public-private partnerships to participate in a number of sectors such as energy, ICT and telecommunications. The following policy initiatives of the Kufuor Government were also aimed at encouraging entrepreneurship: Promoting, developing and sustaining growth of micro and small enterprises (MSE) and training graduates to establish their own micro and small enterprises. Establishing the Ghana Venture Capital Trust Fund in 2004 to provide long-term capital for small and medium scale enterprises. Full tax exemption from corporate income tax, dividend tax and capital gains tax was granted to eligible venture capital companies and investment in eligible venture capital companies was made fully tax deductible. Removal of import duties and Value Added Tax on industrial raw materials, irrigation pumps, fishing ropes and nets. Introducing an unlisted securities market on the Ghana Stock Exchange to enable SMEs secure equity financing. Though not operational at the moment, it is expected that its full implementation will enable entrepreneurs to access equity funding from the stock exchange without necessarily being listed. Arranging 500 tailor-made business improvement programmes for 15,000 entrepreneurs by the National Board for Small Scale Industries by 2007.

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Review of petroleum exploration law to make Ghana an attractive destination for investments in hydro carbon exploration.

The Mills Government came to power in 2009 with a Better Ghana Agenda that aim among others to enhance the countrys economic growth by supporting the development of micro, small and medium enterprises in the country. The government has instituted various policies targeted at entrepreneurial development in the country though it has also taken steps at revamping the countrys State Owned Enterprises particularly those in the utility sectors. The major policy initiatives by the Mills Government that supports the growth of entrepreneurship in Ghana are: Facilitating the use of various incentive schemes to ease credit delivery to entrepreneurs including using EDIF, the EXIM Guarantee Bank and the National Investment Bank. Reconstitution and strengthening of the National Board for Small Scale Industry (NBSSI) to provide technical and financial support for small and medium scale enterprises. The establishment of Export Trade Houses to address the challenges that small and medium scales enterprises face in the export sector. The government also seek to develop an incubation policy to help design, develop, support and monitor private sector business incubators in the country.

What is clear from the foregoing discussion is that, although entrepeneurship has been with us from pre-colonial times, Ghana has not always been a nation that has cherished and encouraged entrepreneurship. More recent governments have however made concerted attempts to encourage and develop entrepreneurship as they recognise the important role entrepreneurship plays in the development of a nationxxiv. Role of entrepreneurship in the development of a country's economy Create jobs As any economy becomes more developed, entrepreneurs take a greater role than the Government in providing jobs and career development opportunities for individuals. By providing jobs, entrepreneurs help create wealth for individuals as well as the government. Over 80%xxv of jobs in Ghana are in the informal sector. A significant majority of these jobs are created by entrepreneurs.
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Drives economic growth Entrepreneurs also contribute directly to increasing the gross domestic product (that is the total volume of goods and services produced in a country) through the goods and services they provide. Statisticsxxvi indicate that about 94% of Ghana's industrial sector is made up of small and medium scale enterprises. These entrepreneurs and SME owners also contribute to economic growth in Ghana through the inflows of foreign currency they receive (by way of payment for exported goods), by training the labour force they employ and by paying taxes on the profits they make. They also contribute to the local economy through their aggregate demand for goods and services that they need as inputs for their own business. Frees up State Resources As entrepreneurs invest in the management of enterprises and sectors of the economy that the State may have otherwise been required to invest in to provide certain goods and services, the State is able to free up some of its resources for infrastructural development. In Ghana, the increased participation of entrepreneurs in the economy has led to increased investment in roads, telecommunication, energy, information technology, education, financial services, real estate amongst many other sectors. For example the increase in the telephone density ratio in Ghana (that is the number of people as a percent of the population who own telephones) from 1.8% in December 2002 to 14% in 2005xxvii was largely driven by entrepreneurial activities by the likes of Mobitel now TiGO, Spacefon (now MTN) and Kasapa through whom 73.4% of total telephone subscribers are able to communicate with telephones. The increased availability of housing has also been driven largely by the efforts of members of the Ghana Real Estate Development Association who risked capital resources to acquire and develop private homes for sale in several parts of the country. Fosters Competition An active entrepreneurial sector is one in which healthy competition exists as several firms and individuals produce similar goods and services. Customers are given greater choice for services and goods and can make informed choices about which products and services best meet their peculiar needs. This in turn forces entrepreneurs to compete with each other for the patronage of the customer. It also, all things being equal, reduces the general prices
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of goods and services. For example, competition in the telecoms sector in Ghana among the likes of MTN and Kasapa has led to a reduction in the costs of owning and maintaining a mobile phone from an average price of [ ] in [ ] to [ ] in 2010. The increasing number of departmental stores such as the Game, Max Mart, Koala and Melcom all competing for the same market has brought about these competitive pricing of goods sold in these shops. Fosters innovation A corollary of the earlier point about competition is that entrepreneurship fosters a culture of innovation as entrepreneurs compete amongst each other for the same limited pool of consumers. To help increase their market share or margins, entrepreneurs would be willing to invest in new ways of delivering goods and services and indeed of producing those goods and services so as to reduce costs. To do so, they rely on new technology, new processes and new sources of supply. An economy that fosters entrepreneurship is therefore also one in which individuals are likely to want to experiment to come up with new ways of doing things so as to profit from their innovation. Although there are no figures available for Ghana, anecdotal evidence suggests that innovation in most industries in Ghana has been driven by entrepreneurs and SME owners. For example, the use of DSL Internet connectivity in Ghana was pioneered by entrepreneurial outfits such as Zipnet. The increasing use of software for business solutions was driven by entrepreneurs such as Herman Chinery-Hesse of SOFT Tribe; processing juice and vegetables for export was pioneered by entrepreneurs such as Mrs Esther Ocloo. Increases productivity Entrepreneurs contribute to increased productivity in the economy. As they compete for consumers and seek new ways of meeting demand, they effectively reduce inefficiencies in the system, cut out waste and reduce the time needed to deliver goods and services. Also, unlike the public sector, entrepreneurs (and those working for them) can typically see direct ties between their hard work and their output. It also has a direct correlation with financial gain and reward. These factors motivate entrepreneurs to become far more productive than public sector employees.

