A few months ago an article in the economist outlined the countries with the highest rate of entrepreneurs. Surprisingly, the top country on this list was Uganda, with about 29 percent of individuals, age 18 to 64, active in either starting up or managing a new enterprise. I will attempt to examine the causes and effects of this phenomenon in relation to society, including organizations working to foster these entrepreneurs and why it is so much higher than the world average of 9 percent (“Uganda…”). Is this occurrence in Uganda because of a cycle that every country goes through or is it something different? Could it be the product of the environment factors such as geography and the government or is it a fundamental difference in the people of Uganda themselves?
Uganda is a land locked country located in east Africa. However, Uganda has access to three major bodies of water, including Lake Victoria. Uganda boasts a fertile land of sustainable natural resources which includes the largest sector of their economy – agriculture – accounting for about 80 percent of the work force. The average age of an entrepreneur in Uganda is between 30 and 40, most of whom only possess a high school education. Uganda’s TEA (Total Entrepreneurial Activity) in 2004 was 31.6, the highest of any country in the study. While agriculture is the main sector, economic growth is driven by the services and trade industries. Asian investors are returning to Uganda and re-establishing businesses and boosting the economy. Even though Uganda is among the poorest countries in the world, the government has pushed economic policies, infrastructure projects, and domestic security initiatives that have led to economic growth including an average of 6.9 percent GDP growth over the last ten years (Beach).
Throughout the rule of Idi Amin, many entrepreneurs were exiled, which could be part of the reason that so many are present in today’s society. Additionally, as previously mentioned, entrepreneurship is encouraged by the government. Discounts and incentives are offered by the government, while many originations are set up to ease the process of legally forming a new business. Culturally, entrepreneurship is looked at with optimism and generally respected throughout society. It is seen as a vital part of the nation building process in many African countries striving to grow. This could point out that possibly entrepreneurship is just a product of Uganda’s situation and not a unique facet of the people. Most Ugandans see entrepreneurial activity as a better way of living. If one were to watch videos about Ugandan entrepreneurship on the World Bank’s YouTube channel, one would see interviews with countless citizens who all state they would like to work for themselves or start their own business in the next five years. It is remarkable how excited these citizens are to be successful and innovative despite their country’s poor economic situation. It brings a refreshing perspective from the gloomy attitude here in the U.S. toward the job market. Additionally, Ugandans claim a motivator for starting a business is independence, showing as disdain for government control (Beach). Possibly this is a factor causing the people of Uganda to be so entrepreneurial, but still pointing to the suggestion that this attitude is merely a product of the situation.
Entrepreneurship is a mindset, an idea that occurs at all stages of the business cycle. It is about creativity and taking a chance on a new and innovative idea. It is finding a demand in the market and meeting that demand with a product or service. Why is it then that people in places like Uganda have this ideology engrained in their minds significantly more than the world on average? Additionally, entrepreneurship is not necessarily advocated in the traditional education system and was just recently introduced into the curriculum of institutions of higher learning, so this mindset is not taught to the people, but rather gained through society (Ocici). Additionally, there is a significant regional difference in the entrepreneurship rates, with Eastern districts showing a much higher rate of activity. This shows that even those people living in the same country and under the same government are exhibiting large differences in economic activity. This may point more towards the proposal that it is not truly a product of government and geography and other physical factors, but rather it is a unique facet to this society. There are many other poor countries around the globe that do not have entrepreneurial attitudes near the levels of Uganda. It seems that this society has formed a unique ideology that starting one’s own business is the best possible future. These people are eager for freedom and independence and are showing that through their economic activity. They are excited to control their own destiny and realize the possibilities of business success (and failure).
