Microsoft Word - 09_jwe_3-4.doc UDC: 005.64, 305-055.2(678)(663) JEL: B54, L26, N37 SCIENTIFIC REPORT Processes of Incubating African Female Entrepreneurs: Some Evidences from Senegal and Tanzania Kyaruzi Imani Silver*, University of Birmingham, School of Geography, Earth and Environmental Sciences (Graduate), Edgbaston, Birmingham Hales Chantal Ahoefa, University of Birmingham, School of Geography, Earth and Environmental Sciences, Edgbaston Birmingham A B S T R A C T This paper seeks to examine the processes of incubating African female entrepreneurs. It is observed that despite the growing interest and large volume of literature on business incubation and their role in local economic growth, theories have been silent on explaining the role(s) of “female incubatees” within this process. The particular focus of this paper is on our current understanding of the nature of the complex processes of providing business support services to female entrepreneurs in Africa, an analysis of how incubation might address those challenges, and some tentative lessons drawn from our empirical research and entrepreneurs` own experiences. Therefore, this paper includes information and analysis on a number of business incubation initiatives, but its goal is to provide an understanding of what might work in the incubation industry and, in particular, why in specific circumstances female-owned businesses fail or succeed in the competitive business environment, which is often dominated by men. Its focus, therefore, is on incubation as means, not ends, as policies that enable businesses to overcome barriers during both pre and post-establishment. The local policies, enterprises and institutions form a significant part of this paper. Although it has been well documented that African female entrepreneurs are constrained by structural, cultural and institutional barriers (Spring and MacDade, 2005; Kyaruzi and Hales, 2006), the solutions to overcoming such barriers remain problematic. Also, their roles in the incubation processes are rarely mentioned in most policies on entrepreneurship in Africa. In an attempt to * Address: Birmingham B15 2TT, e-mail: boraimani@yahoo.com or kyaruzis@adf.bham.ac.uk Kzaruyi, I.S., et. al., Processes of Incubating, JWE (2009, No. 3-4, 42-68) 43 understand the mysterious concepts behind this one sided view, this paper draws its conclusions from studies conducted in Senegal and Tanzania to examine the role(s) of female entrepreneurs within the incubation process. Data was drawn from 160 in Dar es Salaam, Tanzania firms and 40 female-owned businesses in Dakar, Senegal. The findings suggest that in most cases, the theories appear to treat the incubators and the business incubation processes as unproblematic institutions or policy tools for creating businesses and stimulating local economic growth through employment creation and taxes generated from new ventures. The conclusions suggest a need for more empirical studies on incubation processes and calls for new ways of incubating female entrepreneurs to realise their potential contributions to local economic growth. Since they have social and economic roles to play in contributing to local economic growth, our paper suggests that it is of significant importance to understand the processes and policies that are directed towards nurturing and supporting their ventures. This, and other elements that have been mentioned in this paper will enable policymakers and bilateral institutions to direct resources where they are mostly needed i.e. training, empowerment, capacity building and backup support. Introduction As we stand on the verge of globalisation and the enterprising world, the implications of social, economic and business incubation processes are mostly idolized – and mostly unknown! Entrepreneurship policies are now forming an economic agenda in most developing countries. Such policies have been followed by establishment of different business support mechanisms to support the newly-adopted entrepreneurship processes. Although the policies seem to target both men and females alike, the entrepreneurial participation and experience have been shown to differ across genders. However, this does not suggest that men are more privileged than women, but the argument presented here seeks to develop a debate on specific support for female entrepreneurs to appreciate their contributions in local economic growth. In recent years, women have been playing an increasing role as drivers of growth in many of the world’s economies (Jalbert, 2000; UNIDO, 2001; Greene et al., 2003; Minniti et al., 2005), however, little is known about the gendered influences on the experiences and the subsequent contributions of growth-oriented female entrepreneurs at country level (Brush et al., 2006). Women’s participations and contributions in economics activities are also limited to specific sectors. For instance, in Africa most female entrepreneurs are particularly found in agriculture and informal businesses (Charmes, 2000; Chen, 2001; Stevenson, 2005) and their contribution to the local economy difficult to Journal of Women's Entrepreneurship and Education (2009, No. 3-4, 42-68) 44 measure (Charmes, 2000). Their ability to establish businesses and grow new ones, generate employment and improve productivity is often hampered by formal and institutional constraints governing their societies (Rogerson, 2000). Despite such realisation, these institutions are rarely explored and, in most cases they are treated as unproblematic sites that exist to manufacture businesses (Kyaruzi, 2008). The local policies and programmes aimed at providing an enabling environment capable of solving these critical issues are often problematic. Whilst there appears to be a number of initiatives (both governmental and non-governmental) aimed at providing both financial and non-financial support to women’s enterprises, evidence has shown women still lack the vital ingredients to develop successful and sustainable businesses. Business incubation has emerged as a cost-effective contributor to local economic development (Albert and Gaynor, 2001), so that, incubating female enterprises from early stage can give the businesses credibility; increase the likelihood of their survival and their abilities to build effective networks and access critical resources such as finance (Shahidi, 1999). While most of the studies on female entrepreneurs in Africa have investigated the entrepreneurs, their enterprises and the entrepreneurial environment (Spring and