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Dalglish, Carol L.,Matthews, Judy H.,Tonelli, Marcello, & Armstrong,
Kathleen (2012) Developing support for micro-entrepreneurs in a devel-
oping economy in Africa. In The Joint ACERE-DIANA International En-
trepreneurship Conference, 31 January – 3 February 2012, University of
Notre Dame, Fremantle, WA.
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Developing support for micro- entrepreneurs in a developing
economy in Africa.
Abstract
The purpose of this paper is to explore the means of building the capacity of those who are
running an organisation designed to support and resource start-ups and growing micro
enterprises among some of the world’s poorest urban poor. The project is based in Beira,
Mozambique, one of the poorest countries in the world. The result of this study is the
development of a model for providing ongoing, inexpensive, effective, capacity building in
developing economies. The model also provides a base for the further development of
strategies to provide better support to micro entrepreneurs in poor developing economies.
Introduction
Small and micro-enterprises play a significant part in developing countries and have
traditionally been viewed from a poverty alleviation perspective, rather than as
entrepreneurial activities. (Mead & Liedholm 1998). Micro-credit institutions attempt to
overcome some of the hurdles faced by the micro-entrepreneur in these countries (Rutherford
2000, Mwenda & Muuka 2004). These institutions are usually willing to loan small amounts
to those without collateral. Despite the popularity of these programs there is evidence that
many of the micro-credit schemes do not reach the very poor that is; those living on less than
US$1.25 per day per person (Chamlee-Wright, 2005; Cuong, 2008; Haynes, Seawright and
Giauque 2000). To better understand how to support these poor micro- entrepreneurs and
their growth from ‘survival’ to sustainable micro-enterprises, a NGO (Despertai
Mozambique) was established in the Beira area of Mozambique to provide resources,
financial and training, to micro entrepreneurs. This paper examines a training and
enhancement program for the staff of Despertai Mozambique to enable them to provide
adequate services to the borrowers.
Many studies have addressed the supply side of entrepreneurship education and training,
providing useful information on the range of entrepreneurship programs offered around the
world (Hegarty 2006; Cheung 2008; Ibrahim & Soufani 2002). While the number and range
of courses has expanded exponentially over the last 25 years, we have also witnessed a
significant debate in terms of what should be taught and how (Ronstadt 1987), which has led
to some level of agreement. With regard to teaching delivery, ‘experiential learning’ is
recommended as a preferred method (Solomon, Duffy & Tarabishy, 2002), individual
activities are favoured over group activities (Sexton & Upton 1984), and the program should
overall be relatively unstructured (Walter & Dohse, 2009). Also, with regard to ‘what’ and
‘how’, it is crucially important to recognize the audience and the context before setting up an
entrepreneurship program (Mayrhofer & Hendriks 2003; Chamlee-Wright 2005).
In the context of survival micro-entrepreneurs in developing countries, there is more concern
with informal entrepreneurship training (i.e. tacit knowledge) rather than formal education
(i.e. explicit knowledge). The distinction between the two has been defined by GEM
(Martinez et al. 2010:8) as follows:
• Entrepreneurship training is very specific in scope and represents “the building of
knowledge and skills in preparation for starting a business”.
• Entrepreneurship education can be much broader and is the building of knowledge and
skills either “about” or “for the purpose of” entrepreneurship generally, as part of
recognized education programs at primary, secondary or tertiary-level educational
institutions”.
In particular, the informal training discussed in this paper is the experiential learning, or
learn-by-doing, which enhances learning through the immediate application of concepts
(Sexton and Upton 1987). In other words, the study is aimed at observing the personal
transformation process influenced by the self-reflective feedback of action learning (Ceely et
al: 2008). The selection of this learning mechanism over others is dictated by the
consideration that business issues such as planning, selling, budget accounting, and day-to-
day management remain of course important to poor micro-entrepreneurs, but there is also a
strong emphasis on changing people’s attitudes in terms of recognizing opportunities,
thinking more creatively, and gaining self-confidence (Stevenson & Gumpert 1985, Sexton &
Upton 1987).
