CONCEPT OF ENTREPRENEURSHIP
CHAPTER I
CONCEPT OF ENTREPRENEURSHIP
Objectives
By the end of this chapter the student should be able to:
Analyze the history of entrepreneurship in Zimbabwe
Define entrepreneurship
Describe the characteristics of successful entrepreneurs
Discuss the roles of SMEs in the economy
History of entrepreneurship in Zimbabwe
Introduction
Zimbabwe has, for centuries, had strong entrepreneurial abilities. There has been evidence of
all industries stretching from primary, secondary and tertiary industry. Agriculture, mining,
trade, manufacturing industries were there before the 19th century. The only argument could
then be the scale and the technology level. In fact, the history of entrepreneurship in
Zimbabwe dates back to the civilization era. In the Mutapa and Rozvi States, there were
successful business initiators/ owners who became very wealthy.
By about 1200 to 1890 AD African Entrepreneurs on the plateau between Limpopo and
Zambezi Rivers became more advanced due to iron technology. The pre-colonial
entrepreneurs included the iron Smiths (boiler makers) or fitting and turning craftsmen
(mhizha), potters, farmers (hurudza), hunters (hombarume), among others.
As an evidence to disagree with the explanation of African history that the pre colonial
African societies were primitive and unchanging, and therefore any important changes were
brought by outsiders, archaeologists have found pottery and iron tools at Great Zimbabwe
and in other different parts of the plateau between Limpopo and Zambezi Rivers (Zimbabwe).
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Entrepreurship in the Primary industry
Farming
There were great farmers during the pre-colonial era. These were known, in shona, as
hurudza. These great entrepreneurs produced not only for their consumption, but for trade
and other fellow citizens. Crops like millet, rapoko, ground nuts, round nuts were grown.
That was crop farming. Animal farming was also popular. Great entrepreneurs could own as
many as 500 or more cattle. Goats and sheep were also kept. The cattle were a form of
wealth and could be traded or exchanged for jewellery and other commodities.
Mining
Zimbabweans have been great miners way before the arrival of the British in the 1880s.
Entrepreneur ENTREPRENEURSHIP SKI miners extracted iron ore from the ground .
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Mining rights were given by the King and his advisors. The minerals mined included gold,
copper, iron, for instance.
Entrepreneurship in the Manufacturing (secondary) Industry
There was a very successful value adding industry before colonization. The output from
agriculture and mining was processed. Great and useful items were made to serve the needs
of the people then.
Metallurgist and Iron smith (Mhizha)
Entrepreneur miners extracted ir metallurgists crushed iron ore and smelt it with very hot
fire. At Great Zimbabwe there is still evidence of clay furnace, forge and bellow. This
smelting separated the metal from the stone. As the pure iron cooled, it hardened again, and
the village smiths could hammer it into shape of hoes, axes and knifes. This was a
revolutionary development in the way of life of Africans.
These were the most skillful technicians, engineers, and business people who had the role of
processing, the iron, cooper, gold into useful products. The farmers needed hoes (mapadza),
axes (matemo ) etc. The hunters needed spears (mapfumo), bows and arrows etc. Jewellery
such as golden necklaces were also needed by the wealthy people and the royal family. These
products could be traded to other kingdom for other products. The ironsmith were usually
very wealth. These skilled artisans were entrepreneurs of the time in metallurgy.. The iron
smith entrepreneurs were weapon and tool makers. The weapons and tools included arrows,
axes, knives, and hoes, among others. At first, iron was used only to make light arrow heads
and jewellery. Bigger items such as hoes and axes took much more time and labour
Entrepreneur metallurgists crush village smiths often paid tributes to their Chief or King with
hoes, axe heads and other items from iron. Hoes were used for special payments such as
lobola.
The use of iron made it easier to hunt wild animals, till land and undertake domestic tasks.
People who lived near deposits became entrepreneurs in mining, smelting, and fabrication
(boiler making) and traded their products for other goods.
Entrepreneur-Potter
Some African Entrepreneurs were involved in pottery designing and making clay pots.
Brewing Industry
Millet, rapoko, and sorghum were processed and brewed into different beer flavours. As it is
today, after work villagers would gather and drink. This industry had strong competition and
successful entrepreneurs were known for exceptional brews and good customer care
Colonization and its effect on African entrepreneurship
Colonization negatively affected the Zimbabwean entrepreneurs and/or industrialists as well
as their governance.