McDade, 2005), there is a little mention on how these ventures are incubated and nurtured throughout their life cycles. Concerning the environment, the studies, though not deliberately, have either ignored or failed to identify the roles of female entrepreneurs in the incubation processes. Others have paid too much attention to the social and economic contributions of females’ enterprises therefore obscuring their views on the day to day experiences of these firms. In an attempt to understand the mysterious concepts behind this one sided view, this paper has the following objectives: − To explain why we need female entrepreneurship − To explain the significances of business incubation processes on female entrepreneurship. − To address the issues within the incubation programs and develop a framework for nurturing females` ventures for local economics growth. This paper is divided into four parts. The first part provides a literature review on female entrepreneurship and incubation. The second part provides some empirical evidences collected from Senegal and Tanzania. The third part offers discussion that link theories and practices. Kzaruyi, I.S., et. al., Processes of Incubating, JWE (2009, No. 3-4, 42-68) 45 The final part forms a conclusion to this study as well a pointing to the direction of future research on the subject. Research on female entrepreneurship There is a growing body of literature on female entrepreneurship. The literature has been centred on three specific areas – the geographical origin, gender issues and economic development schools. First, much of the initial research on female entrepreneurs was carried out in developed countries, such as the USA, Canada, the UK, and Australia (Belcourt, 1990; Lerner et al, 1997; Hisrich and Ozturk, 1999; Carter et al., 2001). Second, traditionally the field of entrepreneurship has been seen as a male activity in terms of access, control and remuneration (Spring and McDade, 1998; De Bruin et al., 2007). The theories of entrepreneurship were developed using samples of men; were tested on men; hence they did not “fully capture women’s entrepreneurial traits and behaviour” (De Bruin et al., 2006). However, significant advances have been made in the field within the last two decades with considerable attention devoted to the identification of differences between male and female entrepreneurs and the importance is attributable to the knowledge that women are engines of economic growth (Buttner and Moore, 1997; Carter et al., 2001; Ahl, 2002; Gatewood et al., 2003; Greene et al., 2003; Winn, 2005). Research on female entrepreneurship has centred on themes such as start-ups (the entrepreneurial process, the motivation (Buttner and Moore, 1997), characteristics and experience of the entrepreneur (McClelland, 1987; Stanley and Gilad, 1991), the finance-related issues (Carter et al., 2003; Verheul et al., 2004; Minniti et al., 2005), business networks (Renzulli et al., 2000; Johannisson et al., 2002; Greve and Salaff, 2003), the management, performance and growth of the enterprise (Birley and Weasthead, 1990; Moore and Buttner, 1997; Gundry and Welsh, 2001) and policy issues (Greve, 1996; Stevenson and Lundstrom, 2001). The push towards an understanding of female entrepreneurialism has led to the realization that there are differences in the social structures and the organizational life of female entrepreneurs in developed and developing countries (Singh et al., 2001; Lingelbach et al., 2005), and subsequently has resulted in more attention been paid to entrepreneurship in developing nations (Mead, 1999; Charmes, 1999; Jalbert, 2000; Fonjong and Endeley, 2004; Guerin, 2006). Journal of Women's Entrepreneurship and Education (2009, No. 3-4, 42-68) 46 Third, on economic development, in Africa, the increasing interest on entrepreneurship emerged from the sheer realisation that entrepreneurial activities help achieve the ultimate goal of economic development (Spring and McDade, 1998; Richardson et al., 2004). In West Africa, earlier studies focused on individual entrepreneurs, on informal sector traders and micro enterprises with recent approaches targeting some SMEs (Fafchamps, 1999; Charmes, 2000; Bar, 2000; Chen, 2001; Fick, 2002). However, there remains a residual concern that studies that identify the factors driving entrepreneurship in Africa are still lacking (Sriram and Mersha, 2006), particularly the view that there is a lack of focus on important variables such as the entrepreneurial environment; how the local policies and support system spawns entrepreneurs and generates new businesses (Thornton and Flynn, 2005); and in particular the role of female entrepreneurs in the incubation process. This paper aims to tackle these gaps in the literature by investigating the environment for female entrepreneurs in Dakar (Senegal) and Dar es Salaam (Tanzania). Defining female entrepreneurship and Incubation For the purpose of this paper some key terms and concepts needs to be defined at the outset: An entrepreneur is an individual who creates and grows businesses; and a female entrepreneur is “a women who has initiated a business, is actively involved in managing it, owns 50% of the firm, and has been in operation for one year or longer” (Buttner and Moore, 1997, p.13). Entrepreneurship is the process through which entrepreneurs create and grow businesses; it is concerned with the discovery and exploitation of profitable opportunities (Shane and Venkataraman, 2000), “drives innovation and technical change and therefore generates economic growth” (Shanea et al., 2003, p.3). Entrepreneurship as a dynamic process of creating firms requires constant development. In this paper we define Entrepreneurship development as the infrastructure of public and private policies and practices that foster and support entrepreneurship. This provides justifications for merging female entrepreneurship development with business incubation processes. “Incubation” is defined as a process of assisting new and growing businesses to become established and profitable by providing them with premises, support and advisory services, networking and access to finance. These are places where professionals offer organised resource-rich and support services dedicated to start ups [and established businesses], to Kzaruyi, I.S., et. al., Processes of Incubating, JWE (2009, No. 3-4, 42-68) 47 strengthen their development (Albert and Gaynor, 2001:2). In the African context, incubators have not been successful. A number of factors have