Micro-entrepreneurs in developing countries generally know so little about management that
rudimentary, as opposed to standard, training is most effective in improving their business
practices, and this applies to those offering them support as well. Drexler et al. (2010)
focused on financial decision-making and reported that basic and simplified training of
accounting produced significant performance improvements. Mano et al. (2011) found
similar results with regard to not just elementary accounting, but also business planning.
Necessity entrepreneurs in developing countries lack, among other things, basic business
skills and an entrepreneurial mindset, being risk adverse, driven only by their most basic
needs, and without growth aspirations (Roy and Wheeler 2006). Those who offer local
training are often little better equipped.
This paper follows the first year of a longitudinal program to train the supporters of micro-
entrepreneurs in Beira, Mozambique. It describes the process of training and support
provided by distance to the staff of Despertai Mozambique to equip them with the skills and
self confidence for them to effectively support aspiring entrepreneurs in their community.
The research seeks to answer the following questions:
• Have local staff improved their technical skills relating to budgeting and reporting
• Are the staff more self confident and willing and able to make independent decisions
• What are the strengths and limitations of the particular training model used.
Literature Review
Entrepreneurs in any context require support and access to resources. In very poor countries
this support is rarely available. The significance of the informal sector has only recently been
recognised and little is known about how to support micro-entrepreneurs from being survival
entrepreneurs in the informal sector into sustainable entrepreneurs in the formal sector. With
poor infrastructure and limited education opportunities, identifying individuals who have the
expertise to run an organisation that supports and resources very poor micro-entrepreneurs is
extremely difficult. This paper explores the decision by one NGO to train the providers of
support, identifies the educational philosophy and processes that were involved.
The African Context.
Probably more than any other continent Africa receives almost universally bad press. The
image of Africa, at least in the eyes of the West, is a continent of poverty, corruption, war and
disease. All of these exist in Africa – as they do in many other parts of the world. Africa has
for most of its history since contact with the West, been judged by non indigenous standards
and these have led to a range of perceptions, held by both Africans and others that get in the
way of Africa reaching its potential.
Over 75% of the population of sub-Saharan Africa lives in poverty. They face challenges
almost unknown in the rich world; endemic malaria, massive droughts, lack of roads and
motor vehicles, great distances to regional and world markets, lack of electricity and modern
cooking fuels, poor health and education services. And the very hardest part of economic
development is getting the first foothold on the ladder. (Sachs 2003)
The development in Europe in the 19th century of Social Darwinism and the ‘science’ of race
added another dimension that enabled the story to be told that Africans by their nature were
substantially different and inferior to Europeans and therefore could not expect to be treated
in the same way. It is a myth that has persevered.
As a result of these perceptions Kwesi Kwaa Prah (2005) explains a gap that needs to be
filled.
“The absence of self reliant creativity, self- assertiveness and cultural confidence on
which to construct a developmentally sound approach to societal problems has
consistently constrained effective poverty elimination efforts.” (Kwesi Kwaa Prah
2005 page 13)
External interventions often do not understand the cultural imperatives nor build on the
strengths already present. There is a pervasive belief that poverty and wealth are simply a
reflection of societal values: that the poor are responsible for their own poverty. African
poverty has therefore been attributed to a dislike for work, suppression of individualism and
irrationality (Sachs 2002 page 315) The idea that whole societies are condemned to poverty
because of their values has a long history, but it is not useful. Culture changes with economic
times and circumstance, so many current changes will modify current beliefs and practices
and create the culture of the future. Culture is slow to change, but it does change. These
changes usually come about in response to external stimulants e.g. change in climate or way
of making a living. The need for African self reliance is recognized but seldom acted upon.
