From Beijing to Accra: How Local Entrepreneurs Drive National Growth

By Maxwell AMPONG (Dr.)

When examining history and following common practice, the main duty for nation-building has traditionally rested with the central government.

Entire governments, both past and present, have constructed infrastructure like roads and hospitals, provided utilities such as electricity and clean water, and generated employment opportunities. In developing countries, particularly those located in sub-Saharan Africa, the impact of central governance on overall national progress has been notably pronounced.

Nevertheless, the intricacies of contemporary societies render this method of progress less feasible. The governments of emerging countries such as Ghana frequently do not have sufficient funds to independently build up the required institutions, infrastructure, and skilled workforce needed for robust economic advancement and an expedited eradication of poverty.

For example, out of the 45 countries in Sub-Saharan Africa, 15 nations report government revenues below 15% of their GDP, although this number can fluctuate annually.

Moreover, governments in resource-abundant Sub-Saharan African countries experience more unstable yet greater revenues compared to those in resource-scarce nations (Izvorski and Karakülah 2019). Consequently, there is an urgent requirement for increased private involvement via entrepreneurial activities.

For clarity, government revenue Specifically pertains to funds gathered by the government through various means such as taxes, tariffs, impositions, entitlements, and miscellaneous charges.

In contrast, Gross Domestic Product (GDP) calculates the aggregate worth of products and services generated within the economy during a certain timeframe.

To put it differently, GDP captures the total economic activity inside a nation, whereas government revenue indicates merely the segment of this economic activity (encompassing income from resources) that feeds into the government’s finances.

For instance, the Chinese government acknowledged this reality during the second half of the 20th century and deliberately moved away from centralized economic planning.

Despite having a population exceeding one billion, the nation managed to outstrip Japan and secure the second position in global economic rankings in 2010, owing to the tacit yet real authorization provided to individual business owners for roughly thirty years.

The significance of entrepreneurship in constructing nations cannot be exaggerated.

From a public policy standpoint, numerous scholars have highlighted the importance of cultivating an entrepreneurial ecosystem to stimulate economic progress via the creation of new enterprises (Malecki, 1994; Reynolds et al., 2001). In fact, research indicates a significant positive relationship between entrepreneurship and overall national growth (Rocha, 2004).

In order to define it briefly, entrepreneurship can be described as the practice where people chase after opportunities regardless of their current resource pool. Hence, an entrepreneur is someone who gathers and coordinates all necessary elements required to turn an innovation or concept into a sustainable enterprise.

As stated by Nafukho (1998), an entrepreneur acts like a bulldozer capable of transforming obstacles into foundations for success. The author also emphasizes that entrepreneurs have the ability to overcome any challenge. They are dynamic and inventive creators who establish crucial links needed to start a new business venture.

Hayton (2002) similarly describes entrepreneurship as the process of recognizing an opportunity for need satisfaction and transforming it into something valuable.

This definition encompasses the strategies and steps undertaken by business proprietors to capitalize on commercial prospects. Furthermore, Otaki (2003) posits that entrepreneurship involves setting up a novel economic unit centered around innovative products or services.

Entrepreneurs play crucial roles in fostering entrepreneurship within their countries, viewing it almost like a valuable resource for the nation. This involves more than just generating profits; it encompasses the creation of value, thereby improving overall welfare along with economic prosperity.

Barringer and Ireland (2016) suggest that there are three main motivations for individuals who decide to become entrepreneurs and launch their ventures: firstly, they desire independence from authority; secondly, they aim to bring their concepts into reality; thirdly, they seek monetary gain. Consequently, numerous people consider entrepreneurship an attractive professional option.

Consider your circle of acquaintances and friends; chances are high that at least one or two individuals among them harbor ambitions to launch their own enterprise, whether in the present moment or sometime down the road. Additionally, the rising trend towards entrepreneurship can be gauged by the escalating volume of literature dedicated to guiding aspiring entrepreneurs through the process of setting up a new venture.

Amazon.com now features over 89,900 titles concerning small business management and an additional 36,900 products associated with entrepreneurship.

In 2013, approximately 62,700 books about small businesses existed. This figure has likely grown substantially since then (Barringer and Ireland 2016). On the other hand, national development pertains to a country’s capacity to consistently enhance the well-being or standard of living for its citizens across various sectors including education, economy, healthcare, leisure activities, among others.

As previously stated, many intellectual advancements have been achieved to demonstrate the link between entrepreneurship and economic growth.