contributed to the slow growth of business incubators. First, incubation theories appear to treat the incubators and incubation processes as unproblematic institutions or policy tools for creating businesses (Kyaruzi, 2006; 2008). Second, the main focus of most theories has been on volumetric measures or outputs such as; number of businesses created, employment generation, taxes and regional economic growth (Aernoudt, 2002; Lalkaka, 2003). These measures are short of giving a clear indication as to whether the incubation process is there to nurture businesses (enterprises) or entrepreneurs (the human side). It is the latter that this study seeks to address. Current Situation: Supporting African Female Entrepreneurship Senegal Senegal is the 25th most populated country in Africa with an estimated 11,987,121 (July 2006 est.) inhabitants, and ranks 157th out of 177 countries in terms of poverty (United Nations Human Development report, 2004). The population is quite young with over 40% aged 14 years or younger; the majority is Muslim and 5%, Christian, but there is clear tolerance and respect between the groups. Estimates show that one in two Senegalese dwell in the city and one city dweller out of five lives in Dakar, with the consequence that many Senegalese are unable to provide for themselves and their families (Duffy-Tumasz, 2005), and the establishment of informal neighbourhoods (poor housing, crowding, unemployment and increased urban poverty). With a population approaching three millions (AfBD/OECD, 2004) and accommodating about 55% of Senegal’s urban population, Dakar is the capital city and the country’s main commercial port. It is known as the gateway to Senegal, a zone producing cotton par excellence (WAEMU), a trade hub and a real asset for textile export companies (USAID, 2005). Additionally, over 80% of businesses in Senegal are located in Dakar, making this city one of the most vibrant cities in the country. The Support System Entrepreneurship is the backbone of most economic societies and it is very important for countries to formulate strategies and policies for Journal of Women's Entrepreneurship and Education (2009, No. 3-4, 42-68) 48 supporting entrepreneurial endeavour and supporting female entrepreneurs in acquiring the technology and resources to manage and develop their businesses. These policies are implemented in financial and non-financial incentives. Across the world there are hundreds of initiatives underway offered by the local government and non-governmental institutions in the form of local and national community initiatives, network initiatives (through business and professional associations meetings and conferences) and large international initiatives funded by donors and through anti- poverty projects such as those by the USAID, OECD and the United Nations (Briges.org, 2002). The Senegalese business environment is the product of substantial reforms such as the SAPs, the PRS, the AGS and other changes in the private sector, which make the business climate enabling or disabling. In a country, while the business environment does not have to be perfect, it must be good enough on a number of dimensions to stimulate enough investment and competition, and be efficient to allow different enterprises and industries to operate (Eifert et al., 2005). In Senegal, the management of SMEs is assumed by the ministry of SMEs, female entrepreneurship and micro finance and its sub-departments which include the SME headquarters (Direction des PME), and the SME support institution ADEPME). The main role of the SME headquarters is to promote SMEs and to provide a strategy for the development of this economic segment. It also aims to generate a favourable environment for SMEs through better control of the judicial, financial, and regulatory aspects of the segment. In 2003, an SME charter, which provides a classification of SMEs in Senegal, was drafted by the Direction des PME. The charter also provides a list of programmes and advantages (access to finance, to public market, export support and exemption from tax), which enterprises recognised by the charter benefit from. In line with the charter, ADEPME has been “following up” enterprises through training, credit repayment and compliance with SMEs laws and regulations. Accessing support institutions Access to Business Development Services (BDS) (general advice, information, training and technology programmes) and support in securing finance is often important for an enterprise establishment, survival and growth (Stevenson and St-Onge, 2005). However, lack of education among some women can have significant impacts on access to training support, as some training materials are only available in French. In agribusiness, Kzaruyi, I.S., et. al., Processes of Incubating, JWE (2009, No. 3-4, 42-68) 49 training provided in national languages is not always successful due to supporting documents being only available in French, and hence limiting the effectiveness of training programmes. Much of the BDS training is provided by donors, and in some cases, in conjunction with financial support. In agribusiness BDS is often provided by institutions such as the technical development centres for women (CRETEF-CETF)1, the national vocational training office (ONFP)2 and the Institute of Food Technology (ITA). Donor organisations also offer training to reinforce the capacities of female entrepreneurs in terms of commercialisation of the finished products, hygiene and the quality of processed food. Entrepreneurs who receive such training then must, under some donors’ rules, train other entrepreneurs to share skills. Here the trainees must mobilise women within their cooperatives or groups and disseminate the programme through other forms of training. The empirical evidence gathered for this study has shown that in both sectors most respondents (55% in agribusiness and 50% in textile) appear to be receiving non-financial support. Depending on the donor institution, however, some women have to pay up to 20% of the training fee. Evidence of increasing training support was reported in the agribusiness sector (Tandia et al., 2002). In the textile sector, however, limited support appears to be available, as nine out of the twenty entrepreneurs (45%) do not get access to any support and only one is able to access both financial and non- financial support. The situation appears to be different in the agribusiness sector where all the entrepreneurs at some point in their business life, had access to financial support (10%), non-financial support (55%) or both (7%). A significant proportion of entrepreneurs (43%) in the textile sector did not have access to any support, and claimed that they either did not know where to go for help, had been unsuccessful, or were discouraged 1 CRETEF stands for Centre Régional d'Enseignement Technique d'Economie Familiale and CETF stands for Centre Technique d’Enseignement Feminin. Both centres are funded by the government and the training is often delivered by graduates from the the school of family and social economics (ENFEFS). 