‘Africa will have to rely upon Africa. African governments will have to formulate
and carry out policies of maximum national and collective self-reliance. If they do
Africa will develop; if they don’t Africa will be doomed. ‘ (Julius Nyere, ex-president
of Tanzania, in an October 1997, speech at the University of Edinborough, Scotland
cited in Ayittey page 401)
The result of this history is that people need not only knowledge and skills to fulfil their role
to support entrepreneurs but the self confidence and self efficacy that enable them to have
confidence in their own decision making and problem solving ability. Very relevant to the
support for very poor micro-entrepreneurs is Burns (2003) comment that an appropriate
leadership strategy would provide a host of listeners who would hear the voices of the poor.
‘The poor cannot lift themselves up by their bootstraps because they have no bootstraps.’
(Burns 2003 p 235.)
Thurow (1999) argues that there are now new rules for success initiated by advances in
technology. Everyone is learning these new rules. This provides opportunities for the
advancement of entrepreneurship in Africa using a platform that everyone is having to learn.
Technology does not have a past that discriminated in the way many traditional practices
have.
Educational principals and practices.
When designing the training program for the supporters of very poor micro-entrepreneurs an
androgogical approach was taken and the development of self awareness was seen to be as
critical as the development of skills. This required an understanding of how adults learn and
the ability to include mechanisms that facilitated transformative learning.
The assumptions behind the design and implementation of this training program lie in
theories of adult learning, particularly the work of Mezirow, Knowles and Friere. These
commentators on adult learning come from very different perspectives but they offer a
number of ideas that have particular meaning in the context where both skills and personal
development and empowerment are required.
The Knowles (1990) provides a synopsis of the development of adult learning theory. The
androgogical model of learning includes a number of assumptions:
1. Adults need to know why they need to learn something before undertaking to learn it.
2. Adults have a self-concept of being responsible for their own decisions, for their own
lives. However when confronted by past experience, they can revert to doing what they
are told. It is important to assist adult learners to make the transition to more self-
confidence in unfamiliar contexts.
3. Adults become ready to learn those things that they need to know and be able to do in
their real life situations - or in situations they want or expect to happen. So the subject
matter taught needs to be directly applicable to their current requirements.
4. Adults tend to be task centred or problem centred rather than content centred.
5. While adults are motivated by external motivators like job security, higher salaries etc,
they are also motivated by internal pressures such as quality of life, increased job
satisfaction.
6. Adults bring to learning a wealth of experience from life. This provides an extraordinary
resource for learning. However, there are also some potentially negative effects from
previous experience. There may have developed mental habits, biases and assumptions
that close adult minds to new ideas and new ways of looking at things. This is particularly
true when people have ‘learnt’ that they are not competent.
Mesirow (1990) suggests:
“Learning may be defined as the process of making new or revised interpretation of the
meaning of an experience which guides subsequent understanding, appreciation and action.
What we perceive and fail to perceive and what we think and fail to think are powerfully
influenced by the habits of expectation that constitute our frame of reference, that is a set of
assumptions that structure the way we interpret our experiences" (Mesirow 1990)
This means that the cultural context and the experience and assumptions of the individuals
play a critical role in providing effective learning opportunities. Paulo Friere (1972) believed
that critical consciousness was something required by those who had been oppressed. The
staff of Despertai Mozambique are potentially in a position to make decisions that could
impact on a whole community and need to be aware of themselves and their inter-relatedness
with others.
Methods
The primary method used to deliver the training was through email exchange. This was built
on a face to face training workshop that introduced the topics of budgeting and reporting.
Over a period of 1 year the trainer responded to communication from the staff in
Mozambique, commented on documents received (monthly financial and activity reports),
and provided guidance on overcoming operation issues that arose.
This method of data collection and training had a number of strengths and weaknesses. From
a practical point of view, there were a number of fundamental issues to be overcome.
• The technology itself could cause difficulties. The establishment of a reliable internet
connection in Beira, and the resources to pay for it were critical.