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Tax base to government By contributing to the tax base, , entrepreneurs provide income that forms a major part of government revenue. Entrepreneurs make a vital contribution to the public purse through a number of direct and indirect taxes they pay. They are taxed on profits of their enterprise and the incomes of their employees. Further, they may pay other taxes such as, capital gains tax and withholding tax on dividends, management and technology transfer agreements. In addition, entrepreneurs increase government revenue through Value Added Tax and National Health Insurance Levy on the goods and services that they provide. Challenges facing Ghanaian Entrepreneurs The entrepreneurs we surveyed they face. Access to finance: consistently across different sectors and business types, access to credit was considered the number one barrier to operations and growth. Although many entrepreneurs have ideas to convert into bankable businesses, we understand that very few succeed in obtaining the requisite funding to do so. The reasons for this are many and include: Low incomes and corresponding low savings culture: As a result of low income prevailing in Ghana and the corresponding low savings culture, banks in Ghana have had a rather limited deposit base from which to provide long-term capital for entrepreneurial development. Gross domestic savings as a percentage of GDP averaged 6.4% in Ghanaxxxx compared to [...]. As a result of this, Ghanaian entrepreneurs have had to fund long-term financing needs with relatively expensive short-term financing. o Little initiative by banks to be creative: Historically, Ghanaian banks have taken advantage of heavy government borrowing and the high interest rates to make money by lending most of their deposits to the government. This has reduced the pool of funding that may have otherwise been available to fund entrepreneurial ventures. Inability to properly evaluate and price entrepreneurial credit. Banks generally find it difficult to be able to properly analyse and price entrepreneurial ventures presented to them. The effect is that they tend to treat
Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 21

