Most entrepreneurs in Africa will start a business in order to take care of their families.
A Business whether small or very successful were started because the founders had a family motivation at the back of their minds.
Most entrepreneurs in Africa will start a business in order to take care of their families. African families have a high dependency rate per employee.
According to the world economic Forum 2018, Kenya's 80.9 percent dependency level is high by world standards but pales in comparison to its neighbors like Uganda which has the highest dependency ratio in the world at 102.3%, Tanzania's stands at 93.8% equivalent to nine dependents out of every 10 workers while Rwanda's is 78.1 percent, the lowest in the region.
This means that most Africans will start a business or work because they cannot afford not to. According to the African Development Bank, 22 % of Africa's working-age population are starting businesses.
The prevalence of business performance and the role of families cannot be separated.
The nature of relationships and conditions of the family translate into how these small businesses perform.
While there are a lot of programs encouraging women to get engaged in entrepreneurship where Uganda, Ghana and Botswana ranked as the top three countries with the highest percentages of women-owned businesses across the 58 markets evaluated around the world according to the Mastercard Index of Women Entrepreneurs (MIWE) 2019, a lot needs to be done on how to encourage women and men in the same family to work together.
Lockdowns introduced by governments to curb the spread of COVID 19 have put a lot of pressure on families. According to UNFPA, if the lockdown continues for six months, 31 million additional gender-based violence cases can be expected.
The financial pressure and a lot of idle time cause conflict over seemingly petty incidences under normal circumstances.
Because spouses are not preconditioned to work together and relationships are precondition on the premise of who earns the most income, the lockdowns instituted an imbalance were the predominant high-income earner does not have such power any more resulting to violence.
A different scenario will have been families coming together during this time to come up with ideas on how they can get alternative sources income.
Husbands and wives coming together to jointly work on new income-generating alternatives or even businesses. For most successful enterprises, this has been the scenario and such stories should encourage more families to make this change.
Hanifah Namutebi the Managing Director of BM Energy Saving Equipment ltd a company that manufactures and distributes clean cooking stoves in Uganda.
Her Father Faizal Mubiru started the company with a humble educational background and modest means. Moving long distances collecting scrap and fabricating them, he ventured into cook stove production.
He has groomed his daughter to run the business. Hanifah who recently graduated from Makerere University is transforming the company and managed to secure a grant from United Nations Capital Development Fund to grow the company's distribution channels.
Such unity in a family enables them to combine resources and skills. An example is an employed partner creates a safety net with a stable income and the other ventures into a more risky but highly rewarding alternative business.
Pulling resources through family members has been the biggest source of financing and skills for many small businesses in Africa.
According to a World Bank report titled Profiting from Parity, Many women who become entrepreneurs out of economic necessity do not intend or have the skills to build large and successful companies.
Their decision to start a business instead of seeking wage work is influenced by important constraints such as differences in skills, capital, networks, time and family formation, occupational opportunities, and safety.
An examination of successful enterprises shows that women and men working together combine skills and allows for complementary contributions.
Constraints experienced by small businesses can be overcome through family resourcefulness.
The story of BM is a perfect example of how competent family members can grow an SME.
The challenge is when the founders give positions in their companies to family members who are not qualified.
While family serves as a training ground to natural talent, there should be policies and processes that both family and non-family members follow in the running of the business.
These include financial management, recruitment, and others. This and the need to plan long term by committing to build structures, documentation, and setting long term goals.
SMEs that rather emphasize day to day sales are unable to attract financing and scale beyond the founders' abilities.
BM energy has embraced the need for technical assistance to improve its sales, marketing, and distribution structures.
According to a research by innovation for poverty action, Men who received loans and small business management training greatly increased their profits by 58 percent six months after the program ended, and slightly more three months later.
In contrast, women-owned businesses saw no increase in profits from loans, grants, training, or any combination, which some women attribute to pressures they face to spend resources on household rather than business needs.
African SMEs will grow much faster and effectively when the role families play in the performance of a business is recognized.
Families need to be recognized as an essential part of a business and their role clearly defined in support of business development programs.
Article published on Newvision: https://www.newvision.co.ug/news/1522408/role-family-business