Wars
When the British arrived, major wars were fought. These are the War of Dispossession or
Anglo-Ndebele War :1893-4;First Chimurenga:1896-7; and the 2nd Chimurenga:1966-79.
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These wars disturbed the smooth running of entrepreneurial activities by blacks in Zimbabwe
in so far as farming , mining, hunting ,among others, were concerned.
Farming
The land Issue
When the British arrived they introduced the reserve system and translocated the native
Zimbabweans to infertile dry inhospitable areas .
In 1894 the first reserves were set up in Shangani and Gwaai and this affected the
entrepreneurs in farming.
After the defeat of the Ndebele, the settlers seized their 6 000 acres displacing many natives
and those displaced became fulltime labourers or squatters.
The settlers started ill treating the Ndebele like they were doing the Shona.
To solve their labour problems, the company introduced forced labour. The chiefs were
instructed to recruit able bodied men and hand them over to the BSAC as labourers- village
smiths oftechibharo. The Shona and Ndebele so enslaved ran away into the hills to escape.
The presence of white settlements contrary to the agreements entered into.
Again this did not please the Ndebele who wanted to claim their ancestral land back as in the
reserves there was food shortage and starvation at times.
CATTLE
Livestock was seized to force men to go to work for the settler
Soon after the defeat of the Ndebele in the Anglo Ndebele war, the whites confiscated the
Ndebele cattle numbering about 250 000.
This drastically reduced the Ndebele herd and the Ndebele wanted their cattle back as it was a
sign of prestige.
TAXATION
For example the Hut Tax of 1903 was enacted to raise revenue for settlers and to force black
men to go and work for the white men leaving their entrepreneurial activities.This was also
imposed to indirectly force the blacks to work in order to pay tax and it was meant to increase
the company income.
The Native Reserve Order In Council: 1898.
The Act created reserves in dry inhospitable areas. This affected the entrepreneurial activities
of blacks in agriculture. The Act also effectively removed all native chiefs who were antisettlers and replaced them with puppet settler administrators.
Land Bank acts: 1912.
The land bank act provided new white settler farmers with free tillage for five years and the
same period as grace before commencing to repay loans from the state owned Land bank.
The Morris Carter Commission:1925.
Divided the whole country into agro-zones based on rainfall patterns from the highest rainfall
region 1 to the lowest rainfall region 5. Natives were trans- located to regions 4 and 5.
The Land Apportionment Act: 1930.In 1930 whites who numbered 50 000 were allocated 49
000 000 acres of prime land while blacks who numbered 1 000 000 were allocated 28 000
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`and was accompanied with untold violence and starvation and malnutrition became
endemic.. The Land Apportionment Act of 1930 confirmed and legalised the displacement
of Africans that had been ongoing earlier.
Up until 1906, ninety percent of Southern Rhodesia. The Shona and Ndes agricultural
produce came from black farmers and many whites did not like this state of affairs. As a
result, the Rhodesia Native Labour Bureau (RNLB) stopped blacks from competing with
whites and between 1908 and 1915, 1.5 million acres of the best land was taken from blacks
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and given to whites. New boundaries were created to exclude fertile high rainfall areas from
newly created reserves. The latter were located in semi arid areas. Blacks in regions 1, 2 and
3 were made to pay higher grazing fees and taxes. Since many could not pay they were
removed and settled in reserves which were situated far away from markets and rail and
tarred motor roads. By the 1920s, 65% of the black population had been forced into reserves.
This led to cycle of poverty among Africans which persists up to today -2004.
The Land Husbandry Act: 1951.
The Act barred any African family from owning more than five herd of cattle or eight acres
of land in the communal lands.
The Tribal Trust Land Act:1965.
The Act segregated the ownership of land between white areas and black areas. Natives
could only occupy land in communal lands without holding title to it. In Towns natives could
only lease property and no black man could own a house in town until after 1980.
The Land Tenure Act:1969.
The act divided the land on racial lines and designated the best 45 000 000 acres as European
land and shared among the 250 000 whites and the worst 45 000 000acres was designated as
native land to be shared by the 5 000 000 blacks. The act also barred the races from
encroaching in the other races agricultural produs land.
Mining
In mining , pieces of repressive legislation were put in place by the British upon their arrival.
For example Minerals and Mining Rights laws restricted the blacks from carrying on with
their entrepreneurial activities in mining. In fact , one had to secure a prospectus license for
mining of which it was difficult for the blacks.
Hunting
Laws were also put in place in hunting. Wildlife Parks and Game Parks were created. It
became illegal to hunt in the parks. One would be treated as a poacher if found in the parks.