highlighted the following as some of the main challenges

entrepreneurial ventures as an amorphous set with the banks demanding the same set of collateral and other requirements instead of evaluating and pricing each entrepreneurial venture separately. Human capital: After finance, many entrepreneurs identify human capital as their biggest challenge. The most common complaint being what has been termed the Ghanaian mentality. The inability or rather unwillingness of the typical Ghanaian employee to proactively participate in developing the enterprise in which he finds himself. As a result many entrepreneurs find themselves doing a lot more than they feel they ought to be doing or would be doing if they had a motivated staff who were committed to developing the enterprise. As we shall see in chapter 9, part of this problem can be avoided by entrepreneurs identifying the right people and properly rewarding, motivating and developing them. Unfriendly government machinery: The institutions and departments of government (such as the Internal Revenue Service (IRS), Companies Registry, Trademarks Registry, Land Commission) which entrepreneurs rely on in establishing and operating their enterprises are perceived by entrepreneurs as being entrepreneur unfriendly. Many entrepreneurs we spoke to would often complain that rather than these governmental institutions seeing themselves as, and acting like pro-private sector or pro-entrepreneurship, civil and public servants who populate these institutions appear (whether inadvertently or not) to discourage and hinder entrepreneurship rather than assist entrepreneurs to achieve their objectives. These public/civil servants seem more concerned with unnecessary bureaucracy and systems that add questionable value. Many are also ill-equipped to provide the level of support entrepreneurs may require. At the Companies Registry for example, we came across officers who lack basic understanding of the very law (the Companies Code) which governs how companies must be set up and registered. At the Ghana Investments Promotion Centre (GIPC), we encountered officers who were unable to articulate existing investment incentives to potential foreign investors. Political and economic instability: This has been a major challenge for Ghanaian entrepreneurs over the last three decades. The high inflation, instability of the cedi against major currencies as well as the threat of coup dtats made it difficult for entrepreneurs to properly plan for their ventures. With the fall in interest rates, the relative stability of the cedi and the peaceful democracy that has characterised the
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Ghanaian economy over the last seven years, this challenge appears to be improving. Access to information: From the initial decision to invest in an enterprise to the decision to harvest, the entrepreneur would require reliable market data based on which he can make decisions. In Ghana, there is a marked absence of widely available and reliable data on the economy, market size and segments. Even a reliable recent figure for unemployment in Ghana (other than the 2000 figure) appears to be non-existent. Where data considered being for public consumption is available, there is often a lack of willingness to release this data to the general public. Available data is also not updated periodically which make it difficult for entrepreneurs to make considered risk and resource allocation decisions that affect their businesses. In seeking reliable market data, entrepreneurs often have to conduct or commission their own research. While we take the view in chapter 4 that research should be undertaken by entrepreneurs, sometimes the scale necessary to obtain accurate research results might be such that it may not be possible for a single entrepreneur to undertake the research. In some situations too, especially at the stage where the entrepreneur is considering a particular idea and has yet to establish the validity of his idea, it may not make sense (at least at that stage) to invest in customer research but to rely on publicly available data(and preferably free). Factors favouring entrepreneurship Entrepreneurship thrives in economies that have the following characteristics: Political stability: This involves protection from political or excessive governmental influence in entrepreneurial activities. Political stability also involves having stable political governments that encourage entrepreneurship through policy initiatives. Macroeconomic stability: The risks that entrepreneurs take are largely calculated risks. Most entrepreneurs therefore like to operate in an environment of macroeconomic stability (and predictability). For most of its independent history, Ghana has been characterized by high rates of inflation, high lending rates and rapid depreciation of the cedi which has made entrepreneurship very unattractive. Indeed, entrepreneurs have had to borrow at rates as high as 47% in 2000. Although more recently (August 2010xxviii) the lending rates by banks have reduced to an
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average of 25.5%.This is still much higher than pertains in other countries. Secure property rights: According to the World Bankxxix, land and buildings account for between half and three quarters of country wealth in most economies. Consequently, securing rights to lands and buildings strengthens incentives to invest and facilitates trade, and with formal property titles, entrepreneurs can obtain mortgages on their homes or land to start businesses. In Ghana, acquisition of land for business has been described as a major obstacle to business development and growth because of the complex land tenure system where ownership is held by a combination of traditional authorities, families, private individuals and public or Government institutionsxxx with its attendant problem of the same land being sold to several people at a time. Property registries are so poorly organized that they provide little security of ownership. Research carried out by the Financial Times reported in 2005 that foreign investors to Ghana are deterred by high business costs and problems such as land tenurexxxi. In Ghana, a simple property transfer in Accra city costs 3.7% 14% of the value of the property and takes over 382 days to register the property compared to no cost in Saudi Arabia and 1 day in Norway. Ease of starting businesses: For entrepreneurship to take root it must be easy to start a business in terms of the number and cost of processes required to register a company, and the minimum capital required by regulation. . In Ghana, according to World Banks 2010 data on starting a business, it takes on average 33 days and it involves 8 different procedures and also costs 26.4% of Ghanas Gross National Income (GNI) and requires capital of 13.4% of Ghanas Gross National Income (GNI). [compared to an average of 61.8 days, 11.1 procedures, and cost and capital required of 162.8% and 209.9% of GNI respectively in the rest of Sub-Saharan Africa.] Free flow of information: The free flow of information is important for entrepreneurship to thrive in any economy. Information on the market size for product, the laws governing the sector one wants to venture into, information on the institutions that offer capital as well as assist in the development of entrepreneurs must be easily accessible to prospective as well as established entrepreneurs to aid in their establishing, planning and developing entrepreneurial ventures. The rule of law and mechanisms for contract enforcement: Contract enforcement is
Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 24

