Paper presented during the GW October program: New Frontiers in Entrepreneurship and definition of Work at George Washington University, School of Business conference held in October 2017.

Abstract:

Problem statement: The Bottom of the pyramid (BOP) literature often confuses the emerging middle class for the poor in the African context. According to Karnani (2007a), virtually none of the examples cited by BOP proponents support the recommendation that companies can make a fortune by selling to the poor. Purpose: The main objective of this paper is to develop a framework for sustainable entrepreneurship at the Bottom of the pyramid (BOP) from an African perspective. Methodology: a thorough search of literature review was conducted to track success stories on sustainable entrepreneurship at the base of the pyramid. Findings: Contrary to popular belief that the poor have the reluctance to psychologically commit themselves in initiatives of making as much money as they can. The paper highlights that there are cornerstones for effective and sustainable entrepreneurship development in Africa. These include the role of the state as a facilitator of promoting a conductive environment for potential entrepreneurs by removing all obstacles (financial and structural) that discourage entrepreneurial intensity in the country. Practical implication: The paper attempts to show that despite the fact the poor does not present any sustainable market, it is important to recognise that opportunities at the BOP exist, there is a roadmap for sustainable entrepreneurship in poor African countries that constitute the bottom of the pyramid.

Key words: entrepreneurship, bottom of the pyramid, wealth creation, Africa.

WHAT IS ENTREPRENEURSHIP

An entrepreneur is a person who identifies opportunities in the marketplace, allocates resources, and creates value. (Acs & Armington, 2006) Entrepreneurship the act of being an entrepreneur implies the capacity and willingness to undertake conception, organization, and management of a productive new venture, accepting all attendant risks and seeking profit as a reward. (Ndedi, 2013: 127) In economics, entrepreneurship is sometimes considered a factor of production, at par with land, labour, natural resources, and capital. (Acs and Armington, 2006) As such, entrepreneurship is a vital component of economic growth and development. The creation of new business entities not only generates value added, fiscal revenues, employment and innovation, but is an essential ingredient for the development of a vibrant small- and medium-sized business sector, the core of most competitive economies. It has the potential to contribute to specific sustainable development objectives, such as the employment of women, young people or disadvantaged groups. Growth-oriented entrepreneurs can also contribute to structural transformation and building new industries, including the development of eco-friendly economic activities. Entrepreneurship policy cannot, of course, be treated entirely separately from broader economic development policies. (Stefanescu & On, 2012) Coordination and coherence are essential in order to achieve a positive impact, to benefit from the synergies of these policies, and to maximize the economic and social growth they can provide. This requires a “whole of government” approach with strong commitment at top ministerial level and coordination across ministries, in partnership with the private sector and other civil society stakeholders, including academia, NGOs, and community organizations. In an effective entrepreneurial ecosystem, multiple stakeholders contribute to facilitating entrepreneurship. It is a system of mutually beneficial and self sustaining relationships involving institutions, people and processes that work together with the goal of creating entrepreneurial and innovative ventures. It includes business (large and small firms as well as entrepreneurs), policymakers (at the international, national, regional and local levels), educational institutions (primary, secondary and higher education), social networks and other civil society actors.

The framework recognizes that in designing entrepreneurship policy “one size does not fit all”. It highlights the key policy areas to take into account and suggests policy objectives and options in the form of recommended actions in each area. (Audretsch, Keilbach & Lehmann 2006), Although the national economic and social context and the specific development challenges faced by a country will largely determine the overall approach to entrepreneurship development, UNCTAD has identified six priority areas for policy focus that have a direct impact on entrepreneurial activity. These are Li, Yang, Zhang & Zhang (2012): • formulating national entrepreneurship strategy; • optimizing the regulatory environment; • enhancing entrepreneurship education and skills; • facilitating technology exchange and innovation; • improving access to finance; and • promoting awareness and networking.

DEFINITION OF THE BOTTOM OF THE PYRAMID

The concept of the bottom of the pyramid (BoP) was first used by U.S. president Franklin D. Roosevelt in his April 7, 1932 radio address, The Forgotten Man, in which he said ‘These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power…that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid’. The more current usage of the BoP refers to billions of people living on less than a $2 per day (Prahalad & Stuart, 1998). In his proposal of uplifting the poor of the poor, Prahalad (2002) and later Ndedi (2013: 129) propose that businesses, governments, and donor agencies must not see the poor as victims, but instead start seeing them as resilient and creative entrepreneurs as well as value-demanding consumers. Hart & Simanis (2005) advance another approach, one that focuses on the poor as business partners and innovators, rather than just as potential producers or consumers. Hart & Simanis (2005) have led the development of the Base of the Pyramid Protocol, an entrepreneurial process that guides companies in developing business partnerships with income-poor communities in order to co-create businesses and markets that mutually benefit the companies and the communities. Another recent focus of interest lies on the impact of successful BoP approaches on sustainable development from a normative ethical perspective, on poverty alleviation as part of an integral part of sustainable development in an intra-generational justice platform. What about empowering the bottom of the pyramid or the base of the base of the pyramid in Africa? There are poverty reducing benefits if the African government works with financial institutions, civil society organizations and local governments to create new local business models that support financially potential entrepreneurs with no business collateral. More than 150 millions of Africans form this largest, but poorest socio-economic group that need sometimes just F CFA 100 000 or 500 US dollars to start a business in the corner of a street in Bouakè, Bujumbura, Daloa, Petersberg, Linlongwe. After all, uplifting the poor of today who may be a part of the middle class of tomorrow, engine of growth in any country. (Ndedi, 2016)