2 The Office National de la Formation Professionnelle (ONFP) is an entity that assists the Senegalese government in determining training priorities and targets, in carrying out labour market studies, in formulating policies and coordinating training efforts, in financing training programmes and in supporting training institutions in conducting relevant training programmes in both the public and private sector. Its funding is provided by company tax, revenues from services provided to firms, and private or public organisations, state subsidies and donor funds (Han and Serriere, ILO, 2002). Journal of Women's Entrepreneurship and Education (2009, No. 3-4, 42-68) 50 from seeking assistance having heard about other entrepreneurs’ negative experiences. Some entrepreneurs were seeking basic business management skills to enhance the running of their business while others required marketing skills to raise their business profile and to compete better. Accessing start-up capital Support for accessing start-up finance is very important and can have a significant impact on the performance of the enterprise (Marlow and Patton, 2005). Literature on female entrepreneurship has documented women’s difficulties in accessing start-up finance (Carter et al., 2001; Eastwood, 2004). In this research, a significant majority (85% in agribusiness and 90% in textile) of respondents in both sectors had enormous difficulties raising start-up finance from mainstream banks and had to turn to their personal savings in the establishment of their businesses. Only one entrepreneur was able to access a bank loan, funding from an NGO and from a mutual saving and credit institution (MSCI) of which she is a member. Unsurprisingly, the entrepreneur who managed to obtain a loan from a bank is a portfolio entrepreneur who has been involved in economic activities for over 35 years, and would have established relationships with financial institutions; evidence supported by a study on Ghanaian and Zimbabwean entrepreneurs (see Aryeetey et al,1994)3. In this study, very few female entrepreneurs were able to access a bank loan, and are now planning to expand their ventures further. The majority of those who have attempted to get a bank loan were turned down because of a lack of collateral or guarantee to secure funding. While micro- finance is another way of getting access to finance to start a micro- business, most entrepreneurs argued that Micro Finance Institutions (MFIs) are inappropriate to their needs and do not always provide sufficient funds to finance their businesses. Start-up capital in both sectors was as small as 100,000 FCFA (about £103.13) or even less for some survivalist 3 The study was carried out in Africa by Aryeetey et al. (1994) on Ghanaian and Zimbabwean entrepreneurs, which reveals that the record of accomplishment of entrepreneurs in their previous business, together with the savings that they have accumulated, may be important in giving them greater access to external finance, which in turn allows them to establish larger businesses. While Aryeetey et al.’s (1994) research was on manufacturing enterprises, they seem to stress the fact that most small enterprise owners use their personal savings to set up their business. Kzaruyi, I.S., et. al., Processes of Incubating, JWE (2009, No. 3-4, 42-68) 51 entrepreneurs. What became clear from the empirical evidence was that access to finance for entrepreneurial start-up is difficult for most entrepreneurs in both sectors; however extensive experience in the business may allow some entrepreneurs to build trustful relationship with some support institutions, which may eventually enable them to funding from mainstream banks. Accessing enterprise management training Acquisition of the appropriate skills is vital for entrepreneurs, because they require the business and management skills to run their business, and the lack of these skills at the start-up stage and throughout the process can have a significant impact on performance (Loscocco and Robinson, 1991). Jalbert (2000, p.29) argues that in developing countries where business and managerial skills are often lacking access to training is even more important as it can “prevent women from reaching their profitability potential”. Evidence from the interviews reveals that access to training was the second most important barrier in both the agribusiness and textile sectors, hence indicating that government policies should be directed at minimising them. Some respondents recognised that while some training may already be offered by the Senegalese government, it is not always adapted to the needs of all entrepreneurs. They argue that they had attended entrepreneurial training courses where they were provided with many documents but found them hard to understand because they used unfamiliar business terms and expressions. To add to this it appears that due to limited resources, there is often not enough time for the trainers to work through all the training pack with the trainees. As a result, entrepreneurs are left with packs of documents that they do not understand and the training tasks are seen as a waste of time, which could be better used on other work, or to run their businesses and make money. The respondents who have been unable to access governmental and NGO’s training schemes argue that it is due to the lack of information about how and where to access the schemes and a lack of time to attend the courses. Social responsibilities and the burden of having to cope with work inside and outside the home has prevented some women from obtaining vital entrepreneurial skills that may be helpful for starting a business and developing it into a successful growth orientated enterprise. Journal of Women's Entrepreneurship and Education (2009, No. 3-4, 42-68) 52 Accessing business premises Accessing an appropriate and affordable business premise was a key challenge for most entrepreneurs in Dakar when setting up their businesses