With further research necessary to absolutely conclude what really drives Uganda entrepreneurs, it is clear they would rather control their fortune than work at the hands of a larger company or the government. However, it is still unclear as to whether this nationwide attitude is merely a product of their position in the world society or it is a construct unique to the region. There are countries in similar situations such as Rwanda who also have high entrepreneurial rates, but also countries such as Brazil who are growing at significant rates, yet their people fail to reach levels half of the entrepreneurial activity close to that of Uganda. Possibly it is a combination of the predicament of Uganda and a unique ideology of its people that make Uganda the most entrepreneurial country in the world.
Works
Beach, Jim. “Uganda.” International Entrepreneurship. 2011. From
http://www.internationalentrepreneurship.com/africa/uganda/#
Ocici, Charles. “A Working Paper on Entrepreneurship.” Commission of Legal
Empowerment of the Poor. 2006. From http://www.undp.org/legalempowerment/reports/National%20Consultation%20Reports/Country%20Files/25_Uganda/25_5_Entrepreneurship.pdf
“Uganda, The Entrepreneur’s Paradise.” Fast Company. 2005. From
http://www.fastcompany.com/magazine/82/uganda.html
Dylan,
ReplyDeleteDo you think that a more constructivist theory or realist theory would back up your data?
You seem, for the most part, to argue in constructivist terms, saying that the ideology and culture of the Ugandan people has shaped the reason for their high percentage of entrepreneurship.
However, I think a realist would argue that Uganda, as a poor nation inflicted with past political problems, is using entrepreneurship to assert its power in the modern world. This high statistic, hands Uganda attention and power both economically and politically, giving it a more secure world position for the future.
Just to throw in another idea, liberal theories may argue that Uganda is using entrepreneurship to get out of its isolated history and join the rest of the world in order to make for more peaceful international relationships.
Which theory do you most agree with?
Dylan, very interesting post!! I see this phenomena more as a result of constructivism - I think it is part of modern Ugandan identity to want freedom, and a better life. Their outlet thus, because they do not have a free government, is to have a free economy, and start up businesses.
ReplyDeleteYou mention that there is a "gloomy attitude here in the U.S. toward the job market" and I think this parallels very well with Uganda. The U.S. is the quintessential example of a country where people strive for freedom and improvement - the U.S. was created under that ideal, and the American Dream is one of cultivation your own success.
Thus I see it as, while the U.S., and more specifically its young and spoiled generation, slowly loose interest in freedom, and the traditional American identity, Ugandan's wish to embrace to, and have done so in their culture. I think this serves as one piece of evidence as to why this is happening.
Dylan, awesome post but I just have a quick question. This may seem rather naive but is it truly an ideal situation for Uganda to be providing all of these incentives for people to begin their own businesses? I mean I understand the growth that it can provide, however what if these businesses fail? Would this not throw Uganda into more financial and developmental issues? If we look at Brazil who like you say does not even meet half of Uganda's rate of entrepreneurship, and yet it's market is raising at incredible rates. So I guess in the big picture my question would is it actually beneficial for Uganda to be supporting entrepreneurship as much as they do?
ReplyDeleteDo you think government incentivization is what is necessary to jumpstart entrepreneurship in the US?
ReplyDeleteHannah, I do think that a constructivist theory would be most appropriate. I think it is the identity of these people that have lead to this data, not Uganda trying to assert its power in the world. Julia, I couldn't agree more with what you said. The Ugandan people are experiencing what our country experienced centuries ago. And yes, they are expressing that want for freedom through their economic actions. Frank, I do think it is a good thing for Uganda as a whole to be this entrepreneurial. While many of these businesses do fail, their economy has been growing at a rate between 4 and 7 percent each year, a healthy and sustainable rate. Additionally, even when business do fail, the people are not discouraged and often go on to open a new business. Wyatt, I don't think we necessarily have to encourage entrepreneurship here in the US. We are a more established economy and are focused on bigger established corporations for products as well as employment. Additionally, I don't think government intervention is really necessary for entrepreneurship seeing as it occurs when there is demand for good and no supply. Regardless of government intervention, entrepreneurship will occur because people recognize that there is a profit to be made.
ReplyDelete