Absorptive capacity of human capital and international R&D spillover on labour productivity in Egypt

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MANAGING KNOWLEDGE
AND INNOVATION FOR
BUSINESS SUSTAINABILITY
IN AFRICA
PALGRAVE STUDIES OF
SUSTAINABLE BUSINESS IN AFRICA
EDITED BY ALLAM AHMED

Palgrave Studies of Sustainable Business
in Africa
Series Editor
AllamAhmed
University of Sussex
Brighton,United Kingdom

In partnership with the World Association for Sustainable Developmnet
(WASD), e Palgrave Studies of Sustainable Business in Africa series
aims to provide a global perspective and understanding of international
business as a context for sustainable business practices in Africa. Providing
new methodologies through which goods and services are produced and
managed using sustainable business practices in Africa, books in this
series offer a sound grounding in the terminology of sustainable business.
In doing so, the series develops a number of tools of analysis in order to
conceptualize various business and management theories that can be used
to address the challenges posed to the development of African businesses.
Adopting and adapting western business and management theories, it
will provide a practical application of various theoretical and practical
frameworks in order to develop new ways of doing business in Africa.
Including case studies, ground-breaking research and new conceptual
approaches, the Palgrave Studies of Sustainable Business in Africa series
includes contributions from a range of African scholars and leaders of
major African academic and research institutions, as well as scholars from
around the world. e merging of these perspectives examines how the
future of African business and management should be shaped in order to
better address the needs of African business development both now, and
for future generations.
More information about this series at
http://www.springer.com/series/15060

Allam Ahmed
Editor
Managing
Knowledge and
Innovation for
Business
Sustainability in
Africa

Palgrave Studies of Sustainable Business in Africa
ISBN 978-3-319-41089-0 ISBN 978-3-319-41090-6 (eBook)
DOI 10.1007/978-3-319-41090-6
Library of Congress Control Number: 2016957375
© e Editor(s) (if applicable) and e Author(s) 2017
is work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and trans-
mission or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilar methodology now known or hereafter developed.
e use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
e publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made.
Cover illustration: © Sergio Azenha / Alamy Stock Photo
Cover design by Paileen Currie
Printed on acid-free paper
is Palgrave Macmillan imprint is published by Springer Nature
e registered company is Springer International Publishing AG
e registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Editor
Allam Ahmed
University of Sussex
Brighton, United Kingdom

v
We are pleased to present the first volume of a series of books devoted
to Sustainable Business in Africa. e Palgrave Studies of Sustainable
Business in Africa series is published in partnership with the World
Association for Sustainable Development (WASD). e series aims to
highlight the difficulty in attaining successful business management in
Africa, a continent with a weak technological and knowledge base.1 e
most profound and encouraging change in African economies over the
past decade has been the rapid advancement towards integration into
the global economy.
Since the Rio summit in 1992 sustainable development (SD) is
increasingly becoming a major concern for both developed and devel-
oping countries (DCs). Yet translating SD principles into effective eco-
nomic and environmental policies seems to be a major challenge for all
countries.
Many of the countries in Africa have undertaken significant economic
reforms: improving macroeconomic management, encouraging a con-
ducive private investment climate, liberalising markets and widening the
1 WASD is a unique global forum that brings together people from across the world to promote the
exchange of knowledge, experience, information and ideas among academicians, scholars, profes-
sionals, policy- and decision-makers, industry, executives and students. to improve the mutual
understanding of the roles of science, technology, business and management in achieving sustain-
able development across the world. See more at: www.wasd.org.uk.
Series Preface