Thus , the blackss land.
Mining
In m entrepreneurial activities were affected by such parks.
Post Colonial Era
During the colonial era black entrepreneurs were so limited. The reason being inability by
blacks to access means of production and suppressed talent. Technical Education was also
biased. From 1980 we saw the cropping of great entrepreneurs from the black populace.
There were business Start ups in the transport sector, retailing, manufacturing, farming, and
many industries.
The government supporting schemes has been the major driver facilitating entrepreneurial
activities. Sources of funds be obtained from AGRIBANK, SEDCO, etc
From 2010 the Indigenization and Empowerment Act created a further empowering tool
leading to the starting up of business in areas like mining.
Zimbabwe remains one of the African countries with potential for a vibrant entrepreneurial
activities.
Entrepreneurship and Patriotism
In Zimbabwe, as elsewhere in the world, patriotic entrepreneurs play a pivotal role in
stabilizing and resuscitating the economy. In other words, across the globe, nations largely
depend on the entrepreneurs in both the informal and formal sectors. Statistics, in Zimbabwe,
shows that 3 000 000 (three million) people are employed in the informal sector (which is
about 75% of the employed people in Zimbabwe). This means that the remaining 25% is
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shared between the state-owned enterprises and the private enterprises in the formal sector.
Apart from being the largest employer, the informal sector is the largest foreign currency
earner, among other crucial roles it plays to the economy.
What is an entrepreneur?
An entrepreneur is the originator (initiator) of an enterprise (economic/business undertaking)
in order to satisfy an identified need or want profitably. That is a person who organizes and
manages a commercial undertaking especially one involving calculated commercial risks. In
other words, an entrepreneur is someone who identifies opportunities in terms of needs and
wants of people and mobilizes resources such as land, capital and labor to develop profitmaking projects to meet the identified needs and wants.
Successful entrepreneurs are not gamblers but take calculated and moderate risks in business.
It should, however, be noted that entrepreneurs believe so strongly in their business ideas that
they are willing to take full responsibility for developing them and to assume most of the
risks should they fail.
What is entrepreneurship?
Various authors define entrepreneurship differently, but their definitions somewhat amount to
the same meaning.
The following are some of the definitions of entrepreneurship:
Appleby (1989) defines entrepreneurship as the process of bringing together creative and
innovative ideas and coupling these with management and organizational skills in order to
combine people, money and other resources to meet an identified need and thereby create
wealth.
Whereas Appleby defines entrepreneurship as such, Stoner & Freeman (1992) view
entrepreneurship as seemingly a discontinuous process of combining resources to produce
new goods and services.
Analysis of definitions
Both definitions do not fall short of the fact that entrepreneurship is a systematic and logical
event as shown by the term entrepreneurial actProcess. That is entrepreneurship is not a
haphazard activity. However, Stoner & Freeman have moved a step further in an attempt to
distinguish entrepreneurship from management as they look at entrepreneurship as a
discontinuous process. That is, it is a discontinuous phenomenon appearing then
disappearing until it reappears to initiate another change, unlike management which is a
continuous event.
The idea of . That is entreprencreative and innovative ideas,creative and innovat shows that
the two definitions are complete. In business, entrepreneurs should be able to come up with
changes or new approaches, means, processes, machinery, tools or techniques and new
products in order to meet the needs of turbulent and dynamic market environments. When a
new venture is being contemplated on, risks arise involving uncertainties which require
initiativeness and process innovation.
Whereas Appleby clearly states, the idea of shows that the two management and
organizational skillsmanagement and organ in his definition, Stoner & Freeman have
remained silent about it. Organizational skills and management are crucial for successful
entrepreneurs. These relate to the ability of the entrepreneur to plan, organize, lead and
control the organizational members in his definition, activities and resources in order to
achieve the stated goals of the enterprise. In other words, the emphasis here is the ability to
organize the other factors of production or resources into creative combination for the
purpose of producing goods and services in order to satisfy human needs and wants
profitably. The combination of resources is as follows:
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For the business to be successful the activities and resoneeds and wants should be identified
first through a feasibility study. Identification of needs and wants will indicate whether there
is a potential market or not. Thus, the viability of a business largely depends on an effective
feasibility study to determine the potentiality of the market. In this case, Appleby should be
identifies definition of entrepreneurship is clear about identifying first the needs of
customers, unlike Stoner & Freemans definition of entrs. Thus, for Appleby, new goods and
services should not just be produced for unknown customers as this is tantamount to wastage
of resources.
