Innovation, Entrepreneurship and the Informal Economy in Sub–Saharan Africa

The entrepreneurial ecosystem (EE) emerged in entrepreneurship literature in the 2000s, gained momentum in 2014, and dominated literature in 2016. EE-significant interaction between varying albeit interdependent stakeholders comprising players such as organizations and institutions facilitating the administration of resources and establishment and growth of new firms continues to be one of the hottest topics discussed in the entrepreneurship literature. EEs have been recognized as essential for achieving productive entrepreneurship in regions and, as a result, have gained the attraction of academia, policy, and practice. However, the term's conceptual, theoretical, and empirical foundations are still nascent, with many areas unclarified. There are concerns about the concept turning into a policy fad. With origins in the United States of America literature, and recent attention paid to emerging economies, Nigeria still trails far behind in the EE discourse. The study, therefore, aims at identifying and discussing salient gaps in the study of EE globally that require attention, narrowing the same to Africa, and specifically Nigeria, and proposing overarching research questions to guide Nigerian researchers in the study of EE. The study provides compelling arguments on why Nigerian literature needs to pay attention to this area of research, especially with the recent surge in entrepreneurial activities in selected regions in the Nation. The paper also identifies some key research questions based on the identified gaps in concepts, theories, empirical works, frameworks, methodology, geography, industry, and level of analysis that can help researchers get started in the study of EEs in Nigeria. The study concludes that the time is right for Nigerian scholars to jump on the bandwagon.

The paper aims to investigate the Small and Medium Enterprises (SMEs) Sustainability Strategies beyond the Periods of Environmental Shocks. We drew insights from SMEs in Africa’s largest economy, Nigeria, to explain how SMEs developed strategies to sustain business operations during the recently witnessed global economic and health shocks that affected the overall business environment. Our study adopted the qualitative research design to demonstrate the disruption of survival, adaptation, and future thinking strategies and their implications for Small and Medium Enterprises in South-Western Nigeria. Interviews were conducted using open-ended questions emailed to forty-three Owners and Owner-managers of SMEs across South-Western states in Nigeria. The study results indicate a negative impact of the economic and health shocks on Small and Medium Enterprises (SMEs) sales, income, and profitability in Nigeria. Considering the sudden nature of the pandemic, operators of SMEs developed various novel coping strategies to minimize the impact and survive during and after the pandemic. However, the study has implications for policymakers toward supporting SMEs’ growth and future adaptation, especially in developing countries like Nigeria.

It is largely acknowledged that entrepreneurial activities represent a crucial means for achieving sustainable development, especially in the developing economy. Yet, the percentage of population involved in business start-ups is still very low in Africa compared to other continents including the developed world. Thus, this chapter explores factors motivating entrepreneurial activities among women and men in a developing economy—Nigeria. To do this, we conducted 10 in-depth interviews which were transcribed and thematically analysed using QSR NVivo. The findings revealed that women and men are motivated by different factors. The implication of this finding is that female entrepreneurs should be treated as a homogenous group separate from their male counterparts. Doing this will enable policymakers to design much more effective entrepreneurial policies that encourage entrepreneurial activities that can stimulate sustainable development especially in sub-Saharan Africa.

This paper deconstructs the concept of informality in industrialization and manufacturing on the African continent, which has impacted inclusive and sustainable economic growth in relation to United Nations’ Sustainable Development Goals (SDGs) 8 and 9. Characteristic features of informality on the African continent are highlighted based on the International Labour Organization’s classification of an informal economy. Informality behaviour in some selected African countries’ economies is elucidated in relation to sectorial spread and gender distribution. Factors driving the growth of the informal sector such as gender disequilibrium (particularly, the feminization of poverty), low economic growth and rapid urbanization, globalization and redundancies, institutional and legal barriers, conflicts and social crisis and the adoption of capital-intensive manufacturing processes are highlighted. Frameworks to innovate the informal sector to drive Industrialization on the African continent are equally presented. Some of these frameworks include standardization of products and protocols of informal sectors, skill upscaling and training, and building an ecosystem of skill mismatch to cascade the informal sector to formal status via pooling of resources.

This paper advocates and posits the Integrative Model of Innovative Entrepreneurship Education (IMIEE). This is achievable by exploring entrepreneurship from the angle of educating students and aspiring entrepreneurs to become innovative entrepreneurs rather than being imitative and non-disruptive. However, given the current overly theoretical nature of teaching schemes across higher institutions today, curriculum needs to be completely overhauled to incorporate more innovative approach of practical and hands-on experiences that fosters innovative entrepreneurial practice. An integrative model for innovative entrepreneurship education becomes imperative for insight and guidance for pedagogy and practice in a way that drives institutional sustainability. Thus, this theoretical paper contributes to existing literature by analysing various empirical works and previous models such as the Design Thinking Approach, D.I.S.R.U.P.T, the Experiential model, and National Innovation Systems (NIS). Some shortcomings in previous models inform the need to posit an integrative model that synthesises vital elements.