vi Series Preface
space for business and entrepreneurship to drive strong and inclusive
growth. However, understanding the nature of problems, challenges and
opportunities in Africa is a very difficult task for many people outside
its territories.
e book series therefore calls for the development of new methods
and approaches to suit the challenges and opportunities of globalisation.
Africa represents one of the world’s most intractable development chal-
lenges, with its peculiar and seemingly insurmountable environmental
inhibitors, including very high transportation costs, small markets, low
agricultural productivity, very high disease incidences, environmental
despoliation, adverse geopolitics and very slow diffusion of strategic tech-
nology from abroad.
A sustainable management approach is seen by many scholars and
policymakers as a way to enhance organisational performance in the cur-
rent era. e book series argues that it is essential that research and policy
development fully takes account of the differing perspectives of sustain-
ability and makes explicit their particular perspective(s).
e book series aims to outline the methodologies by which goods and
services are produced and managed using sustainable business practices.
It is also important to note that all significant sustainability initiatives are
necessarily dependent on the engagement of the people working in the
organisation. Without engagement, change will falter and ultimately fail.
is book series goes behind the scenes of business management to help
managers, consultants and practitioners implement sustainable business
development approaches for their organisations.
Underpinned by academic models and theories of sustainability, the
series explores the ideas behind the tools to provide the reader with the
link between theory and practice. It gives educators and business man-
agers the confidence and knowledge to assess the factors affecting an
organisation’s ‘readiness’ and to effectively manage these throughout the
sustainability life cycle. It addresses current challenges, such as how to
understand the environmental context driving the need for sustainable
business practices; how to initiate and sustain momentum throughout
the sustainability programme; how to institutionalise structural and
behavioural change; and how to create a compelling vision. With case
studies from various academic and business sources, the book series

Series Preface vii
provides practice-based insights into the realities of leading sustainable
change in business practices.
e series presents many African academic and practical business case
studies. In practical terms, this series will demonstrate that SD is a mul-
tidisciplinary process that involves many areas including science, inno-
vation, technology, research and development, information technology,
human capital development, business and management, trade and so on
for knowledge-based economies and sustainable inclusive growth. Ideas
and techniques explored in the book series are therefore illustrated and
supported throughout with various case studies contributed by senior
academics, scholars and business managers from a wide range of private-
and public-sector organisations, for example universities, education,
industry, central government, engineering, banking and so on.
All books in the series are of a consistent academic quality. All chapters
are structured logically around a coherent central theme, and there is also
a balance between theoretical/methodological and empirical chapters in
the books.
e series publishes original manuscripts, conceptual studies (propos-
ing approaches and solutions), literature reviews, reviews (sectors, indus-
tries, systems, methodologies, etc.), case studies (empirical work, industry
cases, country-specific studies, etc.), research (original data), viewpoints
and opinions, technical works (technical systems, processes, etc.), confer-
ence reports, management reports, book reviews, notes, commentaries
and news. It expects to publish three to four books annually.
e series will present many illustrative African examples, rather than
exhaustive research-oriented case material.
Finally, we would like to congratulate the authors for their valuable
contributions, and we hope that the ensemble of chapters presented in
this series will help to stimulate debate amongst scholars, researchers and
policymakers within and outside Africa with a view to defining common,
effective responses to tomorrow’s challenges that will ultimately lead to a
more integrated and multidisciplinary approach to policy design.
We are also grateful to all reviewers for graciously offering their invalu-
able comments, which have enriched the quality of the volumes in
this series, and also for making available to us their valuable time and
efforts. e suggestions and criticisms of these leading world experts

viii Series Preface
greatly enhanced the quality of the book series, and much credit goes to
them for the quality of this series. We also would like to thank Palgrave
Macmillan and most sincerely Liz Barlow (Senior Commissioning Editor,
Scholarly Business) and Maddie Holder (Assistant Editor, Business and
Management) for giving us the opportunity to publish this book series.
London June 2016 Allam Ahmed

ix
It has taken me a long time to complete this book. A series of this nature
and scope can only be completed through the hard work and dedication
of many people. It is difficult to mention all of them but we would like to
congratulate the authors for their valuable contributions and we are grate-
ful to all the reviewers for graciously making available to us their valuable
time and efforts. eir suggestions and criticisms have greatly enhanced
the quality of this volume. Finally, I would like to thank my wife, Samar,
and daughters, Waad, Shahd, Lena and Salwa, for their patience and all
the happiness they have brought to my life while editing this book.
London June 2016 Allam Ahmed
Acknowledgements

xi
Part I Introduction 1
1 Managing Knowledge and Innovation for Business
Sustainability in Africa 3
Allam Ahmed
2 From Innovation to Sustainability: Life- Cycle Polylemmas
and Strategic Initiatives for Entrepreneurship in Africa 13
Jerry Kolo
Part II Innovation and Entrepreneurship 29
3 e Role of an Innovative ICT-Based
Entrepreneurial Evolution on Africa’s Development:
e Case of University- Based Incubators 31
Sherif H. Kamel
Contents

