The History of Business in Africa

Africa evokes an image of poverty and underdevelopment. The painful emigration of millions of people annually underlines this. Africa also evokes a dramatic distant history from slave trade to colonisation. Africa is nevertheless full of contradictions. Across its vastly diverse regions, in a process of non-linear growth, enterprises or groups of enterprises have emerged, actors able to mobilise the most advanced technical and organisational resources. It is the enterprise, both private and state-owned, being able to act effectively on the market, to be the protagonist of modernisation and development, that rose in response to market opportunities and that has put Africa on the post-liberalisation trajectory to global engagement. This book is the first systematic study on African enterprise in its different typologies of size and organisation. This book underlines the geographical differences, the dynamically changing policy and the institutional context volatility of African business development. Using a longue durée approach, it wants to explain the reality of the present.

Verhoef maps out the complexity of Africa since earliest times, which exposes the myth of African unity, a single African nationalism and ‘the African culture’ as concepts of political expediency rather than historical validity. Focusing on what was published on business in Africa, the chapter exposes the lack of an all Africa inclusive focus on business of all its people. This chapter highlights the under researched Business History perspective of the agency of individuals, entrepreneurs and business organisations in Africa. Verhoef shows the emergence of business activity among the diverse people of Africa at different stages of the discontinuities of Africa’s history. That sets the context of business development under different modalities of capitalism to guide the study of Business development in Africa.

The central characteristic of the persistent entrepreneurial inclination of merchants, tradesmen, middlemen and politicians before effective colonisation is outlined in the constantly changing relationships of trade. Verhoef identifies the dynamic interplay between political power and business as a golden thread through the history of Africa. Individualism in business is subject to networks of religion, kin or culture, signifying the underlying undemocratic authoritarian nature of exchange. The organisation of managerial functions did not monopolise exchange, but enhanced wider entrepreneurial opportunity. Verhoef not only offers original case studies to substantiate the kinship/business connection since pre-colonial times but also observes the pursuit of profit irrespective of the commodity exchanged.

Verhoef dispels the notion of immediate colonial superiority, by presenting evidence of mutual dependence, successful adaptation by African entrepreneurs and the co-existence of struggling metropolitan chartered companies and local entrepreneurs and middlemen. The pendulum swung between colonial state power enforcing cash crop production and business concentration and resisting local businessmen and farmers persevering on the margins of the market. Entrepreneurial survival in kinship networks in West and East Africa contrasts with the dual model of European and African business development in South Africa. Verhoef offers compelling evidence of entrepreneurial ingenuity and successful survival and growth strategies under colonial and minority governments, dispelling the notion of African business inability to compete in the capitalist market. Local banks from South Africa competed successfully with imperial institutions.

Entrepreneurial resilience in spite of the state. Verhoef outlines business activity during the post-independence period in Africa as having to negotiate new market distortion in the form of authoritarian regimes, where political favouritism and different forms of discrimination characterised newly independent states. Formerly, unknown cases of business resilience under conditions of socialist macro-economic policies and a dominant position for state-owned enterprises in the leading economic sectors of the new states are discussed, whereby the state-business relationship since the 1960s emerges. Verhoef describes the Botswana exception as a case of business-state inclusivity, as opposed to statutory ethnic marginalisation and nationalisation that destroyed opportunity and undermined growth in independent states. Verhoef illustrates the inhibiting impact of state power on the development of small entrepreneurs and managerial capabilities in the private sector, as SOE management failed the states.

Verhoef describes Africa’s turn to the market since the debt-ridden stasis of the 1980, as the dawn of democracy, political accountability and private enterprise. The causal relationship between market, responsible leadership, governance and entrepreneurial achievement is highlighted in the first exposition of entrepreneurial freedom and success in Africa since independence. Verhoef integrates biographies of business birth, growth and consolidation across Sub-Saharan Africa and the Maghreb and connects experiences with privatisation to the rise of large diversified conglomerates in Africa. Innovation and leadership are core to successful business development, and Verhoef connects these characteristics to the enduring family networks of early African business development when identifying leading businesses contributing to development in different sectors of African economies. The organisational form and management structures, except in South Africa, remain either relatively flat or owner-centralised.

Business in Africa has matured into several highly competitive multinational corporations able to compete globally. Verhoef presents the first overview of Africa’s global business capabilities by following the successful emerging market conglomerates from the continent. South African EMNCs dominance in market-seeking globalisation strategies are built on superior managerial and financial competitiveness, while ownership structures and a lack of technological advantages hold EMNCs from other African markets confined to intra-African expansion. The relationship between a legacy of capitalist market relations and globalisation from Africa needs consideration, as well as access to physical and human capital. The agenda on business development, organisational structure and management culture in Africa is opened by this provocative introduction to Africa’s globalising corporations and aspiring EMNCs. Verhoef underlines the persistent challenging state-business nexus and compromising governance context of corruption and political nepotism.