Entrepreneurship is vital to the sustenance of local economy of any country. Particularly in the developing economies where there is a need for an entrepreneurial ecosystem consisting of a network of government, Multinational Enterprises (MNEs), start-ups and other institutional bodies tasked to contribute to entrepreneurial innovation and shape the creation of new businesses. Yet, how the contributions of MNEs in the ecosystem help achieve the UN sustainable development goals (SDGs) have been largely understudied. We contribute to the growing body of literature through a qualitative case analysis of four telecom MNEs. We show a novel model that demonstrates that telecom MNEs contribute by “building technology infrastructure” and “information communication technology centres” to support start-ups in Nigeria. Moreover, our analysis revealed the role of government as an exogenous factor mediating how MNEs contribute to SDGs. These findings contribute to the wider discussion regarding the contributions of MNEs to the entrepreneurial ecosystem in developing economies.

We engaged a quasi-experimental approach to estimate the impact of the O-pay technological innovation in transportation services on development outcomes in Kwara State, Nigeria. We randomly sampled 100 O-riders and 60 motorcyclists who were not under the O-Pay project. A structured questionnaire was used for data collection. The collected data were analyzed using descriptive statistics and difference in difference estimators. The intervention effects were evaluated in the short term. Our findings showed that the average weekly income increased by 137% for participating O-riders to (N30,220 [84 USD] from N22,050 [61 USD] at baseline) attributed to the intervention. The average weekly savings of O-riders increased by 355% (N4875 [$14] to N17,309 [$48] at baseline). We found an increase in average weekly labor productivity at 160% (625.06 Naira/hour [$1.7] from N 389.6/hour [$1.1] at baseline). The intervention led to a reduction in resource wastage; for example, the weekly fuel cost was reduced by 21% (N1254 [$3.48] out of N6020 [$16.7]) when compared with the non-O-pay participants. Although evidence in the short-term revealed that smart transportation has the potential to address significant development issues, including poverty, unemployment, financial exclusion, resource wastage, poor health, and well-being, among others. Evidence showed that there is a need to plan and invest in the sustainability of technological innovations rather than focusing on innovating alone to harness its full benefits.

The study examined the drivers of adoption of eco-innovation by firms in Nigeria’s manufacturing sector. Firm-level data from the World Bank Enterprise Survey (ES) and the Innovation Follow-up Survey (IFS) module for 2014/2015 was employed. The factors influencing firm’s decision to adopt eco-innovation were determined using the logit regression model. Evidently, product and process eco-innovation exist among manufacturing firms and these eco-innovations are mostly new to the local market. Demand-pull factors and regulations were major factors that significantly influenced firm’s decision to adopt both product and process eco-innovation. In addition, organizational innovation and technology-push factors influenced firm’s decision to adopt process innovation. Policymakers through collaboration with relevant agencies such as Manufacturers Association of Nigeria (MAN), SMEDAN to organize awareness campaigns on eco-friendly products and health issues for firms, as this will significantly drive the adoption of both product and process eco-innovations. Moreover, organizational innovation needs to be a necessity for firms. These would significantly influence firm’s decision to adopt process eco-innovation. Policies that encourage partnerships and interactions of firms with other actors most especially, private companies and individuals and other stakeholders in the innovation system be developed to encourage adoption of process eco-innovation.

Although the successes and benefits of Open Innovation are widely spoken about in literature across the globe, there’s very little understanding of the role open innovation plays across the innovation value chain, particularly in African contexts. This theoretical paper interrogated existing innovation and entrepreneurship literature to provide a conceptual model depicting the role of open innovation across the innovation value chain from an African perspective. Investigating the various academic and industry texts regarding open innovation and the innovation value chain leads to an in-depth understanding of what is needed to bridge the gap from invention or idea to market. An open innovation value chain model which includes 3 distinct support mechanisms for the value chain is proposed. The model derived helps government stakeholders, industry and entrepreneurs across Africa in making better decisions about what is needed in fostering total early-stage entrepreneurial activity.

The design of an institutional framework capable of promoting innovative entrepreneurship is an important component of any social, political and economic reforms. This framework is crucial in speeding-up the entrepreneurial activities, structural and economic development, particularly in developing countries. Therefore, this study examines the impact of institutions on the growth of innovative entrepreneurship in Sub-Saharan African countries. The study employs a two-stage least square technique to analyze a panel data consisting of 20 Sub-Saharan African countries covering the periods 2001 to 2018. Using the year fixed and robust standard error options which control for time constant at the country’s level and correct for the threat of multi-collinearities respectively, the result provided evidence in support of a strong link between institutions and entrepreneurial activities in the Sub-Saharan African countries. The overall results suggest that policy reforms aimed at achieving entrepreneurship growth, and economic development must implement institutional reforms that allow for innovative entrepreneurial activity to flourish.