xii Contents
4 Prospects and Challenges of Managing Clusters
as Entrepreneurship Development Interventions
for Sustainable Development in Nigeria:
A Discourse Analysis 69
Lukman Raimi, Morufu Oladimeji Shokunbi,
and Stephen Bolaji Peluola
5 Understanding How Failing a Job Interview
May Be a Source of Innovation:
e Case of WhatsApp Founders 83
Alain Ndedi and Kelly Mua Kingsley
Part III Education 93
6 Impact of Education Quality on Sustainable
Development in Africa 95
Adil A. Dafa’Alla, Elmouiz S. Hussein,
and Marwan A. A. Adam
7 Use of Mind Mapping (MM) as an Unconventional
Powerful Study Technique in Medical Education 119
Nahlaa A. Khalifa
Part IV Capacity Building and Human Capital 135
8 Design and Engineering Capacity Building
for a Sustainable Development of African Economies:
e Case of Algeria 137
Abdelkader Djeflat

Contents xiii
9 Absorptive Capacity of Human Capital and International
R&D Spillover on Labour Productivity in Egypt 153
Eman Elish and Hany Elshamy
Part V Investment 165
10 Foreign Direct Investment in Zimbabwe and Botswana:
e Elephant in the Room 167
Mavis Gutu, Constantia Anastasiadou, Maktoba Omar,
and Collins Osei
Part VI Banking and Finance 195
11 e Kenyan Banking Industry: Challenges
and Sustainability 197
Samuel Muiruri Muriithi and Lynette Louw
12 Assessment and Way Forward of the Douala Stock
Exchange in Cameroon 223
Alain Ndedi
Index 237

xv
Marwan A.A. Adam Sudanese Knowledge Society, Sudan
Marwan A. A. Adam received his BSc in Electrical Engineering, University
of Khartoum in 2002. In 2004 he joined Mobitel (now ZAIN-SD) as a
Maintenance Engineer. He was part of the BSS Technical Support team from
2008–2012, participating in an innovative team that examined the moderni-
sation of Network Energy and developing a strategy to introduce alternative
energy and other solutions after the success broad-spectrum trials. He then took
the position of Power Manager, where he guided the network towards efficiency
and optimisation in operational, environmental and quality dimensions by
putting green solutions to work with optimum economic structure and lower
CO2 emissions. He guided the work by blending TQM, System Modelling and
research approaches. In 2015, he moved from ZAIN-SD to become a freelance
engineer and an active member of the Sudanese Knowledge Society (SKS),
which he currently chairs.
Allam Ahmed President World Association for Sustainable Development
Allam Ahmed is a senior lecturer at the University of Sussex, UK, Founding
President of the World Association for Sustainable Development, and Founding
Director of the Middle Eastern Knowledge Economy Institute. He is also a
Fellow and Chartered Marketer of the Chartered Institute of Marketing, UK,
has advised the African Capacity Building Foundation and the EC, and held
the position of International Coordinator for UNESCO Chair on Transfer of
Technology.
Notes on Contributors

xvi Notes on Contributors
Constantia Anastasiadou Edinburgh Napier University, UK
Constantia Anastasiadou is Reader in Tourism at Edinburgh Napier University
Business School, Edinburgh, UK. She has a PhD and MSc in Tourism from
Strathclyde University, UK and a BA (Hons) in Economics from the University
of Macedonia in Greece. She has published extensively on the impact of regional
trading organisations on international tourism in Europe and beyond, and her
research interests focus in particular on policy and planning and inter-organ-
isational dynamics in tourist destinations. She has undertaken research projects
on cross-border collaboration in tourism in Southern Africa, tourism marketing
technologies and community engagement in events. Previously she worked as a
qualitative social researcher on tourism-related and employability projects and
was involved in knowledge transfer activities on an EU Tempus project involv-
ing four Russian regions.
Adil A. Dafa’Alla Airbus UK, UK
Adil A. Dafa’Alla graduated in Mechanical Engineering from the University
of Khartoum, Sudan in 1981 and received his PhD from the University of
Manchester Institute of Science and Technology (UMIST), UK, in 1988.
He is currently a Specialist Member of the Aero Data for Loads Group
at Airbus UK Ltd. As part of his quest for continuous development, he
became a Chartered Engineer (C.Eng.), a designation granted by the British
Engineering Council and recognised worldwide as proof of a high standard of
professional experience and conduct. He followed that up to become EurIng,
the European sister of the C.Eng., granted by the European Federation of the
National Engineering Associations (FEANI). His current research interests
include aircraft safety and airport capacity planning. He has published his
research in a number of journals and conference papers in addition to many
technical reports. Coming from a Sudanese background, he also has a special
interest in topics related to industry, education and sustainable development
in Africa. He is an active member of the World Association for Sustainable
Development (WASD) and has been Associate Editor of the Journal of World
Review of Science, Technology and Sustainable Development (WRSTSD) since
its inception in 2003.
Abdelkader Djeflat University of Lille, France and Oran University, Algeria
Abdelkader Djeflat currently teaches industrial economics and the economics
of technical change and innovation at the University of Lille, France. He was
previously Full Professor of Economics at the University of Oran in Algeria,
where he held the position of Dean of the Faculty of Economics. He is the