critical for entrepreneurs who enter into relationships with customers and also for the financiers of these entrepreneurs. The more confidence an entrepreneur has in the legal system, the more likely it is that he might be willing to enter into a broader range of agreements with a wider number of people to facilitate his entrepreneurial activities. In Ghana, according to the World Bank, it takes an average 487 days to enforce a simple payment dispute compared to [581.1 days in the Sub-Saharan regionxxxii. Availability of human capital: Entrepreneurs do not operate in a vacuum and as a result need to be able to tap into a talented labour pool to be able to exploit the available opportunities. Many entrepreneurs complain about the calibre of the available labour pool. Kuenyehiaxxxiii however, has found that in many cases the issue about calibre is significantly exaggerated because of the unwillingness of business managers/owners to invest time in training. There are many highly talented Ghanaians who just want to be given a chance. Access to finance: This is a very important aspect of the entrepreneurial process. The

ideas or opportunities as well as the acquisition of the other resources to turn the idea(s) into an entrepreneurial venture is only possible with adequate financial resources. There are some organisations that specialise in providing venture capital for entrepreneurs with brilliant ideas. There are increasing numbers of banks that have proved willing and able to assist small businesses. Although by no means exhaustive and certainly not an endorsement , a number of entrepreneurs we spoke to singled out Zenith Bank, Amalbank and Ecobank as being particularly supportive of their entrepreneurial effort. . Size of the market in terms of numbers and income levels: Since entrepreneurship involves turning ideas into goods and services that take away an existing pain and at the same time result in financial reward, there must exist a sizable consumer base to patronise the products and services provided. Equally important, the income levels of the target should be such that they can afford to pay for the value added to the product or service.

Regulation of businesses: The quality of government regulations of businesses and the institutions that enforce this regulation are a major determinant of prosperityxxxiv. Regulations such as those protecting trade secrets and patents, preventing unfair
Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 25