Moreover, Applebys. Thus, for Applebs definition appears to be more comprehensive than
that of Stoner & Freeman as he mentions the idea of s definition appearswealth creation. The
major aim of any business entity is to create wealth or increase the owner. The major aim of
s equity by maximizing profit. Without profit maximization or creation of wealth, the
business will not survive.
Entrepreneurship distinguished from Intrapreneurship
Investor's or entrepreneurs are innovative and creative but not all of them are able to come up
with innovations, and as such they leave innovations to innovative managers or employees.
An employee or manager who is innovative and creative in an existing organization is known
as an entrepreneur. Managers or employees who carry out entrepreneurial roles are aware of
opportunities and they initiate changes to take full advantage of them.
The fundamental issue about the entrepreneur is that he/she has to have innovative ideas and
transforms them to profitable activities within an existing organization. In other words,
he/she is an initiator or originator of the commercial undertaking.
The word intrapreneurship is attributed to Gordon Pinchott an American who founded a
school for entrepreneurs to help managers from large corporations to take responsibility for
creating innovations and turning ideas into profitable reality.
Relationship between entrepreneurship and Patriotism
Patriotism is the spirit of loyally supporting ones equity by maximizis nation. The major
thrust of patriotism in the context of entrepreneurship in an economy is to refrain from
corruption and sabotage or subversion. Thus, the relationship between entrepreneurship and
patriotism is reflected in the following roles that a patriotic entrepreneur plays to the nation
that is the entrepreneur should have the spirit of:
Creating jobs without oppressing fellow citizen workers i.e. the entrepreneur will be expected
to provide good working conditions and be worker s nation. The major centered.
Charging fair and affordable prices
Producing quality products which compare with international standards
Conserving natural resources
Practicing good ethics and social responsibility in business and the community
Generating foreign currency without externalizing it or taking it to the black or parallel
market for exchange, but to the registered banks for official exchange
Generating government revenue through paying corporate tax.
Playing supportive role to the giant firms by being subcontracted in construction,
manufacturing and distribution
Reducing anti-social activities such as theft, robbery, murder, promiscuity by creating
employment for self and other citizens
Reducing rural to urban migration by creating employment opportunities in rural areas
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Entrepreneurial characteristics
In a new business, the entrepreneur is the most important person. The entrepreneur has the
responsibility to initiate, manage and see the success of the business. The success of a
business largely depends on the entrepreneurial or personal characteristics. The following are
some of the characteristics of successful entrepreneurs.
Action oriented
Successful entrepreneurs are action oriented, that is, they want to start producing results
immediately. The critical ingredient is getting off business and doing something. A lot of
people have ideas but they are a few who decide to do something about them now and not
tomorrow.
Success oriented/optimism
Successful entrepreneurs are optimistic, that is successful entrepreneurs do not have
centered.
Charging buts about succeeding. All they think about is how they are going to succeed and
not and not what they are going to do if they fail.
Perception of opportunity or opportunity seeking
Entrepreneurs should be able to see the unfilled areas or gaps in products, process and
application of services. That is successful entrepreneurs are able to see and act on new
business opportunities.
Moderate risk taking
Entrepreneurs are expected to be able to take moderate and calculated risks. This is contrary
to the stereotype that entrepreneurs are gamblers or high-risk takers.
Goal setting
In setting a new business, entrepreneurs are expected to have the ability to set goals which are
specific, measurable, achievable, realistic and time bound (SMART) basing on
their(ENTREPRENEURS) strengths, weaknesses, opportunities and threats (SWOT).
Moreover, their goals must be consistent with their interests, values and talents in order to
achieve the. Their belief in the reality of their goals is the primary factor in the fulfillment of
those goals. Their plans may seem illogical to others but they are perfectly logical in the
context of their own personal values and desires.
Long-term perspective
Successful entrepreneurs can tolerate considerable amount of frustration and delay in need
gratification and they devote a lot of time and effort in goals that often yield profits at a
distant point in the future. Entrepreneurs should be able to accommodate hurdles, difficulties
and temporary failures in business.
Self-motivation/self esteem/self faith/self confidence
Effective entrepreneurs have solid and stable self-esteem and self-motivation which stem
from healthy feeling of self worth and self-acceptance. Entrepreneurs with a positive selfimage are basically satisfied to be the type of people they are. This self-faith is even
important than self-confidence especially when serious setbacks and failure occur.
Innovativeness/initiative ness/creativeness
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Effective entrepreneurs have the ability to come up with new products, methods or techniques
of production and the accompanying machinery and tools.