Notes on Contributors xvii
founder and current Chairman of the MAGHTECH (Maghreb Technology)
Network (http://www.Maghtech.org/) and Senior Researcher at the CLERSE
(CNRS). He is also Vice President of the Scientific Committee of the Globelics
Network (http://www.Globelics.org). He has published several articles in inter-
national journals on the issues of technology transfer, innovation and the knowl-
edge economy. He has also written and edited several books and done extensive
consulting for several international organisations.
Hany El Shamy Tanta University and British University in Egypt, Egypt
Hany El Shamy is Associate Professor of Economics at Tanta University, Egypt.
He received his PhD in Economics from the University of Surrey, UK, and his
MPhil in Economics, MSc in Economics (First class) and BSc in Commerce (First
class) from the University of Tanta, Egypt. His principal research interests are in
productivity. In particular, his PhD investigated the impact of technological change
on UK manufacturing. is included producing econometric results to show the
importance of research and development (R&D) expenditure as a technological
indicator. His future research plans are to build on the foundations of his PhD to
further develop models to study the impact of technological change, as measured
by such things as technical standards, on productivity in UK manufacturing.
Eman Elish British University in Egypt
Eman Elish is a lecturer in the Economics Department, Faculty of Business
Administration, Economics and Political Science at the British University in
Egypt. Prior to joining the university she was a lecturer at the University of
Modern Sciences and Arts from 2004–2007. She was also employed as an assis-
tant research expert at the Institute of National Planning (INP) in Egypt from
1998, assigned to write and publish economic research focusing on the Egyptian
economy and other developing economies, as well as contributing to the prepa-
ration of the ‘Human Development Report’ and the ‘Annual Economic Report’
published by the institute. At the INP she taught post-graduate students in
the Economic Planning master’s degree programme. She has published research
papers in international and regional conferences and in well-established aca-
demic journals. Her research interests are in economic development, foreign
direct investment and public debt.
Mavis Gutu Edinburgh Napier University, UK
Mavis Gutu, is a 2nd year PhD candidate at Edinburgh Napier University,
UK. Her PhD research area is in Foreign Direct Investment and Determinants,
with a focus on Zimbabwe. She holds a Masters’ Degree in International

xviii Notes on Contributors
Business Management and a BA (Hons) Degree in Business Studies, both from
Edinburgh Napier University, UK. She is an Associate Member of the Institute
of Chartered Secretaries and Administrators. Mavis has attended and presented
papers at International Conferences in Foreign Direct Investment. Her research
interests are in international business, global marketing, emerging markets, and
branding. Prior to commencing her studies at Edinburgh Napier University,
she held senior finance and research positions with the University of Exeter in
England, and has worked in senior finance and management roles in the private
sector in Zimbabwe
Elmouiz S. Hussein Airbus UK, UK
Elmouiz Siddeg Hussein is a Mechanical Engineering graduate of the
University of Khartoum, Sudan (1999). After graduating he gained work expe-
rience as a mechanical engineer at a private workshop in North Khartoum,
Sudan. During this period, he also worked part time as a teaching assistant at
the Faculty of Engineering, University of Khartoum. He subsequently moved to
the University of Portsmouth, UK, to do his MSc in Advanced Manufacturing
Technology (2003–2004). In 2006, he joined Airbus UK as a Manufacturing
Engineer. Currently he develops and integrates the industrial system for the
A350XWB Wing, develops and optimises business processes and manages
industrial risk.
Sherif Kamel American University in Cairo, Egypt
Sherif Kamel is Vice President for Information Management and Professor of
Management at the American University in Cairo. He was Founding Dean of
the School of Business (2009–2014). He led a major repositioning of the School
by focusing on entrepreneurship, innovation, leadership and responsible busi-
ness. During his tenure as Dean, he initiated and achieved the EQUIS, AMBA
and ACCET accreditations and got the school reaccredited by AACSB, joining
70 business schools worldwide that are known as triple-crown accredited. He
established the Center for Entrepreneurship and Innovation and the university’s
Venture Lab, which has become Egypt’s primary university-based incubator. He
has served as Associate Dean for Executive Education (2008–2009), Director
of the Management Center (2002–2008) and Director of the Institute of
Management Development (2002–2006). Before joining the university, he
was Director of the Regional IT Institute (1992–2001), and helped establish
and manage the training department of the Cabinet of Egypt Information and
Decision Support Center (1989–1992). He is an Eisenhower Fellow (2005), a
board member of the Egyptian American Enterprise Fund (2012–present), a

