1. Introduction

This writing project has commenced with collating different perspectives from few literatures as sources of insights to Equatorial Guinea and its business environment for
entrepreneurial activities.  From the understanding gathered, an attempt was then made to apply drivers of entrepreneurial activities to the context of Equatorial Guinea.

The structure started with listing few drivers noted from literatures on entrepreneurial themes.  We then proceeded with gathering our understanding of Equatorial Guinea’s general culture and economy, while applying some general key drivers of entrepreneurial activities to its context.   We have concluded this writing with some lessons learnt from similar economy of Nigeria, as broad yardsticks in measuring progress, and general implication for Equatorial Guinea.

The balancing check in this project arises from the limitation that we neither know much about the country nor its potentially changing related-policies.  This limitation may mean some past facts and views gathered so far may also be irrelevant and there is more to learn of the trends on continuous basis.

2. Purpose of project and Equatorial Guinea background

Purpose of this writing project mainly pertains to a jagged attempt to apply the few broad entrepreneurial drivers identified to Equatorial Guinea.  Equatorial Guinea is part Central Africa, which also comprises of countries such as Congo, Angola, and Cameroon.

Central Africa has had history of higher rural poverty levels and ongoing constraints in improving these levels (International Fund for Agricultural Development, 2001).  The following figures depict its geographical location visually (2011c):

Figure 1

Figure 2

Figure 3

Equatorial Guinea’s current economy appears to be dominated by discovery of “petroleum reserves” from mid-1990s (Arguemon and Pambou, 2010; KPMG, 2008).  KPMG noted the profitable source of oil and gas discoveries will continue to be the driving force of its economy (KPMG, 2008), as well as, an attraction for foreign investments (Aguemon and Pambou, 2010).

Its 2008 report further indicated development may be required in the country’s infrastructure sectors.  Another updated analysis on outlook for 2011/2012 highlighted its current infrastructure development is maturing and it is more focused on acquiring skilled human capital, particularly for its health and construction sectors (2011b).

The analyses and background of Equatorial Guinea had provided promising outlook for future entrepreneurial activities to be part of the progress in highlighted sectors so far.  However its other factors provided alternative views to keep reality in check, particularly, that of political and societal such as autocratic political climate and less equitable distribution of wealth, suggested in McSherry’s research.  She noted the benefits have not been evident in the wider mass of communities, which had remained in below-average standard of living (McSherry, Spring 2006).

Her paper cautioned against the phenomenon of “Dutch Disease” (p.27).  This occurred when the country is experiencing economic success from exporting oil reserves but its other local sectors may be undermined, as well as, overall experiencing less desirable outcomes of high inflation and unemployment.  This was also experienced by similar resource-rich economies, such as Ecuador and Nigeria.  In addition, she suggested possible further “under-development”, such as increasing criminal activities, societal abuses, particularly against the backdrop of strong dictatorship.  One of McSherry’s suggestions to counter-act the phenomenon and its potential societal side-effects included learning from Botswana, in Southern Africa.

With the above background including both its potential gems and barriers, we explored in next sections, general motivation that may drive its entrepreneurship and lessons that it may consider from its neighbours experiencing similar learning curves.

3. Drivers of entrepreneurial activities and applicability to Equatorial Guinea

3.1. Drivers and general pattern of entrepreneurial activities

One study, in the context of African-American entrepreneurship in the U.S., suggested a primary driver for entrepreneurship stemmed from individual’s self-motivation (Sriram et al., 2007).  So a nurturing condition would include encouraging individuals’ efforts in a given setting.  Other suggested drivers referred to that of “historical, cultural, political, idealogical, attitudinal and structural” (p.15, Stevenson and Lundstrom, 2001)

Stevenson and Lundstrom (2001) noted a pattern where there was lower density of SMEs in few developed economies largely dominated by public sectors or institutions.  An implication refers to the extent of influence over entrepreneurial activities, from public policies.

3.2. Applicability of drivers to Equatorial Guinea

Without in-depth understanding of the social, cultural and political aspects of the country, it may appear its current economic activity is dominated by larger, public institutions which control the reserves.  This is consistent with a pattern noted above, that there were fewer SMEs (lower density) in strong public-sector economies compared to other economies.  Given such stronger influence from public sectors, the implications for expanding SMEs are that entrepreneurial activities could be further encouraged with nurturing policies and climate, and in fine-tuning the balance between SME sector and public sectors.

This implication of applying a key driver of self-motivation to Equatorial Guinea could have also been overly simplistic after understanding that in context of African societies, a gap existed between the deeply rooted traditional practices and the formal institutions placed into the society (Mersha, 2000).  The report recommended effective blending required over long haul, with respect to reconciling this gap.

The need to applying more weights to other drivers indicated (political and social), was also reinforced by the analysis of 2011/2012’s economic outlook for Equatorial Guinea (2011b).  The analysis noted shaping the business climate in the country currently depends mainly on government’s initiatives in public policies to tackle issues, such as perceived level of corruption, widening financing options for small and medium businesses.

It further noted there is growth opportunity for Equatorial Guinea to manage economic partners strategically, to provide opportunities for its people and improve poverty level in the long run.  It suggested “peer learning” from its African neighbours as an option, leading to the inclusion of the next section for learning in context of Nigeria.

