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Challenges of Enterprise-Driven Economic Growth in Africa (African Journal of Business and Economic Research, vol 3 No 1, 2008

Challenges of Enterprise-Driven Economic Growth in Africa (African Journal of Business and Economic Research, vol 3 No 1, 2008

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There is a growing concern within the development research and policy communities today about the persistent sluggish economic growth in most African countries despite the general upturn in the world economy during the last two decades and the general reduction of poverty in most developing countries. The search for explanations for Africa's poverty has stretched from considerations such as corruption, poor governance and institutional problems (Killick et al., 2001), to the limited attention to private enterprise development (Fafchamps et al., 2001). The African Union has recently estimated that corruption costs Africa 148 billion US dollars per year, thereby increasing the costs of business transactions in Africa by up to 20 per cent. Similarly the World Bank estimates that corruption impedes growth rates by 0.5 per cent per year. There is also the problem of weak supply side of the economy due, partly, to low levels of entrepreneurial activities throughout Africa. Other scholars have shown that the impacts of the activities of external agents such as donor organisations and Multinational Corporations (MNCs) operating in Africa have not always been positive, as expected by economic theorists. Based on this understanding, it makes sense to argue that reversing the downward trends in growth and development in Africa requires the joint and consistent effort of a multiple set of actors - foreign and local firms, governments, the bureaucracy, the donor organisations and the civil society - all pulling in the same direction. These challenges have encouraged some scholars to turn to sociologists and anthropologists for inspiration and insight. Sociologists generally argue that the keys to economic growth are to be found in the social structures and the nature of the value systems in each society. Individuals and local entrepreneurs as well as external agents such as donor organizations and foreign investors are guided in their behaviours by the social structures, values and governance mechanisms of the societies. Thus, if economic planners can identify the principles of co-operation and adaptation which are inherent in their societies, they should be in a position to mobilize them to provide vehicles for economic growth. To do otherwise would be to overlook an important creative potential within societies.