Notes on Contributors xix
member of the Egypt–US Business Council (2013–present) and a member of
the AACSB International Middle East Advisory Council (2015–present). He
was previously a member of the World Bank Knowledge Advisory Commission
(2012–2014). He is a founding member of the Internet Society of Egypt and
chairs the Education Committee at AmCham Egypt.
Nahlaa A. Khalifa King Abdulaziz University, Saudi Arabia
Nahlaa A. Khalifa is an assistant professor at the Clinical Nutrition
Department, Faculty of Applied Medical Sciences, King Abdulaziz University
in Jeddah, Saudi Arabia. She holds a PhD in Food Science and Nutrition from
Khartoum University in cooperation with Hanover University in Germany.
She is Coordinator of the evaluation and quality assurance programme,
Chairperson of the academic advising committee, Member of the strategic
planning committee, Coordinator of the undergraduate curriculum develop-
ment, revision and accreditation programme, inkbuzan Licensed Instructor
(TLI) and Train of Trainer (TOT). She has been awarded certificates for her
contributions to health, community and educational missions. Having pub-
lished articles on food science and nutrition, her main interests are in alternative
medicine, nutigenomics and medical nutrition therapy. She is also interested
in the application of modern information technology in educational systems
and accreditation.
Jerry Kolo American University of Sharjah, UAE
Jerry Kolo is a professor in the Master of Urban Planning Program at the
American University of Sharjah (AUS) in the United Arab Emirates. Prior to
joining AUS in 2006 he was a professor of Urban Planning at Florida Atlantic
University in Fort Lauderdale, Florida, USA, and the founder and director of
the Center for Urban Redevelopment and Empowerment (CURE), an applied
research and community outreach programme. His teaching and research areas
are sustainable community planning processes, land use planning and tourism
development. He also has extensive consultancy experience in public-sector
planning and community capacity building.
Lynette Louw Rhodes University, South Africa
Lynette Louw is Raymond Ackerman Chair of Management, Department of
Management and Deputy Dean, Faculty of Commerce at Rhodes University in
Grahamstown, South Africa. She obtained her Doctor Commercii in Business
Management at the University of Port Elizabeth in South Africa. She is the recip-
ient of research awards, serves on journal editorial boards, and has co- authored

xx Notes on Contributors
and edited textbooks on management and strategic management. She is the
leader of an international project in Africa, ‘Chinese Organisations in Sub-
Saharan Africa: New Dynamics, New Synergies’. Her areas of speciality include
strategic management, international organisational behaviour, and intercultural
and cross-cultural management. She has international teaching experience in
Germany, the Netherlands and China.
Kelly Mua Kingsly Harvard University, USA
Dr Kelly Mua Kingsly holds a Ph.D. in Public Finance from Charisma
University, and several Masters Degrees, including a Master in Public
Administration and Management from Harvard University at the John F.
Kennedy School of Government.
Dr Mua is currently the deputy director for Finance Operations at the
Cameroonian Ministry of Finance. Before this recent appointment, Dr Mua
has more than 10 years experience within the Cameroonian ministry of
finance. He has occupied among others, the position of technical Adviser in
the Cameroonian Ministry of Finance, programme portfolio manager at the
African Development Bank (AfDB), and assistant resident representative-oper-
ations within the United Nations Development Programme. He is alternatively
adjunct lecturer at the AGENLA Academy on Forensic Accounting and proj-
ect Management. Author of four books, Dr Mua areas of specialisation are
operations Management, supply chain management, forensic Accounting and
forensic investigation.
Samuel Muiruri Muriithi Daystar University, Kenya
Samuel Muiruri Muriithi is a senior lecturer in the School of Business and
Economics at Daystar University, Kenya where he teaches graduate courses in
management, strategic management and cross-cultural management. He also
coordinates the MBA research and thesis programme at the school. He holds
a PhD in Management from Rhodes University (South Africa), an MA in
Communications from Wheaton Graduate School (USA) and an MBA from
Seattle Pacific University (USA). He has extensive experience as a consultant in
strategic management and cross-cultural management, besides having a keen
interest in the banking industry in Africa. He is a member of several committees
involved in research, examination and curriculum development besides lectur-
ing in different universities. He has authored articles on leadership and manage-
ment and several books, including African Crisis: Is ere Hope? and African
Development Dilemma: e Big Debate.