because of land legislations and the ongoing problems of urbanisation in Dakar, which makes access to land very expensive and hence difficult for women. Due to the lack of this critical resource, small-scale female entrepreneurs initially operate their businesses from their homes until they can find appropriate premises. In food processing, access to affordable premises, which meet food regulations is difficult for most respondents, and many claim to pay very high rent when operating from dedicated business premises. Being close to customers and finding a cheap location were the two most cited reasons behind the locational decision in both sectors. Others location decisions have been made to reflect health and safety regulation (mostly in food processing businesses), or simple because there was no other alternative. In the latter case, premises were offered by the government and there was no other alternative. Membership of business associations as a last resort Female entrepreneurs in Dakar have an interesting way of organising themselves into business associations, an Economic Interest Group (EIG), an umbrella association or an NGO. To cope with the difficulties accessing critical resources to start and develop enterprises, Dakaroise4 entrepreneurs would join several business and trade associations because they believe that they can have positive impacts on the development of their enterprises and on the procurement of support services. Evidence from the study suggests that the majority of the female entrepreneurs would join up three associations simultaneously. However, they are increasingly lacking trust in the associations and leaving them as they believe that they are not ripping the expected benefit; they claim that the association management team keep the benefits for their own businesses. Despite their difficulties accessing support, the majority of the female entrepreneurs appear to have acknowledged the role of the government in their effort to provide an enabling environment within which female entrepreneurs can develop and grow their business. 4 Women in the Dakar region are often referred to as Dakaroise. Kzaruyi, I.S., et. al., Processes of Incubating, JWE (2009, No. 3-4, 42-68) 53 Perceived role of the government Based on current government support available to SMEs, respondents were asked to comment on the perceived role of the Senegalese government in providing an enabling environment for them, and to suggest measures that could be taken in the future to provide better support. Their responses clearly suggested that they are aware of the government’s effort to help women, although there is a small minority who are unaware of the support provided to entrepreneurs through government and non-government incentives. The well-established entrepreneurs are fully informed of the role of the government, and the existence of donor institutions and providers of sector-specific training. For many entrepreneurs, there is a strong conviction that “since the arrival of President Wade, many changes have taken place to help women”. Nevertheless, those who are supportive of the government’s policies and programmes still believe that much more can be done to help them, including the “need to facilitate access to resources for mass production; to help and facilitate export of processed products by improving packaging; and to improve processing units”. Tanzania The business support environment in Tanzanian is different from that of many African countries dues to her socialism past. As (Treichel, 2005:4) puts it: “…Tanzania, unlike many other African countries [including Senegal], was a highly state controlled economy engaged in the pursuit of socialist objectives. As a result, it had an inflexible economic system that was characterized by monopolistic and heavily regulated production structures in all sectors of the economy. [Pre-structural adjustment programmes] Tanzania’s rigid economic system of state-interventionist policies…external shocks during the late 1970s resulted in major macroeconomic imbalances, economic stagnation, and a decline in per capita income that lasted over 15 years”. The country is still in transition from a centrally-planned to a market- led economy. However, the postsocialist policies have been plagued with ineffective economic growth strategies that rely on foreign aids (Bigsten et al, 1999). For most postsocialist countries a search for best ways of stimulating local economic growth till continues. As one of the solutions, some practitioners have pointed towards the direction of policy Journal of Women's Entrepreneurship and Education (2009, No. 3-4, 42-68) 54 formulation and deregulation. For instance, Odling-Smee (2002)5 suggests that the key to unlocking the long-run growth potential of postsocialist countries is to push forward with structural reforms. These include: further reducing the role of the state; maintaining hard budget constraints on all enterprises; correcting price distortions, and fostering competition and a conducive business environment; improving the social safety net; developing financial markets; and building institutions to promote good governance (See also Dawson, 2003). In Tanzania, the transition to a fully market-led economy has not been smooth (Wangwe, 1997; 2001). However, there is a positive sign that processes of business incubation and clustering have potential to offer postsocialist countries with solutions. Lalkaka (1997) warns that, in the postsocialist countries, much should not be expected within a short period of time, he believes that “the process of technological transformation is even more complex and painful due to the legacy of systemic problems…[as a result]…these countries are in a situation of massive budget cuts, exodus of talented scientists, shortages of research equipments and supplies, absence of finance, regulatory barriers and painful process of reconversion. Institutional reforms are believed to be essential in postsocialist countries (Dawson, 2003). However, it is argued that the knowledge of how to transform institutions especially in the Sub-Saharan countries remains weak (Henisz, 2002). According to a World Bank study (1997b) there are five crucial functions that are the domain of the state because market and private institutions cannot secure them. In particular these functions are related to (a) Legal foundations; (b) Performing macroeconomic policy framework; (c) Investments in fundamental social services, human capital, and infrastructure; (d) Comprehensive