The Global Economic Monitor (GEM), an organization supported financially by Babson College located in Massachusetts, USA, along with the London Business School, focuses on exploring the connection between entrepreneurship and economic growth. It also aims at identifying strategies to promote entrepreneurship, especially within emerging economies.

The GEM carries out an annual research project covering as many as 42 nations, with the results being released publicly for worldwide access.

As stated by Hisrich and Peters (1998), the existence of a connection between entrepreneurship and economic growth can be attributed to rising individual productivity and wealth, along with "transforming and restructuring businesses and societies." Additionally, these researchers indicate that entrepreneurial initiatives have rejuvenated economically disadvantaged areas across different nations.

In 2010, Ahiauzu explored the impact of entrepreneurship on economic progress in Ghana. Initially, he cited Dejardin (2000), stating that "a rise in entrepreneurial numbers contributes to enhanced economic growth." Additionally, Morrison (2000) argued that "entrepreneurship plays a crucial and significant part in societal transitions over time, including shifts from traditional to modern systems, modern to postmodern contexts, and from government-regulated economies to those based on market forces," thereby reinforcing this perspective.

This being true, a nation's economic advancement stems from various human efforts. Economic growth is a vibrant process marked by shifting consumption trends. To achieve income generation through product manufacturing, new items must initially come into existence—this conclusion makes sense logically.

A growing nation such as Ghana needs savvy private investors capable of spotting fresh prospects and ready to assume the associated risks. Consequently, low-income business owners have the potential to disrupt the cycle of poverty and joblessness in Ghana.

As stated by the International Labour Organization (ILO, 2009a), private enterprises frequently play a crucial role in advancing a nation's economic growth initiatives.

They combine human resources, financial backing, and strategic expertise to develop enterprises capable of thriving in local, national, and global marketplaces.

This vitality not only drives economic expansion through the production of goods and services but also fosters employment opportunities, skill enhancement, and social progression.

Through leveraging their innovation and flexibility, business owners significantly contribute to the development of emerging sectors, broadening economic outputs, and fostering sustainable, long-lasting advancement across most areas globally.

To fully understand this, we must consider how entrepreneurship contributes to building a nation, which encompasses;

1. Entrepreneurship Spurs Economic Development: It creates countless fresh avenues and job openings. Many foundational roles critical for converting untrained employees into proficient professionals arise from entrepreneurial ventures. Furthermore, these initiatives equip and provide trained workforce members to major corporations. The rise in entrepreneurship significantly contributes to boosting a country’s total employment levels. Hence, entrepreneurship is crucial for generating new work possibilities.

In Ghana, 49.2% of individuals who are at least 15 years old are proprietors of their own enterprises (Ghana Statistical Service 2019). Micro, small, and medium-sized enterprises (MSMEs) are prevalent across the business sector and play a vital role in driving the country’s economic growth.

MSMEs are considered a vital component of the Ghanaian economy, representing approximately 92% of all enterprises, providing employment to more than 80% of the workforce, and generating around 70% of the country’s GDP (Ghana Ministry of Trade and Industry 2019).

They also dominate the nation's industrial sector, particularly within the manufacturing industry, which sees high participation from MSMEs, providing employment to 85% of the manufacturing labor force.

1. Entrepreneurship Fosters Innovation: Entrepreneurs stimulate innovative advancements that pave the way for fresh business opportunities, market spaces, product lines, and technological breakthroughs via robust R&D efforts. These innovators can uncover answers to issues left unresolved by present-day products and tech. As such, entrepreneurship has the potential to improve individuals' quality of life by introducing novel commodities and services or by enhancing those already available with cutting-edge ideas.

Nevertheless, the majority of entrepreneurs in Ghana start out of necessity, often running informal businesses solo either on the streets or from their homes. Similar to numerous other African countries, economic circumstances push many individuals toward entrepreneurship as their primary way of making a livelihood.

Even so, 'opportunity-driven' entrepreneurs have a positive effect on the nation's job market. Studies show that 71% of businesses started by these entrepreneurs generate employment opportunities, providing work for an average of 8.4 full-time employees each.

1. Entrepreneurship Has the Potential to Drive Societal Transformations: By moving away from obsolete methods, procedures, and tools, entrepreneurs also reshape or question established social customs and cultural values. They lead the way in adopting innovative technologies and frameworks, which consequently drives broader shifts within society. Such transformations correlate with better quality of life, increased philanthropy, elevated spirits, and superior financial choices.