Robust economic growth and development cannot be achieved without putting in place well focused policies and programs to reduce poverty and promote gender equality through empowering the people by increasing their access to credit facilities. The latent capacity of the poor and the women would be significantly enhanced through the provision of microfinance services to enable them to engage in economic activities and to be more self-reliant, increase employment opportunities, enhance household income, and create wealth. Thus, the study set out to investigate how microfinance could be applied as a vehicle for zero poverty and gender equality in Nigeria. The study employed a basic growth–poverty model and descriptive statistics using data from 1980 to 2020. Results show that microfinance is a veritable tool to achieving zero poverty in Nigeria. Results also suggest that gender equality would be significantly addressed with the judicious application of microfinance to women in Nigeria. The study concludes that microfinance services are a means of broadening economic participation to include marginal groups that have been left out previously, which makes microfinance institutions effective by its ability to enhance poverty eradication and gender equality. The study recommends that microfinance institutions should be adequately capitalized, appropriately regulated, and supervised to address the need of financing at the micro levels of the economy if our objective of sustainable zero poverty and gender equality are to be achieved now and in the future.

There is a general consensus by development finance experts and theorists that granting the poor and vulnerable persons in the society access to cheap funds will help them create wealth for themselves, achieve financial security as well as reduce poverty. The objective of this study is to examine the extent to which financial inclusion drives of government has helped in poverty reduction. The study used Granger Error Correction Method (ECM) to analyze the decomposed data obtained from the World Bank for 27 sub-Saharan African (SSA) countries for the period 2007 to 2017. The differenced General Methods of Moments (GMM) was used to resolve the endogeneity and persistency problems associated with panel data. The result shows an existence of a long-run correlation amid inclusive finance and poverty for the overall and small savings countries. However, the coefficient of the ECM showed evidence of a negative relationship which implies that an increase in per capital income or reduction in poverty rate will not engender financial inclusion of individuals in the selected countries. It therefore recommends that government of the affected countries should consider other factors like financial literacy, reduction in the cost of funds, deployment of digital financial technology, and increase in payment channels as strategies for driving an inclusive financial system.

Whereas the strategic management literature has widely established firms’ responsiveness to human-made and natural disruptions, there is very little empirical evidence in the literature about the adaptiveness of firms during periods of unexpected disruptions caused by health-related outbreaks. The study focused on investigating the adaptiveness of MSMEs during times of environmental disruptions. The study adopted a qualitative method to investigate strategies that are relevant to ensuring the adaptiveness of MSMEs during and after the COVID-19 pandemic. In particular, semi-structured interviewing was conducted to collect data from the respondents. The result from this study revealed that during environmental disruptions MSMEs in Nigeria are fast adopting digital methods and the possibilities of adjusting their firms’ operations and supply chain modalities to virtual possibilities, while yet sustaining the firm’s existence.

Scholars have increasingly lauded the importance of entrepreneurship activity to economic development. Unlike in the Western context where that critical importance has been vigorously documented, a survivalist natured entrepreneurship is reported to be a common trend in the SSA context where high unemployment and poverty levels remain major challenges. Reviewed literature also points to a high business discontinuation rate in SSA compared to other continents. Leveraging the fit viewpoint of leadership, this chapter forwards a dual leadership framework that combines entrepreneurs’ and government aspects to contribute not only to knowledge development in this area but also to pinpoint core leadership initiatives for refocusing entrepreneurship activity to impact economic development in the SSA setting. In line with these dual contribution targets, recommendations are offered as well as core directions for advancing research flagged.

This chapter draws our concluding thoughts on the book project titled “Innovation, Entrepreneurship and the Informal Economy in sub–Saharan Africa: A Sustainable Development Agenda”. Specifically, the chapter discussed the informal economy as a springboard for entrepreneurship development and innovation in sub-Saharan Africa (SSA). Informal economy SMEs in the SSA region represent a formidable force within the economic and social context of the region. However, these SMEs are constrained by the paucity of formal institutional responsiveness to implementing a practical entrepreneurship and innovation ecosystem. Therefore, we adopted the institutional logic theory and synthesized it into a self-reliance theorization as a workable option for the sustainability of the Informal economy SMEs’ entrepreneurship and innovation ecosystem in SSA. We drew the curtains by supporting the notion of ecosystem resilience as an adaptive pathway to self-reliance theorization and ensuring the success of both the entrepreneurship and innovation ecosystem and the firms operating in the informal economy of SSA.