safety net for vulnerable strata of society; (e) Protection of the natural environment. However, Tanzania, like many other post socialist states like Ghana and Mozambique, has struggled to put their social and economic reform programmes in place due to the pace of change around the world. The functions suggested above by the World Bank were aimed at laying a foundation for the introduction of the market economy as opposed to the 5 Press Briefing on Developments in Baltic and CIS Countries, Opening Remarks by John Odling-Smee, September 28, 2002 (http://www.imf.org/external/np/speeches/2002/092802.htm). Kzaruyi, I.S., et. al., Processes of Incubating, JWE (2009, No. 3-4, 42-68) 55 previous state economy. But, the achievability of these programmes appears to need more work than words only could describe. The institutional arrangements are the most important factor for progress toward durable growth. It is argued that unlike certain liberalization measures, institution- building by its nature must be a gradual process (Dawson, 2003). We could agree with such views as Tanzania is still in transition and rushed programs that led to duplication of economic activities in the past could be avoided (see also Cooksey et al, 2001). Does this suggest the potential of incubation programs? The support system While SMEs and entrepreneurship are making headlines in Tanzania, less has been said on the role of support institutions and the policies that govern them, by treating them as unproblematic sites (Temu and Due, 2000). The findings from this study suggest that Tanzanian institutions are highly centralised with poorly qualified personnel who are incapable of coping with modern businesses` demands. In essence, previous empirical research on how the regulatory environment affects the growth of micro and small businesses is rare (Massawe and Calcopietro, 1999). Recently, “institutional theories6in developing countries have begun to draw attention to the institutional or contextual – cultural, social, political and economic factors as determinants of entrepreneurship” (Veciana et al, 2002:2), and especially in developing countries like Tanzania where “statism”7 has dominated almost all major economic decisions for over four decades. Absorption of business support A large section of businesses (68.8%) did not seek business support. Only 31.3% of the survey businesses sought some sort of support. Follow up interviews suggested that, entrepreneurs only approach business agencies if they offer what they are looking for to meet the specific needs of their businesses and they are accessible. As one interviewee explained: “I decided not to approach business agencies...the reason being that, I have had bad experiences with banks. They do not seem to understand my business needs. Anyway, I managed to raise money from friends and here I am” (Case 5) 6 “A theory that seeks an understanding of the relationships between institutions, behavior, and outcomes” (Diermeier and Krehbiel, 2002:7) 7 The idea that a centralized government could somehow be better than private initiative. Journal of Women's Entrepreneurship and Education (2009, No. 3-4, 42-68) 56 To almost all local entrepreneurs, finance is preferred to other types of services. Further analysis will attempt to establish the alternative sources of support adopted by entrepreneurs as well as reasons for their (the entrepreneurs) reluctance to seek support. Nature of support sought In most African countries, where the private sector is well established, business support institutions are still rare (or at an embryonic stage) (see Brautigam et al, 2002) and entrepreneurs tend to use different sources of support. As the empirical findings of this research indicate, the choice of support depends on the nature of businesses, size and accessibility factors (influence if one knows someone in the organisation/agency). Some issues were explained by one interviewee: “No. I am not receiving any support now [at this moment]. Firstly, for me to receive support it would take a very long time as my businesses is too small to be recognized…also there is a lot of paperwork involved. I have to leave my business to deal with all that [meaning filling in the forms] Secondly, I may not get anything in the end… but some of my sales might be affected in the process…so well… now you know the reasons why we decide to stay away from these organizations”. (Case 25) The survey data suggest that the majority of the surveyed firms (69% of the total population) did not used external business support during the start up phase of their businesses, some out of choice and others not so. For those who received support (N=50), the majority received family support followed by private support agencies. Government support was the least- sought support raising issues of accessibility to government institutions and the availability, provision and accessibility of business support services in Tanzania. To explore these possibilities respondents were asked why they used what support they did (family support over private or government support). It appears that those who chose to opt for family support did not have access to other forms of support. But also, failure to seek support could also be attributed to ignorance or lack of awareness on the part of business founders. The tendency of some SMEs to reject or ignore support has been blamed on their lack of entrepreneurship spirit and culture. But the figures are suggesting that the majority of the firms (39.1%) were not aware of the existing support. This signals an alarm as to why these support agencies still fail to make themselves known to the wider business community. Kzaruyi, I.S., et. al., Processes of Incubating, JWE (2009, No. 3-4, 42-68) 57 Other major failures to gain support have been blamed on difficult/denied access (40%). What policy makers could draw from such findings is the fact that business support does exist, but with poor accessibility, bureaucracy and a lack of openness in their dealings with the entrepreneurs. Fewer agencies admitted to the fact that the clients do not know their services and organisational objectives they are supposed to serve. For the support agencies it is still the “number game” where agencies are evaluating their success and achievement based on the number of contacts with clients and businesses formed (volumetric measures) rather than the effectiveness or usefulness of support they offer to entrepreneurs. Entrepreneurs also have their expectations and rate the