Notes on Contributors xxi
Alain Ndedi Saint Monica University, Cameroon
Dr Alain A. Ndedi is a Professor of Entrepreneurship, Organisation, and strat-
egy. Advisory board member of the Bioinfo Publications, the Journal of Business
and Management Economics, the Journal of Business and Management of the
Centre of Excellence for Scientific and Research Journalism, the African Journal
of Business Management, Dr Ndedi is Director of the ink Tank Comerci,
and Past President of Young Entrepreneurs for the New Partnership for Africa’s
Development (YENEPAD). He has consulted for the UNDP, the World Bank,
and the United Nations. He has been involved on monitoring and evaluation
research and training since 2002. He is member of many networks including,
AfrEA, SAMEA, 3ie and NONIE.
Professor Ndedi holds a doctorate in Business Management with the focus
on corporate entrepreneurship. Author of more than 20 books, Dr Ndedi has
lectured entrepreneurship in many tertiary institutions for the past 15 years.
His areas of expertise are entrepreneurship, corporate innovation and creativity,
monitoring and evaluation.
Maktoba Omar Coventry University, UK
Maktoba Omar (Reader in Marketing Strategy) completed her PhD at the
University of Leeds entitled “Contextual Determinants of Standardisation and
Entry Strategies in Internationalisation”. Since then she has published and acted
as editor and referee for a number of academic journals and performed as track
chair, presenter and member of the Vetting Panel for a number of national and
international conferences. She has won the Emerald LiteratiNetwork outstand-
ing paper Award 2008. She also acted as consultant and leading academic in a
number of projects and Knowledge Transfer Partnership (KTP) and has gener-
ated a substantial amount of funds in the UK and overseas. Currently her main
research focus is a study of the impact of branding, emerging markets and for-
eign direct investment in relation to UK companies.
Collins Osei Edinburgh Napier University, UK
Collins Osei is Marketing Lecturer at Edinburgh Napier University. He
has been involved in delivering a number of undergraduate and postgradu-
ate modules. He also supervises doctoral students. He completed his PhD at
Edinburgh Napier University in August 2014. His thesis, entitled ‘UK Foreign
Direct Investment in Ghana: Determinants and Implications’, empirically
investigated the relative significance of the determinants of UK foreign direct
investment in Ghana. He also holds an MBA in Marketing from the University

xxii Notes on Contributors
of Leicester and a BA (Hons) from the University of Cape Coast in Ghana.
His key research interests are emerging markets, global marketing, branding,
international marketing, international business and research methods. He has
presented papers at conferences and seminars and published in refereed journals
and books.
Stephen Bolaji Peluola Yaba College of Technology, Nigeria
Stephen Bolaji Peluola is a senior lecturer at the Centre for Entrepreneurship
Development, Yaba College of Technology, Lagos, Nigeria. He is a member of
the Institute of Management Consultants of Nigeria and the African Association
of Entrepreneurs Nigeria. He is a member of the Examination Committee
at the Centre for Entrepreneurship Development. He is a patron of a num-
ber of students’ associations at the Yaba College of Technology. He has led a
team of staff and students to award-winning national entrepreneurship exhibi-
tions and inventions. His research interests focus on developmental issues and
entrepreneurship.
Luqman Raimi Yaba College of Technology, Nigeria
Lukman Raimi is Senior Lecturer and Coordinator of Training and Part-Time
Programme at the Centre for Entrepreneurship Development, Yaba College of
Technology, Lagos, Nigeria. He holds a PhD in Entrepreneurship and CSR from
the Leicester Business School, De Montfort University, Leicester (UK). He is
a Fellow of Cumberland Lodge, Windsor (UK). He is a member of the British
Academy of Management, the Nigerian Institute of Management, the American
Economic Association and the African Association of Entrepreneurs Nigeria. His
research interests focus on developmental issues and entrepreneurship. He has over
26 public academic papers to his credit, including ‘Corporate Social Responsibility,
Waqf System and Zakat System as Faith-Based Model for Poverty Reduction’,
which was awarded the Highly Commendable Academic Paper for 2015 by the
World Journal of Entrepreneurship, Management and Sustainable Development.
Morufu Oladimeji Shokunbi Yaba College of Technology, Nigeria
Morufu Oladimeji Shokunbi is Lecturer II at the Centre for Entrepreneurship
Development, Yaba College of Technology, Lagos, Nigeria. He is a member of
the National Entrepreneur Educators of Nigeria and the African Association
of Entrepreneurs Nigeria. His research interests focus on human resources
development issues and entrepreneurship. He is a member of the Examination
Committee at the Centre for Entrepreneurship Development, a public affairs
analyst, and a coach for the Young Children’s Association in Nigeria.