competition, supporting thriving businesses all determine the extent to which entrepreneurship develops in a country. Culture: Where the culture of a country encourages risk taking and boldness and celebrates honest failures, as is the case in the United States, entrepreneurship thrives. In Ghana, our culture is one where there is a lot of stigma and shame attached to business failures. Mark Davies, the Scottish serial entrepreneur and founder of Busyinternet and an entrepreneur in Ghana for over ten years, attributes this to the fact that because the Ghanaian society is status driven, people are scared of taking any risks that may diminish the loss of that statusxxxv. Also, the colonial educational system focused on development of clerical and literacy skills deemed necessary for colonial administration and for making good employees out of locals rather than entrepreneurs. This legacy continues. The following institutions provide the proper framework to enable entrepreneurship to thrive: An independent central bank to help ensure monetary and economic stability. Monetary stability consequently encourages the inflow of capital assets and prevents a flight of capital from the country. In Ghana, the Bank of Ghana Act 2002(Act 612) established the independence of the central bank (Bank of Ghana)xxxvi. The Bank of Ghana, through its Monetary Policy Committee initiated policies that brought interest rates down from 47% when the Bank of Ghana Act 2002 was passed to 15% in August 2010. The Bank has passed a number of directives and policies which encourage and support entrepreneurs. An independent judiciary to ensure that the rule of law is enforced including ensuring impartial enforcement of contract terms and the protection of property. Under the late Chief Justice Acquah, a commercial court was set up to focus exclusively on hearing commercial matters. As part of its procedural requirements, the commercial court requires parties to a dispute to participate in a pre-trial conference at which a judge tries to settle the matter without the parties having to continue in court. The idea is to encourage settlement rather than protracted delays in litigation which has historically been the case. Independent media and easy access to credible information to facilitate the free flow of information, to expose corruption and other criminal wrong doing and to disseminate ideas.
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Neutral and professional army or security forces to help ensure law and order as well as protect life and property. Why become an Entrepreneur? Typically, a significant majority of graduating students from universities and polytechnics in Ghana would take 'regular' executive or civil service career paths. Many would go on to spend the rest of their working lives climbing the ladder in big and small corporations as well as the civil service and eventually retire on a pension paid by these corporations or the civil service. Increasingly, many will also spend their time moving from one corporate establishment to the other. Some also, after working for a number of years and gaining experience and contacts gather the courage to 'go it alone' in a business venture by starting or even buying a small or medium size business. In some rare instances, the reverse is true some start out in business of their own but later move to join an established company or the civil service. In many instances, people simply dip their toes in the entrepreneurship water by starting an entrepreneurial venture on the side while they maintain their day time jobs in Corporate Ghana, at least until their entrepreneurship venture is at a stage that they feel confident about making the plunge full time. By doing so, they will have a constant stream of income from Corporate Ghana while pursuing their more risky entrepreneurial passion. The appeal of joining 'Corporate Ghana' or the Civil Service straight from university is as follows: More security: Starting a business of your own requires greater initial risk. It is possible that after investment of time, energy and resources, the business might fail. There is therefore less security in starting your own business than in joining an already established company or the civil service. Certainty of income: An entrepreneur's income is typically (at least in the initial stages) uncertain. While there is a great potential to make significant financial gains by going it alone, there is also a risk that at least in the initial stages the income might be pretty modest or even non-existent. Rather than face a short term or medium term future of modest or non-existent income, many graduates are therefore attracted by the prospects of working for an already established company (banks in particular) or governmental sector where there is certainty of income and (in the initial stages at least)
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relatively more income. Greater training opportunities: Often, graduates joining a company or a governmental sector would expect to move on to other job functions, responsibilities or even different companies or governmental departments during the course of their working lives. As a result, they often consider which jobs would give them the best opportunity to train to develop their skills set. A job in a well established company such as a multinational or a big local corporation or in the Civil Service would typically offer bright graduates, greater opportunities for training and personal development which makes such jobs more attractive than entrepreneurial roles. Even where graduates definitely intend to pursue entrepreneurship as an option, they may decide to go and 'learn' in such environments before taking the plunge. Our view is that as much as possible, it is better to learn on someone else's dime (or cedi) before making that plunge meaning that it is better to spend time learning in the corporate environment, learning in that environment and making mistakes at the expense of the employer rather than your own. Lower levels of stress, working hours and better quality of life: Starting and managing your own business as a full time job can be extremely stressful. This makes pursuing the regular corporate or civil service path much more attractive to many. Starting and managing your own business entails working many long and unpredictable hours and making many personal sacrifices that many young graduates may not initially be willing to make. By contrast taking the corporate or civil service route ensures predictable hours and less personal stress making these routes more attractive. Smaller personal risk: Arguably, the only real risk in taking a corporate or civil service job is the opportunity costs of taking that job which many people cannot initially quantify. By contrast, starting and managing a business involves many personal and financial risks that may deter several people, especially those straight out of university and with relatively little capital. Responsibility: Starting and managing an enterprise entails such a significant level of responsibility that may deter many graduates. It entails being responsible for the outcome of all decisions relating to the business and making many decisions that they might not be knowledgeable about. By contrast though, joining a corporation or civil service department would ensure that all responsibility given is well measured out and phased. There would be several layers of people in the organisation to bounce ideas off and it
Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 28