received support in terms of the differences made to their businesses` performance. The comments made by an entrepreneur Case 18 below confirm the feelings entrepreneurs have. Discussions: Theory and Practices Female entrepreneurial businesses in Senegal and Tanzania can become engine of growth if they operate in an enabling environment and have the right entrepreneurial support to help them grow their enterprises. The process of incubating female enterprises from an early stage of the business process would enable the businesses to grow into sustainable enterprises. Incubating Senegalese and Tanzanian female entrepreneurs would involve providing common facilities such as the physical space, equipment, shared services, enterprise skills training, network, business and legal advice to facilitate the business development through to graduation, when they are able to survive on their own. Firm formation in developing countries is now a complex process due to the ever-changing global businesses (change in technology and global business environment). This is true in African SMEs that seem to lack flexibility and adaptability to cope with the current changes (Krugell and Naude, 2001). It is also suggested that the “region lacks a base for technical skill formation and its enterprise financed R&D in the productive sector is the lowest in the world” (Albaladejo and Schmitz, 2000:10). This indicates that African SMEs are not only suffering from lack of protection due to globalisation but also internal factors (legal, knowledge base, structure, size and management). These problems have been highlighted in Journal of Women's Entrepreneurship and Education (2009, No. 3-4, 42-68) 58 Brink and Cant (2003) as internal factors (management skills, financial knowledge, lack of expertise) and marketing factors (poor location, insufficient marketing, inability to conduct marketing research, misreading the market, poor products or service, poor service, misreading customer trends and needs, human resource factors). The advancement and increase in interaction among the world’s countries has meant that Third World governments have had to adopt new mechanisms of supporting businesses in order to compete with the changing world. The failure rate (Lalkaka, 1997) and uncompetitive features of SME`s in developing countries (Krugell and Naude, 2002) have made it necessary for governments to improve their business support services. In some African countries, the incubation process is still a recent phenomenon (Nanyaro, 2001). Lalkaka (1997) hints that, although most of the incubators are less than five years old, they are a great potential as they appear to increase rapidly. While the assessment carried out by UNIDO (Lalkaka, 1997; UNIDO, 2001) suggests that countries such as Brazil, Czech Republic, P.R. China, Mexico, Nigeria, Poland and Turkey have potential to create innovative incubators in other countries in transition (such as Senegal and Tanzania) this process seem to be slow and difficult to achieve. It is perceived that the process of technological transformation is even more complex and painful due to a legacy of systemic problems. The culture of government intervention to the private sector has been blamed for the centralisation of businesses leading to unnecessary bureaucracy (Levitsky, 1996). The lack of capital and entrepreneurial skills are hindering most of the SMEs’ development in developing countries. The formation of innovative and advanced firms have been made difficult due to the fact that most SMEs are undercapitalised and usually rely on loan capital (Levitsky, 1996). Based on empirical evidences from Senegal and Tanzania, one feature of poor economic growth performance over the past 50 years has been the lack of the private sector to grow fast enough, to create sufficient jobs and to expand exports to the rest of the world (Lalkaka, 1997). In some countries, foreign policies (Krugell and Naude 2002; Lalkaka, 1997) have had an impact on the introduction of entrepreneurship and business incubation systems in developing countries. Levitsky (1996), believes that the recognition of SMEs difficulties and weaknesses have led in most countries to the creation and continuous expansion of special institutions Kzaruyi, I.S., et. al., Processes of Incubating, JWE (2009, No. 3-4, 42-68) 59 set up to cater for SMEs. In this case, the world has witnessed growth and spread of incubators in different developing countries. According to Scaramuzzi (2002:6) “there are no comprehensive surveys regarding the current status of business incubation in developing and transition economies”. This study has attempted to collect survey on incubators from 1997, 2002 and the recent figures from Lalkaka (2003). A Proposed framework for Incubating Female Entrepreneurs A Framework for Incubating Female Entrepreneurs Source: Kyaruzi and Hales (2008) Senegalese and Tanzanian incubation industry could benefit from the Israel’s experience. The key notable facts in the Israel incubation systems success story include the fact that, the majority of 3,000 entrepreneurial firms did not exist 7 years ago and since 1991, over 600 projects have been accepted on the incubator programme (UKBI, 2002). The research programs have been given a priority and the Israel Government is still encouraging the co-operation with other countries (UK-Israel initiative that Regional Policies: Local infrastructure and resources Professional support: Accountants, consultants, ICT support External Support: Banks, MFIs Incubatees Graduates Universities and Science Parks Innovation and knowledge transfer INCUBATOR Premises, training, nurturing & consultancy Journal of Women's Entrepreneurship and Education (2009, No. 3-4, 42-68) 60 encourages joint research between two countries). Much of this development is contributed by the government’s initiatives to develop the private sector through improvement in the “enabling environment”. Some of the incentives offered to new businesses include, tax rebates and breaks (see Roper et al, 2001), encouraging technological innovation and IT industries (Shefel and Modena, 1998; Roper, 1999) followed by effective policies on both national (Teubal, 1993) and regional (Frenkel et al, 2001) innovation systems. However, recent research (see figure 8.46) by Lalkaka 92003:2) are suggesting a rapid growth of incubators in developing countries especially Asia. Description of the framework: In light of the above account, we seek to introduce the following framework that is more culturally