xxiii
Fig. 4.1 Agriculture and food value chain 77
Fig. 5.1 e creativity steps according to Morris and Kuratko 87
Fig. 6.1 Generic education system model as a closed loop
to the society (Dafa’Alla et al. 2016) 99
Fig. 6.2 Correlation of human development and average
years of schooling for Africa and Asia 109
Fig. 6.3 Correlation of global innovation and education quality
for Africa and Asia 109
Fig. 6.4 Correlation of global competitiveness and education
quality for Africa and Asia 110
Fig. 7.1 Mind map vs linear note (devised by author) 124
Fig. 7.2 Pathology final exam result for second-year clinical
nutrition students who used mind mapping in education
(devised by author) 127
Fig. 10.1 FDI trends in US$ million: World, Asia and
Africa, 2002–2012 168
Fig. 10.2 FDI inflows in US$ million: Zimbabwe and Botswana
comparison, 2002–2012 169
Fig. 10.3 Political stability and absence of violence/terrorism:
Zimbabwe and Botswana comparison, 2002–2012 171
Fig. 10.4 Voice accountability and rule of law: Zimbabwe and
Botswana comparison, 2002–2012 172
List of Figures

xxiv List of Figures
Fig. 10.5 Control of corruption: Zimbabwe and Botswana
comparison, 2002–2012 173
Fig. 10.6 Inflation: Zimbabwe and Botswana comparison, 2002–2012 176
Fig. 10.7 Zimbabwe and Botswana GDP per capita PPP, 2002–2012 178
Fig. 10.8 Unemployment rate: Zimbabwe and Botswana
comparison, 2002–2012 179
Fig. 10.9 Regulatory quality and government effectiveness:
Zimbabwe and Botswana comparison, 2002–2012 186
Fig. 11.1 Structure of the banking industry (*GOK shareholding
includes shares held by the state corporation) 212
Fig. 12.1 Scattered plots from respondents’ responses 229
Fig. 12.2 Scattered plots of respondents 231

xxv
List of Tables
Table 2.1 Business life cycle polylemmas and strategic
initiatives for African entrepreneurship 16
Table 3.1 EIP primary focus areas 53
Table 3.2 Sample profile of AUC venture lab start-ups 60
Table 3.3 Start-up Africa matrix 63
Table 9.1 Sources and descriptions of data 159
Table 9.2 Cointegration analysis 161
Table 9.3 Error correction mechanism (ECM) 162
Table 10.1 FDI categories and objectives 169
Table 11.1 Kenyan banking industry non-performing loans
1995–2003 204
Table 11.2 Ownership and asset base of commercial
banks (Ksh. million) 212

Part I
Introduction

3
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI 10.1007/978-3-319-41090-6_1
1
Managing Knowledge andInnovation
forBusiness Sustainability inAfrica
AllamAhmed
Today, more than ever before, the African continent is confronted with
many challenges on its path to sustained growth and development. ere
is no denying the fact that Africa needs to substantially improve growth
performance if it is to achieve the Millennium Development Goals
(MDGs).
It is evident from various recent international reports that nearly all
African countries’ attempts to transform their economies during the past
three decades have not delivered the desired outcomes when measured
against the principal indices for sustainable development (Ahmed and
Nwankwo 2013). Overall progress towards the attainment of the MDGs
has been patchy and less than robust given Africa’s peculiar and seem-
ingly insurmountable environmental inhibitors, including very high
transport costs, small markets, low agricultural productivity, very high
disease incidences, environmental despoliation, adverse geopolitics and
very slow diffusion of strategic technology from abroad.
A. Ahmed(*)
Science Policy Research Unit (SPRU), University of Sussex, Brighton,
BN1 9SL UK