would be the exception rather than the rule that a fresh graduate would be making major decisions on issues on which he or she is not knowledgeable. As a result of the above factors, many graduates decide to join established companies or the civil service on graduating from universities and polytechnics in Ghana. However, a few still decide to venture out on their own and take the entrepreneurship option because of the following reasons: Autonomy & Desire to control own destiny: One reason that people cite for starting their own business is the desire to control their own destiny. Entrepreneurship is such that they can go as far as they want, regardless of company politics or the goodwill of employers and superiors. As the 'boss', they call the shots and make the fundamental decisions that concern them. They do not have to pander to the whims and caprices of superiors at work to advance. Flexibility: Entrepreneurship typically offers great flexibility as the entrepreneur, as master of his enterprise', is free to decide when to work and what hours to work, unlike his counterparts in 'regular' employment who have no or little flexibility. That said though, in many instances, entrepreneurs find that they have little time for anything else other than work, especially in the initial stages of starting the business. Opportunity to reap unlimited profits: Employees would typically take a limited share in the profits of the companies they work for as the bulk of the profits will go to shareholders. Entrepreneurs who own and manage their own business however can reap unlimited profits from their venture. This makes entrepreneurship particularly attractive although it must be borne in mind that the flip side is true as well: Whereas employees would typically not suffer any loss in the event that their company goes out of business, the entrepreneur would most likely suffer significant personal and financial loss if this were to be the case. Unemployment & Underemployment: With high unemployment and underemployment in Ghana, some become entrepreneurs less by choice than by necessity. Rather than simply stay at home for an indefinite period after graduation, they begin to pursue entrepreneurial ventures. Family: Many people opt against the traditional route of corporate or civil service
29

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employment because of a family tradition that is steeped in entrepreneurship. Where parents or grandparents are already well established entrepreneurs, it is more attractive to take a step in this direction as the requisite capital and other support would readily be available. However, even in such instances, it is important for the would-be entrepreneur to independently want to become an entrepreneur, rather than have entrepreneurship 'imposed' on him by the family. Overview of the Entrepreneurial Cycle -The 4 Stages of entrepreneurship Despite the diversity of enterprises that constitute entrepreneurial ventures, it can be said broadly that entrepreneurship follows 4 main stages: o o o o Identification of opportunities Acquiring resources Implementing plan to take advantage of opportunity Harvesting the opportunity

Identification of opportunities Identification of opportunities is the point at which individuals realize there are opportunities to be tapped in the market place. The impetus for this may come from a number of sources. An individual (for example one who wants to leave his current employer) may actively research these opportunities. Opportunities for entrepreneurial ventures may also come from a wide variety of sources including complaints from consumers, business associates or members of a distribution channel. In chapters 3, 4 and 5 we discuss in more detail the identification of opportunities in the form of idea and opportunity analysis and considering whether to buy an existing business or start one from scratch Acquiring resources Once you have identified an opportunity and developed an idea that you would like to exploit the opportunity, you need to find resources required to be able to exploit those opportunities. These resources may take a number of forms but typically, top on the list are time, finance and human capital. Of course, many businesses take off without requiring any resources other than the time and human capital that the owner provides. In most businesses though, there is a need for start-up capital, which may come from the owner's savings, loans and other parties looking to invest by way of acquiring equity. Those who provide these financial resources must be appraised by the entrepreneur before taking
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such resources as an assessment of the needs and requirements of the providers of financial resource would put the entrepreneur in a better position to bargain for the resources at the lowest cost without losing control. In chapter 7 and 8, we discuss the process of acquiring and managing financial resources. In chapter 9 we discuss the process of attracting and retaining the requisite human resources. Implementing Plan to take advantage of opportunity This phase involves developing a plan and implementing that plan to ensure that entrepreneurs are able to achieve the maximum potential gains from their investment. The odds of success in small business are pretty bleak so it is important that entrepreneurs develop as robust a plan as possible to take into account any number of contingencies. However, it must be pointed out that several plans made for business are not actually relied on or quickly become outdated giving the fast pace of the nature of the relevant business. Our opinion, however, is that the discipline of planning and thinking through the issues that might, or might not, arise is invaluable in itself to any entrepreneur or potential entrepreneur, and it is consequently highly recommended that everyone does at least some basic planning in relation to their enterprise, no matter how small an enterprise. Indeed, this is succinctly summed up by the old adage that 'Success is when preparation meets opportunity'. In chapter 14, we will discuss the process of writing and implementing a business plan in more detail.

Harvesting the opportunity A farmer looks forward to the harvest season when the fruits of his hard labour in tilling the soil in the scorching Ghanaian heat are rewarded with cash paid for his produce. Similarly, an entrepreneur who has worked hard to successfully develop his enterprise may decide to 'harvest' that opportunity by making the decision about whether to sell a part or all of that enterprise privately or seek an initial public offering (IPO) on the Ghana Stock Exchange. In chapter 13 we discuss how an entrepreneur may harvest the fruits of his entrepreneurship.