• Translation was a constant potential source of misunderstanding with the staff in
Beira being Portuguese speaking and the trainer in Australia English speaking.
• Difference in education standards, and therefore assumptions about knowledge
needed careful thought. The co-ordinator in Beira had received barely any formal
education and lead within a largely uneducated community with narrow
understanding of business concepts. The trainer was MBA trained and familiar with
a wide range of business concepts. Finding a level that made sense to both parties
was an ongoing challenge.
• Cultural differences were substantial and therefore assumptions had to be constantly
explained to avoid misunderstanding.
From a more positive perspective this mechanism gave immediate access to what the staff in
Beira were actually doing. There is detailed record of the interaction between trainer and
trained as well as monthly reports on activities which illustrate not only changes is what is
being done and how, but also the attitude of the staff to problems that arise – and to the
trainer. The evidence is not self report – but reported activity and apparent attitude.
What follows is a snap shot of the critical communication over a period of three months
following a face to face training session held in Beira on budgeting and reporting. These
emails have been between the trainer and the local co-ordinator in Beira.
2010 SEPT
Date
Summary
General topic
20 Sep
Carol and Kathleen in Beira for 1 week. Training delivered
on topic of budgeting and reporting for the operation of the
Despertai Mozambique
Budgeting /
reporting
1 Oct
First budget and monthly report received.
Expenditure/Activit
y
9 Oct
Receipt of reports acknowledged
20
10
12 Oct
"Basic Budgeting" lesson notes promised so that staff can
Budgeting for
provide local training.
training purposes.
14 Oct
Staff in Beira indicate appreciation of efforts. They make a
commitment to run the organisation well.
Acknowledgment
of help needed.
19 Oct
Following feedback and questions about the budget there is
a request "do not get tired of teaching us..."
Want to learn. Fear
of being abandoned
if they don’t get
things right.
3 Nov
Monthly reports are received - timely and thorough.
Reporting
3 Nov
Congratulations and praise in relation to timely reporting.
5 Nov
Response from Beira "your satisfaction is our pride",
Want to please,
want to improve.
This is
reinforcement of
attitudes in earlier
emails
11 Nov
Staff are introduced to the Australiana treasurer who will be
party to some communication with regard
to financial
reporting.
Expanding
interaction with
more people in
Aus.
24 Nov
The number of reporting forms increased – financial
reporting, activity reporting, borrowers’ reporting.
The local team
responds positively
on every little
improvement
suggest
ed and
responded
promptly.
Nov
A number of issues relating to their technical equipment
raised as hindering their responsiveness.
Reporting and
responsiveness
2010 NOV
29 Nov
Trainer explains requirements for an annual budget rather
than basic financial reporting and introduces a new
treasurer.
After concerns about their equipment and ability to respond
they are very eager very eager to learn the new processes
Back on track with
learning.
and extended reporting
16 Dec
Staff request for a Christmas bonus as is custom and
practice in Mozambique. Australia requested that they
educate us re the culture in Moz. and at the same time
demonstrate that their request needs to be supported with
such information.
Demonstration of
and increase in
their confidence.
22 Dec
Beira identifies a gap in providing necessary information
with relation to an application from an influential
community member.
There appears to be
some
difficulty in
dealing with
requests from
influential
community
members and
requiring them to
go through the
appropriate
processes.
22 Dec
Staff are thankful for the bonus – it appears they did not
really expect to get it.
.
22 Dec
The voice of the Executive Committee, made up of elected
community members, is now apparent they appear more
comfortable to raise their concerns / to challenge what has
been designed. They are able to explain their view of the
categories of the borrowers and propose changes.
Growth in their
confidence evident.
12 Jan
Lack of equipment causing stress. Now using a personal
laptop. Still waiting a response from Aus.
Tension is
beginning with the
conflict of a want
to do well but
resource issue
unresolved
21 Jan
Anxiety when the trainer did not respond for 10 days whilst
on holiday. The team in Mozambique had not been
informed of this.