4. Learning from other economy

Besides more similar cultures and background, lessons from few neighbours may be more relevant due to similar development and learning curves experienced.  In addition, a similarity in vices related to the common perception of corruptive practices is present (2011b).  Their presence in the few African countries may also be hinted in recent election practice observed in Congo, which would have rendered the election results less credible (2011a).

Nigeria and Botswana

One recommendation noted in Nigeria’s context to encourage entrepreneurship included oversight of educational system in entrepreneurship development to attain specific goals effectively (Onifade, 2010).  He also recommended the role of government in penalty policies to improve contractual practices; and provide support to SMEs in the form of more affordable financing or tax.

An observation made by Onifade, suggested that the entrepreneurship is improved when supported by the country’s infrastructure, as well as minimized social and economic vices (such as corruptions and robberies).  These recommendations may have implied a long term commitment to the suggested developments, comprised of short-term milestones, before reaching a desired state.

Positive lessons from success story in Botswana, suggested by McSherry (2006), also reinforce the role of government support.  Botswana applied macroeconomic policies to control its real exchange rate, yielding outcome of protecting its other sectors, and therefore its other entrepreneurial activities.  This serves as control measure for “Dutch Disease” cautioned by McSherry, when over-emphasis of success in the resource-sector may undermine its other sectors and restrict other activities.

Application to Equatorial Guinea

KPMG’s 2008 report, first suggested it required more experienced and skilled staff particularly in its service industry.  This is also supported by a recent analysis for the country’s outlook, which re-iterated the shortage of skilled labour, and highlighted knowledge gap for strategic partnerships to benefit its economy and residents (2011b).

This may be one of the steps which could contribute to further developing infrastructure and policy-development, as recommended in Nigeria’s context.  The breadth of knowledge introduced in the form forms of skills-sharing, job-creation, and policies, may potentially contribute to controlling the damaging social vices, while improving quality of infrastructure and policies provided to its other businesses.

Botswana’s experiences highlighted the importance of government initiatives, to drive entrepreneurial activities, besides individual motivation.  Outside African continent, lessons may also be considered from initiatives to support entrepreneurial activities in less resource-rich but developing or developed countries, such as Hong Kong and Singapore, amongst many.

5. Conclusion

The understanding we gathered so far led us to think that the individual motivation may not the only driver to predict the country’s entrepreneurial activities.  We learnt the impact of macro-economic policies in their role of SMEs’ development.  These were supported by the pattern of lower SMEs’ density in economies dominated by stronger public institutions (with dictatorship potentially at one of this spectrum), occurrence of “Dutch Disease” when not duly controlled, as well as potentially damaging social vices.

Therefore we conclude at this stage that the country’s entrepreneurial hopes are still triggered by the individual’s inclination and motivation, but only will lead to further realisation and profitability, in tandem with Equatorial Guinea’s infrastructural and policies’ support in its societal context.

Reports of the country’s status also led us to think there are current continuous efforts towards improving infrastructure and other existing conditions, to provide more hopes than mirages, as with any other country or place.  This is so even as more drastic steps may be constrained by other cultural or social vices.

By Lee Shien, Pang & Luis Ortiz

References:

  1. 2011a. Chaotic Congo vote count mars credibility of result: EU. Reuters Africa. Available: http://af.reuters.com/article/topNews/idAFJOE7BD00C20111214?feedType=RSS&feedName=topNews&pageNumber=2&virtualBrandChannel=0&sp=true
  2. 2011b. Equatorial Guinea. Available: http://www.africaneconomicoutlook.org/en/countries/central-africa/equatorial-guinea/
  3. 2011c. WorldAtlas – Map of Equatorial Guinea. Available: http://www.worldatlas.com/webimage/countrys/africa/gq.htm
  4. Aguemon, H. & Pambou, Y. 2010. Equatorial Guinea. African Financial Systems: A Review. Available: http://fic.wharton.upenn.edu/fic/africa/Equatorial%20Guinea%20_2_.pdf.
  5. International Fund For Agricultural Development, I. 2001. Assessment of Rural Poverty – Western and Central Africa.
  6. KPMG 2008. Equatorial Guinea – Current State Assessment and future prospects of the business and regulatory environment. Gulf of Guinea Oil and Gas Conference.
  7. McSherry, B. Spring 2006. The Political Economy of Oil in Equatorial Guinea. African Studies Quarterly, 8.
  8. Mersha, T. 2000. Quality, competitiveness and development in Sub-Saharan Africa. Industrial Management & Data Systems, 100.
  9. Onifade, A. 2010. Improving Entrepreneurship In Nigeria’s Emergin Economy. International Business & Economics Research Journal, 9.
  10. Sriram, V., Mersha, T. & Herron, L. 2007. Drivers of urban entrepreneurship: an integrative model. International Journal of Entrepreneurial Behaviour & Research, 13, 235-251.
  11. Stevenson, L. & Lundstrom, A. 2001. Patterns and Trends in Entrepreneurship/SME Policy and Practice in Ten Economies. Entrepreneurship Policy for the Future Series. Swedish Foundation for Small Business Research.

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