QUESTIONS FOR CLASS DISCUSSION Should every entrepreneurial venture seek to remove a customer pain or satisfy a customer need in order to survive and make profit? Do you agree with the assertion that the development of an entrepreneurial idea is opportunity driven rather than resource driven?
Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 31

Are there particular traits, attributes, attitude or characteristics that one requires to be a successful entrepreneur? Is there a truly social entrepreneurship? Can intrapreneurship affect the growth of entrepreneurship in Ghana? Has successive Ghanaian governments stifled the growth of entrepreneurship in the country? What do you think government should do to foster entrepreneurial development considering the role they play in national development? Does the Ghanaian political, social and economic environment promote entrepreneurship considering the factors that has been identified as necessary to fostering entrepreneurship? From your personal experience and interactions with people, how easy or difficult is it to become an entrepreneur in Ghana.

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CASE STUDY: SEDINA ATTIONU: NECESSITY ENTREPRENEUR? Sedina Attionu, Chief Executive Officer and Managing Director of The Pillbox, a chain of pharmacy shops in Accra, has not always been an entrepreneur. After obtaining her degree in Pharmacy at the University of Science and Technology, Kumasi, she travelled to England to work with Victorian Support, a UK charity and later for the West Middlesex University Hospital. Upon her return to Ghana she did her compulsory national service at the Pharmacy Council of Ghana. The regulatory experience she got at the Council put her in a good position to work with SGS (Societe General de Surveillance S.A) the Swiss inspection, verification, testing and certification company where she helped set up Medlab, a medical laboratory based in Accra. She subsequently worked in various capacities at Phyto-Riker, a US pharmaceutical company and at Intravenous Infusions Koforidua, a Ghanaian pharmaceutical manufacturing company where she was in charge of marketing for Francophone West Africa. Although she did not intend using her license to work as a pharmacist, a lack of job opportunities after relocating to Accra made her open her first pharmacy shop in 1999. Her strategy was to set up a chain of retail pharmacies to ensure economies of scale where her products would be relatively cheaper. Her vision is for The Pillbox to become a household name, synonymous with world-class dispensary service, known for reliable supply and the ability to provide whatever drug a customer wants when no one else can. In the space of five years, she had opened five additional shops. She encountered a fair share of challenges, the major one being availability of finance for her projects. It was quite difficult acquiring capital from the banks for the expansion phase. Her bankers were a bit jittery about plans for such rapid development. They thought she was new in the business and should take her time and not move as fast a pace as she wanted to. As she had no equity of her own, she had no alternative other than to rely on debt financing and to date, shes still paying off. In addition to the challenge of finance, she had to deal with regulatory issues of the pharmacy council in order to keep her shops open. Working in a male-dominated industry did not make matters any easier. Most suppliers and industry gurus thought she was too-known for trying to make such a big impact in their industry in so little a time and threw as many stumbling blocks as they could in her way. All these problems have not deterred her. She sees them as tests which have strengthened her as an entrepreneur. Although she is not working with a spelled out business plan, her
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target is to own about half, if not more, of the industrial share of retail pharmacies in Ghana, and thats where shes channelled her energies. She is embarking on a social franchising model of opening at least a shop in every district in Ghana. Also, she is trying to set up as many outlets as possible. She believes that the wider spread The Pillbox is, the better its economies of scale will be, translating into cheaper products that are affordable to all Ghanaians. Currently, she has six shops. She hopes to open thirty more outlets in the next five years. If the social franchising gets the funding it needs, that makes 140 shops by 2011!! Sedina realizes that she needs to keep employees who believe in her vision and are ready to work hard to bring her plans to fruition. The 30 employees she has now were employed after a rigorous selection process and all subsequent employees will be subjected to the same procedure because the only way she can translate world class service to her clients is through her staff. Sedina agrees that it has not been an easy task running her business. Especially when she was carrying her babies, was put on bed rest and could not go out and check on the progress in the various outlets. Its part of the challenges that comes with being a woman entrepreneur, a mother and wife is all Sedina says about this inconvenience. Her advice to all those who want to give entrepreneurship a shot is just go for it! She believes that one can do anything she sets her mind to. She is however quick to caution that, you must save some money and have equity of your own before starting out because debt financing is a very strenuous and stressful situation to have to deal with in the early stages of running a business. She also recommends that chapters on management, finance, marketing and customer service be included in all books on entrepreneurship in Ghana as it would help immensely. Asked if there was anything she wishes to have done differently, she pauses, thinks about it a bit and exclaims, I wouldnt have expanded as quickly because of the stress, the high interest on loans and the fact that there is so much debt to be repaid but the satisfied smile on her face when she talks about her shops seems to say, I dont regret anything one bit. QUESTIONS FOR CASE DISCUSSION: 1. Can Sedina be described as an opportunity entrepreneur or a necessity entrepreneur?
Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 34

2.