Hence, societal shifts gradually influence alterations at local, national, and international levels. Recognizing the significance of social entrepreneurship is essential.

In Ghana, the information and communication technology (ICT) sector hosts the largest share of established startups, accounting for 34% of all national startup ventures that offer products or services within this domain. This is trailed by industries such as agriculture, manufacturing, and construction. Conversely, fields like healthcare, water management, and sanitation attract notably fewer entrepreneurial initiatives in the country.

I trust you found this piece informative and engaging. Your comments mean a lot to me, and I am eager to hear your thoughts on subjects you'd like me to explore further.

You can book a meeting with me via my Calendly link. www.calendly.com/maxwellampong Alternatively, reach out to me via multiple platforms on my Linktree page at www.linktr.ee/themax . Subscribe to the ‘Entrepreneur In You’ newsletter here: https://lnkd.in/d-hgCVPy .

If you wish to delve deeper into this topic, I've assembled a collection of readings and sources that offer more detailed information and concentrate on specific aspects.

1. Ahiauzu, A. (2010). Entrepreneurship and Economic Growth in Nigeria: Next Steps .
2. Barringer, B. R., and Ireland, R. D. (2016). Starting Businesses: Effective Strategies for Successful New Venture Initiation (5th ed.). Pearson.
3. Dejardin, M. (2000). Is the link between entrepreneurship and economic growth self-evident? (Publishing series). The Institute for Development Strategies, Indiana University.
4. Global Entrepreneurship Monitor (GEM). Global reports . GEM. https://www.gemconsortium.org/report
5. Ghana Ministry of Trade and Industry. (2019). Ghana's National Micro, Small and Medium-sized Enterprises (MSME) Policy: Final Draft .
6. Ghana Statistical Service. (2019). Ghana Living Standards Survey (GLSS 7): Primary Report .
7. Hayton, J. C. (2002). Review of behavioral studies on national culture and entrepreneurship. Entrepreneurship Theory and Practice, Issue 26 (4), 33–52.
8. Hisrich, R. D., & Peters, M. P. (1998). Entrepreneurship (4th ed.). Irwin/McGraw-Hill.
9. World Employment and Social Outlook 2009: Trends. ILO. (2009) Global employment trends .
10. Izvorski, I., & Karakülah, K. (2019, February 20). Four insights for emerging nations drawn from developed countries' history . https://www.brookings.edu/blog/future-development/2019/02/20/4-lessons-for-developing-countries-from-advanced-economies-past/
11. Malecki, E. J. (1994). entrepreneurship in regional and local development. International Regional Science Review, Volume 16 (1–2), 119–153.
12. Morrison, A. (2000). Entrepreneurship: What triggers it? International Journal of Entrepreneurship and Business Behavior, Volume 6 (2), 59–71. https://doi.org/10.1108/13552550010335976
13. Nafukho, F. M. (1998). Development of entrepreneurial skills programs for unemployed youths in Africa. In A. Ahmed & S. A. Nwankwo (Eds.), Attaining sustainable growth across Africa (pp. 278–296). London: WASD.
14. Otaki, O. (2003). The impact of youth unemployment in Nigeria on the third millennium. International Review of Social Sciences, 2 (1), 21–26.
15. Reynolds, P. D., Camps, S. M., Bygrave, W. D., Autio, E., and Hay, M. published their work in 2001. Global Entrepreneurship Monitor – 2001 leadership summary Kauffman Center for Leadership in Entrepreneurship.
16. Rocha, H. O. (2004). entrepreneurship and growth: The function of clusters. Small Business Economics, 23 (5), 363–400. https://doi.org/10.1007/s11187-004-3991-8
17. Ubong, B. (2013). Entrepreneurship and national development in a shifting landscape. Mediterranean Journal of Social Sciences, Volume 4 (16), p115. https://doi.org/10.5901/mjss.2013.v4n16p115

I hope for an immensely fruitful and prosperous week coming up for you!

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Dr. Maxwell Ampong acts as the CEO of the company mentioned. Maxwell Investments Group He serves as an Honorary Curator at the Ghana National Museum and acts as the Official Business Adviser for Ghana’s biggest agricultural trade union within the framework of the country’s Trade Union Congress (TUC).

Founder of WellMax Inclusive Insurance and WellMax Micro-Credit Dr. Ampong contributes articles on current economic issues and offers broader viewpoint essays. ‘Entrepreneur In You’ is operated under the supervision of the Africa School of Entrepreneurship , initiated by Maxwell Investments Group.

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