Adventuresome ness
Successful entrepreneurs are adventuresome i.e. they are interested in testing out and
experimenting phenomena in an endeavor to come up with solutions to the needs and wants
of people.
Commitment
To succeed in business, you must be committed. Commitment means that you are willing to
put your business before almost everything else.
Some of the characteristics of an entrepreneur include; patience, friendliness, hardworking,
reliability, dedicated ness, responsibility, objectivity, rationality, honesty, determination,
courage, flexibility, imaginativeness and knowledge.
In a word, successful entrepreneurs must have appropriate personal characteristics, business
skills where necessary.
Roles of Small and Medium Enterprises
What is a small business?
A small business is generally a business that has low annual sales, few assets such as
buildings, equipment, vehicles, serves local markets rather than national and international
markets, has small number of employees and usually the owner is solely responsible for the
success or failure of the venture.
There are two kinds of small businesses that is survival and growth businesses
Survival businesses are small businesses which allow owners to make a living but the focus is
on keeping the business alive e.g. backyard businesses/home based businesses.
Growth businesses are larger and allow owners to make more money e.g. manufacturing
operations in the industry.
Reasons for continued survival of small firms
Small businesses are able to be more flexible, innovative and can react changes much quicker
Small businesses play a supportive role to the giant firms by being subcontracted in
construction, distribution, service and manufacturing sectors
Small businesses serve small markets (market riches) where large firms do not have interest
Small firms receive government support through the Ministry of Small to Medium
Enterprises, ministry of Youth Development Gender and Employment Creation and Ministry
of Higher and Tertiary Education that is they receive support in form of training and funds.
Small firms also pay lower taxes.
Small firms supply their goods and services in smallest lots than giant firms which usually
supply in bulk
Small firms offer specialized and personalized services to customers e.g. electrical
businesses.
Small firms remain small usually during the initial phases of new technology or innovation or
product introduction as the firms will be studying market reactions and modifying the
products.
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Roles played by small firms to the economy
Small businesses create employment for the business owner as well as the other fellow
citizens (employment creation)
Small businesses increase the range of goods and services available to the local community
(provision of goods and services) especially in rural areas where goods and services were
previously unavailable.
Small businesses reduce anti-social activities such as theft, robbery, promiscuity and burglary
Small businesses reduce rural-urban migration as more goods and services and employment
opportunities become available in rural areas. This will help to decrease the pressures on
urban in terms of sanitary problems, theft, robbery and promiscuity.
Small firms contribute in the improvement of the standard of living of the community
Small firms contribute in stabilizing the economy through increased employment, reduced
prices and improved standard of living
Small businesses help in indigenising the economy. If the economy is in the hand so
indigenous people, resources are not expatriated.
Small firms help in the generation of foreign currency
Small firms contribute in the production of quality and affordable products by being in
competition with giant businesses
Small firms contribute to government revenue through payment of business and employment
taxes
Small businesses contribute to the national income of the country (GDP about succeeding.
Gross Domestic Products) and to the improvement of the balance of payment
Government Entrepreneurship initiatives
Government entrepreneurship initiatives are efforts by the government to promote selfsustenance, entrepreneurship and indeginisation in order to stabilize the economy. In an
effort to promote entrepreneurship and self-sustenance, the government established the
Ministry responsible for employment creation since 1980 i.e. Ministry of National Affairs
and Employment creation now Ministry of Youth Development, Gender and Employment
Creation. Moreover, the following institutions were introduced by the government to enable
potential entrepreneurs to establish themselves:
Small enterprise development corporation (SDECO)
Infrastructural Development Bank of Zimbabwe
Agribank
Affirmative Action Group (AAG)
Zimbabwe Cross Boarders Association
Zimbabwe Tuck shop Association
The government has also introduced the Ministry of Small and Medium Enterprises to ensure
that small businesses succeed. Black empowerment and indigenisation policy was also put
in place to promote entrepreneurship. Land redistribution exercise is a good example to
government entrepreneurship initiatives to promote self-sustenance and the development of
the country.
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Activity
Analyse the history of entrepreneurship in Zimbabwe
Examine the effects of colonization on entrepreneurship in Zimbabwe
iii)
Analyze the government initiatives to promote entrepreneurship in Zimbabwe since
1980.
iv)
Discuss the roles of the following in promoting entrepreneurship in Zimbabwe
AAG
Ministry of Small and Medium Enterprises
Zimbabwe Cross Boarders Association
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