What is the opportunity/necessity that Sedina is seeking to exploit? What is the idea? stability?

3. Will you say Sedina is driven by passion for her business or by need for financial 4. Does the gender of a person affect his or her entrepreneurial skills? 5. What are the risks faced by Sedina operating without a business plan? 6. Are Sedinas plans for expansion realistic and achievable

i ii iii

Higgs, Henry. Life and Work of Richard Cantillon. London: Macmillan, 1931. Translated by Clement C. Biddle, LL.D. Philadelphia: Lippincott, Grambo & Co., 1855 Stokes, D. Small Business Management, an active learning approach. 2nd Edition. London; Letts Educational. 1997 Robert D Hisrich, Entrepreneurship, Intrapreneurship and Venture Capital. Lexington, MA, LexingtonBooks, 1986, 96

iv

v See Chapter 6 vi Johnson, Industrial and Commerical Training, Volume 33 Number 4 2001 pp 135-140
vii viii ix

Paul-Arthur Fortin (1992).Textbook ibid

J, Timmons, New Venture Creation, 4th Edition (Homewood, IL: Irwin, 1994)

http://www.sinapiaba.com/sat/index.php?option=com_frontpage&Itemid=1

September

2010
xi
xii

Vise and Malheed.The Google story, New York:Baram Dell,2005,page 7. Chesbrough, H., Nohria, Sull (2000). Networked Incubators: Hothouses for the New Economy. Harvard Business

Review 78 Sep-Oct, pp. 74-84. xiiiBosma, N., and Harding, R. Global Entrepreneurship Monitor, 2009 Expenditure Report. (2009 and 2006 summary results(2007)[CHECK....] Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 35

) www.gemconsortium.org. Assessed 8th August, 2010


xiv xv xvi xvii xviii xix xx xxi

FK Buah: A history of Ghana, Macmillan, London and Basingstoke, 1980 Reynolds, Trade and Economic Change on The Gold Coast 1807-1874, Longman, London, 1974 Reynolds, Trade and Economic Change on The Gold Coast 1807-1874, Longman, London, 1974 T E Anin, Banking in Ghana, Woeli Publishing, Accra, 2000 Gocking R., S. The history of Ghana. Westport: USA, Greenwood Publishing Group Inc. 2005

Kellick, Tony, Development Economics in Action, Heinemann, 1978 Hug, M.M[Check], The economy of Ghana, Macmillan Press, London, 1989 Asamoa, Ansa Socio Economic Development Strategies of Independent African Countries, the Ghanaian

experience. Ghana University Press, Ghana, 1996.


xxii xxiii xxiv

Mike Ocquaye, Politics in Ghana 1982 1992, 2004 http://www.dic.com.gh/ [check date occurred] See pages[ ] on the Role of entrepreneurship to the development of a countrys economy et al found in The State of the Ghanaian economy in 2009(Institute of Statistical Social and Economic

xxv Gough

Research)
xxvi xxvii xxviii xxix xxx xxxi

State of the Ghanaian Economy 2003, ISSER. The State of the Ghanaian economy in 2005 (Institute of Statistical Social and Economic Research) Bank of Ghana, 2006[CHECK]

World Bank Group Private Sector Network, Doing Business in 2005[UPDATE] Sub-Saharan Africa Enterprise Forum, July-Dec 2004 Financial Times Special Report Ghana, November 1, 2005, World Bank Group Ibid Kuenyehia, E. Uncommon Practice: Strategy that works (unpublished). Lecture delivered at British Council World Bank Group Private Sector Network, Doing Business in 2005 Sub-Saharan Africa[UPDATE]

xxxii xxxiii

Management Express Forum, Accra and Kumasi June 2007


xxxiv

xxxv Mark Davies, Lecture delivered at Ghana Institute of Management and Professional Administration [XXX, 2008] xxxvi Banking Act 2002 (Act.)

Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship

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