The article by Susan, Garry, & Eric focuses on informal family businesses in Africa. In the article, we learn that families build a theoretical basis for the establishment and evolution of family business in the emerging economy. In additions, we learn that entrepreneurs in East Africa use both the family and the community ties to establish and expand businesses. This leads to economic informalities which are viable opportunities for entrepreneurs.
Most researchers and scholars in Africa have failed to recognize the emerging economies and particularly fail to address the current businesses in the region. However, lack of attention on how family business emerges and develop may shed light on how to fight poverty in the area. The article also focuses on literature on family businesses, the economics of development and sociology of economic. The article concentrates on what the families put forth on African entrepreneurs.
The article takes us to East Africa nations, Kenya and Uganda which have almost similar profiles regarding demography, culture as well as historical ties. Great Britain colonized the two countries. During colonial times, the colonial authorities depended on small tribes; in return, the tribes received favors like access to employment and education. As a result, the colonial government introduced land tenure system that led to private property schemes, and hence worsened land inequalities. The two countries continue to practice agrarian economies characterized by high levels of poverty and uneven distribution of wealth. In additions, the two nations are faced with unemployment and the larger part of the population live on less than $2 per day.
The article outlines that in Africa, most family’s businesses are informal micro businesses. The author adds that the businesses are not registered, do not pay taxes and have less than five employees. As well, the article has illustrated why African entrepreneurs run informal businesses, considering the obstacles by the government to register and license a business. On average, it takes fifty-six days to start a business in East Africa.
One of the interesting points in the article is about the social ties and how they are related to the informal ventures in Africa. The article points out those micro-entrepreneurs in Africa use social networks to bridge the formal and middle organization. The full range of ties has a mix of people they trust. In additions, it comes out interestingly that the social network creates opportunities for the entrepreneurial venture. Another interesting thing is that individuals rely on more on the extended families for economic support. More interestingly, members of extended families depend on one for their family member for financial assistance.
The article has failed to reveal to the reader that informal family’s businesses carried out in East Africa countries are illegal, as most of them are not licensed and do not pay taxes to the government. In my view, such informal businesses in Africa have led to increased poverty as their governments cannot be able to finance projects involving essential services such as the provision of water. Typically, the article is limited to two out of fifty countries in Africa. Individually, the researchers should have gone beyond the rural areas to lay down the foundation of their arguments.
Relationship to course material
I find the article very educative as it relates to the course material. I have learned that international aids to lift nations cannot get the developing nations out of poverty pit. The article has also advanced my understanding of informal business in East Africa and how strong extended family ties affect women. It has also given the reader an opportunity to suggest to financial assistance agencies that in East Africa there are opportunities to prosper.
- Discuss, what make African family business exceptional?
- Referring to the context, what does it mean by ‘strong family ties’?
- Reefing to the case study (Kenya and Uganda), what should their governments do to discourage informal business activities?