Concern /
insecurity.
Indications of
dependency
A number of themes appear.
There is a willingness to learn and evidence of technical improvement in their ability to
budget and report accurately. However this ability is threatened by aging and limited
physical resources.
They want to please and improve. Growing confidence is seen through the request for a
bonus and the suggestions for improvements from the executive committee. However this
confidence is still fragile as seen when the trainer was out of contact for a short period of
time.
These challenges are ongoing. Frustration at both ends in resolving the resource issue -
communication of a point gets lost among other topics, the issue lingers. It took until Aug
2011 for approval to be given to purchase the necessary physical resources in Beira. This did
not come without its challenges. In the interest of 'educating' and being able to support the
decision to spend the funds the team was asked to get quotes. The thinking of 'everything'
was a challenge for them. An important lesson was that it is difficult to know what people do
not know – as they are not in a position to help.
This is a snap shot of the process being undertaken and it raises issues for everyone
concerned. For the trainer there was the conflict between helping to resolve operational
issues, with a strong drive to simply get it done, and the need to ensure that the staff in Beira
actually did all the required activities so that they could improve their knowledge and skills.
This frequently made the process very slow.
As the basis of learning moves from budgeting and reporting to human resource issues the
complexity will become greater. It will be necessary for a face to face training session on
human resource issues to happen to address the unspoken, implicit cultural questions that
arise when putting a human resource management plan in place. They have much to learn
and so do the trainers.
Results
The purpose of the training was to address two priority areas of capacity building.
• Improve their technical skills in areas such as budgeting, reporting and evaluation to
provide assistance and mentoring to local micro entrepreneurs.
• Increase their self efficacy and ability and willingness to make decisions for which
they are accountable.
The result of this study is increased understanding of processes of building capacity and
encouraging pro-activeness in poorly educated but very willing staff in a developing
economy. The process is not without its challenges. It became clear that face to face training
is required to maintain the relationship, trust and confidence of the learners. The pressure on
the trainer to go and do it for them was sometimes very strong but a full-time presence would
have lifted the responsibility from those locally. This process required those on the ground to
find a way of doing what needed to be done, however difficult. An example of this was
getting quotes for equipment, which clearly they had never done before. Many of the
providers that they sought the information from would also have found the process strange.
Learning by doing has been a key aspect of the process of both developing skills and
confidence.
The research seeks to answer the following questions:
• Have local staff improved their technical skills relating to budgeting and reporting
• Are the staff more self confident and willing and able to make independent decisions
• What are the strengths and limitations of the particular training model used.
There is evidence from the monthly reports and the email correspondence that both their
skills and self confidence have increased but that both are still, after a year fragile.
Without technology set up effectively in both countries very little of what has been achieved
would have been possible. Improving this technology and ensuring it can operate in the
hostile environment of a developing economy is vital.
There needed to be recognition on the part of the trainer that often the learners did not know
what they did not know, and making assumptions of any kind could lead to
misunderstanding. Not only have the local staff not been exposed to many of the facilities
and ideas that we take forgranted, the infrastructure locally means that tasks that take a few
minutes in Australia might takes days in Beira. An example of this is the year long struggle
to get appropriate banking facilities.
Discussion and Conclusion
The research identifies a number of areas of development that appear to be significant in the
success of any in-country team to support poor micro entrepreneurs. These include:
increased technical skills in relevant areas such as budgeting, business planning and
marketing; Improve self efficacy and self confidence to overcome year of subordination; a
better understanding of the requirements of reporting and accountability. There is also
significant learning for the trainers in Australia. This training includes a continual reminder
that operational issues are fraught with difficulty in many developing countries; a reminder to
the importance of not making assumptions about the level of knowledge; ensuring that
communication happens in a clear and uncomplicated way and recognises cultural differences
that may impair action; to be persistent and where possible to keep putting decisions back to
the in-country team.
This is not the easy way but may be the only way to self determination and long term
sustainability.
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