The history of business in Africa has largely been ignored by Western scholars, despite a very rich history of trade, markets and entrepreneurship on the continent. Professor Grietjie Verhoef’s recently published book The History of Business in Africa: Complex Discontinuity to Emerging Markets fills a gaping hole in the literature on the business history of the continent.
A professor in the College of Business and Economics at the University of Johannesburg, Verhoef launched the book at an event at the university last week.
Besides exploring trade and entrepreneurship across the continent, the book also takes an interesting look at trade in the precolonial era in Africa.
It explores the history of colonisation on the continent, from the first Arab colonisers in North Africa in the seventh century to the British and European colonisers of the 18th and 19th centuries, and the impact these have had on trade development in Africa.
It delves into the complex history of occupation and oppression and looks at Africa’s emergence into the post-colonial era and beyond. Family business and globalisation are two other prominent themes in the book.
Verhoef’s inspiration for the book can be found in the preface.
She writes: “The unexplored potential of the people of my continent is the single most distressing fact of our times. Africa has the benefit of centuries-long culturally enriched diversity. This book was inspired by the need to introduce the strength of that diversity on the African continent. Since Africa is not the home of the world’s largest multinational corporations, business historians have paid scant attention to the development trajectory of business in Africa.”
Leon Louw, executive director of the Free Market Foundation, a guest speaker at the book launch, said the forgotten history of Africa is that it is a continent of traders and trade, with early evidence of stones, shells, wood carvings and other artefacts found in markets literally thousands of miles from where they were produced.
He said what human beings commonly do when they encounter others of different cultures and races, is to trade.
“So the history of Africa is not the history of political conflict but a history of cooperation and collaboration between people who want to exchange value,” said Louw.
Speaking at the launch, Verhoef said the future of Africa lay in its engagement with markets and that any progress towards realising the economic potential of the continent had to be premised on an understanding of the complex discontinuity of development suffered by the people of Africa over many centuries.
She said while her research revealed a long history of strong entrepreneurial inclination across Africa, what was very surprising was the extent to which entrepreneurship was stifled by leaders of many African countries post independence.
“The people of Africa fought so hard to free themselves from the shackles of colonialism and its stifling of economic, political and other freedoms, yet post-independence African governments perpetuated these unfree conditions by centralising the bulk of economic activity in inefficient state through state-owned enterprises. This, together with nepotism and an obsession with political power, distorted markets and excluded entrepreneurs from taking advantage of new market opportunities. This excessive market distortion meant large numbers of really good entrepreneurs were unable to grow their enterprises or expand them across Africa,” she said.
Another surprise, said Verhoef, was how long this system of economic centralisation, post independence, stayed in place before it was dislodged – not by Africans, through their own agency, but controversially, through the intervention of international organisations.
“Although these organisations weren’t liked for that – it was difficult medicine – structural adjustment was necessary. And although it did not achieve all its aims and goals, it did have an impact on state control and political economy thinking in Africa, opening up opportunities for African business to enter the global markets,” said Verhoef.
Louw said it was a strange paradox that those fighting for freedom from colonialism – for the right to own property, to trade, for freedom of exchange and the right to participate in markets, were then subject to the same suppression of these rights and freedoms by their own African rulers when the colonialists were thrown out.
He pointed out that in South Africa, Sol Plaatje – first secretary-general of the ANC – had objected to black people not being allowed to own land and to trade. Louw also described the Freedom Charter as a liberal market document that promotes the freedom to trade and property rights. “[Nelson] Mandela and [Walter] Sisulu made it very clear that when the Freedom Charter referred to ownership by the people, it meant ownership by the people, not ownership by the government.
“As we debate the question of property rights in South Africa today, by which people mean agricultural land rights, I have this vision of the ghost of [Hendrik] Verwoerd walking around South Africa with a big smile on his face, thinking to himself, ‘I never dreamt that a black government would one day implement my policies, which is to force black people to live on government land’,” said Louw.
Dr Adri Drotskie, Henley Business School Africa’s Master of Business Administration director, has worked closely with Verhoef in collecting case studies of African entrepreneurship across the continent.
Speaking at the book launch, she said many of the long trends that still exist today, such as family business, entrepreneurship, colonialism’s impact on democracy and communism, state-owned enterprises, privatisation, small, medium and micro-sized enterprises, and nationalism, were not only concepts that emerged in First World countries, but also have their roots in Africa.
“A great insight from the book is that the same trends that the US and Europe had to deal with, Africa also dealt with over many centuries, but that the African context saw a different evolution of those trends from their evolution in the Western world. An example is entrepreneurship, which has strong links to innovation in the Western world but was used as a means of survival in Africa and was more about individuals taking the initiative to do things to better their own economic prospects than about innovation,” she said.
Drotskie believes that the future of business in Africa lies in innovative entrepreneurship. One issue that Verhoef highlights in the book is the lack of industrial development on the continent.
“What it boils down to is insufficient education on the continent and a lack of innovation. Until fairly recently, Africa has not played its part in industrial development and innovation but has rather been a taker of new and innovative products from advanced industrial countries,” said Verhoef, who also pointed out that things are changing.
Towards the end of the book, she writes about the emergence of innovation on the continent, especially in the areas of information technology (IT) and electronic financial services, where East Africa has taken the lead.
“We are seeing the wonderful ways Africans are using technology to innovate, devising new electronic and IT products to transfer money, make payments, communicate and store value. And we’re seeing Naspers, the largest emerging market multinational, growing its business through electronic media and online platforms, but growing these from Africa by meeting the needs of Africa’s people,” writes Verhoef.
In additional to the role entrepreneurship has played on the continent, Drotskie was also struck by the significant role that family business and trade played on the continent throughout the centuries.
“There are excellent examples in the book on family business, trade and entrepreneurship. Trade in Africa was very significant, yet nowhere in any international business textbook are trends on Africa to be found, despite the enormous contributions Africa has made to trade,” said Drotskie.
She said students at Henley Africa are constantly asking why they are trained on Western business models, instead of African business models.
“The truth is, there is still no African business model. But despite this, there are very strong ways of doing business in Africa which need to be recognised so that Western ways of doing business don’t persistently dominate,” she added.
In the book, Verhoef points to the impressive growth performance of African economies since the last decade of the twentieth century and the emergence of African multinational corporations on global bourses. She writes: “The time has come to consider African business development in its own right.”