specific and focuses on the enabling environment rather than just financial support from higher bodies (institutions, governments, banks and donors). Firstly, the approach to incubating female entrepreneurship should focus on identifying women’s needs in geographically specific locations. Regions have been known to possess variable resources; this framework put emphasis on designing a set of specific regional policies for supporting entrepreneurs. This will enable policymakers to recognise and respond to both the opportunities and the constraints that regions present. Secondly, the proposed framework emphasises provision of effective and continuous entrepreneurial training which is based on the assessment of individual entrepreneurial needs. Also, there is a need to establish University-SME links to aid this process. The reason behind this is the fact that, apart from gender issues, the policies aimed at incubating female entrepreneurs in Africa appears to suffer from a lack of a serious note on entrepreneurial training. It is proposed here that, there should be a provision of basic business training starting from early stages of business establishment to improve the businesses survival rates. We strongly believe that with effective training, women in Africa will be able to acquire and equip themselves with modern skills and knowledge that will enable them to set up competitive businesses that are capable of contributing to the local economic development and growth. Thirdly, based on empirical evidences it can be suggested that women need empowering. However, the type of empowerment we are proposing here is one that can enable women to realise their capabilities and their roles in economic development. This could be achieved by setting Kzaruyi, I.S., et. al., Processes of Incubating, JWE (2009, No. 3-4, 42-68) 61 up effective incubation programs for women to boost their capabilities and business confidence. The literature also suggests that equality can be attained (Hill and Macan, 1996) but in our views gender empowerment remains a problem in many African countries. Therefore the incubation policies should encourage more women to participate in other economic activities that were originally believed to be for men only. This way, women will have more areas to expand upon and hence fully utilise their capabilities upon graduation from the incubators. Finally, policy makers should aim at improving the provision of business support services. The entrepreneurship development literature suggests that, enterprises tend to go through different growth stages. Therefore, after identifying needs, providing training and empowering women to go beyond their previously assigned statuses in economic activities, we propose that there should be an injection of support at different enterprise development stages from different sources. These sources include the whole business support ecosystem – professional support services, universities and science parks, banks and MFIs etc. There are a few successful female entrepreneurs who deserve visibility and recognition. Institutional support should focus on assisting them to grow beyond micro‐enterprise levels. This type of continuous growth could be achieved through continuous support receive from the incubators. In this way, women who are about to start‐up businesses will have successful case studies to learn and benchmark from incubator graduates. Conclusions This study set out to explore the process of incubating female entrepreneurs in Senegal and Tanzania. However, as indicated above, specific measures need to be put in place. First, the policy needs to recognise the varieties of businesses that exist in the two countries (including female-owned enterprises). There has been a global consensus that a stable private sector environment and policies are key catalysts for economic growth and development (OECD, 2001, 2002). For an economy to develop there is the need to improve coalitions between the government, private sector and entrepreneurs. The support institutions need to be developed and so do local businesses. For the Tanzanian case, since the private sector initiatives have been in place Journal of Women's Entrepreneurship and Education (2009, No. 3-4, 42-68) 62 for less than fourteen years (since 1992`s trade liberalization policies), little has been written on ways of introducing new methods of stimulating local economic growth through entrepreneurship and SME support. The new mechanisms are essential way of replacing policies that discouraged private sector development (Olomi and Nchimbi, 2002, p.6). Research should seek to explore the existing support mechanisms, and specifically attempt to answer the question “how should support institutions be developed to support Senegalese and Tanzanian entrepreneurs?” Based on incubation literature and empirical evidences provided in this study, there is a need to establish reasons why Senegalese and Tanzanian female-owned firms choose to seek business support or go through incubation processes. This could be in terms of sustainability, expansion and growth of their entrepreneurial firms. As suggested by Baum (1996, p.79): “Young organizations are more vulnerable because they have to learn new roles as social actors and create organizational roles and routines at a time when organizational resources are stretched to the limit. New organizations are also assumed to lack bases of influence and endorsement, stable relationships with important external constituents, and legitimacy.” (1996:79). There are different reasons why businesses seek support. The policy should also attempt to empirically explore such reasons. Where do African institutions and business incubators go wrong? Could we learn anything from local entrepreneurs? As indicated above, business support services and nurturing of firms could improve the survival rate and productivity of female-owned enterprises (and most businesses). This study on Senegal and Tanzania explores different ways of supporting businesses by looking at different stages of business formation. This involves identifying the effectiveness of the received support both pre-start up and post-start up. It is evident that most incubator models (Lalkaka, 1997; Kmetz 2001) do focus on enterprise creation, development of an entrepreneurial culture and employment creation (when used as a policy tool). However, incubators in developed countries appear to follow different styles of firm formation. 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