At the same time, there is no suggestion that Africa has cocooned itself
away from the rest of the world. In fact, many countries have opened up
their economies, implemented political and market reforms, and under-
taken variants of structural reforms to foster and sustain market respon-
siveness with the concomitant goal of improving the overall well-being
of their people.
Poverty remains amongst the most important challenges facing all
African countries today due to the failure of macroeconomic policies,
market imperfections and inequalities as well as the inability of African
governments to enhance productivity. Knowledge, innovation and tech-
nological learning in building a knowledge-based economy in Africa are
therefore of paramount importance for the continent’s efforts to achieve
sustainable development.
Due to inadequate knowledge absorption and innovation, technologi-
cal development in Africa lags behind that in other regions. e majority
of African countries are mired in the very early stages of their develop-
ment. e African region is neither digitally nor politically well posi-
tioned to leverage factor endowments in financial and natural resources in
a productive way that fosters the development of knowledge economies.
As a result, there is an urgent need for a public sector that is knowl-
edgeable, efficient, empowered and committed; a private sector that is not
only innovative and growth oriented, but also driven and competitive;
civil society that is constructively responsive and capable of collaborat-
ing with both the public and private sectors with a view to achieving the
MDGs; a political system that is responsive to its citizens and premised
on good governance; and a socio-economic and geopolitical environment
that is enabling and inclusive of all.
Moreover, a substantial amount of literature has been written about
the role that science, technology and innovation (STI) plays in building
an enabling environment to foster economic growth and promote the
knowledge economy (see Ahmed 2005, 2012; Danofsky 2005; Hamel
2005; Mansell and When 1998).
A ‘pure’ knowledge economy generates creativity to produce new ideas
instead of making use of existing knowledge. is creativity is innovation.
Innovations contribute to knowledge creation and technological learn-
ing, which represent the core fundamentals of the knowledge economy.
4 A. Ahmed

e focus in national strategies should be on investment in research and
development (R&D) and training to strengthen capacity for knowledge
absorption and information dissemination.
Based on a synthesis of policy prescriptions for a renascent Africa, it has
become clear that solutions to extreme poverty in Africa will have to come
from Africans themselves. Africa is not in want of policy prescriptions;
problems often arise from implementation failures. e point needs to be
made, however, that Africa is not poor because the people are poor.
Over the years, contemporary works by thinkers such as P. T. Bauer
and William Easterly (e.g., From Subsistence to Exchange and e White
Man’s Burden) have demonstrated that indigenous entrepreneurship pro-
vides a strong foundation for development. e logic is simple: Africans,
through progressive indigenous efforts at social change, could bring about
enterprise-led institutional change which, in turn, could foster the evolu-
tion of rules of social cooperation and thus realise the immense gains of
trade through entrepreneurial activities (Boettke 2007).
e most profound and encouraging change in African economies
over the past decade has been the rapid advancement towards integra-
tion into the global economy. Many of the countries have undertaken
significant economic reforms: improving macroeconomic management,
instigating a conducive private investment climate, liberalising markets
and widening the space for entrepreneurship to drive strong and inclusive
growth. Concurrent with institutional reforms are policies to improve
the conditions for enterprise to thrive and provide a dynamic source of
growth. By and large, African economies are opening up and beginning
to respond to genuine market signals.
e purpose of this first book in the series is to address issues that will
be central to Africa’s various attempts to manage effectively knowledge
and innovation for sustainable business management.
e book is also very timely with the recently launched Science,
Technology and Innovation Strategy for Africa 2024 (STISA-2024) by the
African Union (AU), emphasising the critical role of science, technology
and innovation in Africa’s socio-economic development and growth.
Among the key pillars for the AU strategy are the promotion of entrepre-
neurship and innovation as well as providing an enabling environment
for STI development in the African continent.
1 Managing Knowledge andInnovation forBusiness... 5

e theme—knowledge and innovation management for business sus-
tainability in Africa—has been very carefully chosen. However, building
on this discussion, a number of policy implications can be derived to
improve the management of knowledge and innovation within Africa
countries and consequently achieve sustainable development (SD).
is book also provides an opportunity to discuss and clarify how uni-
versities can contribute to the generation of wealth in Africa through the
transfer of finalised knowledge and the creation of new firms, new indus-
tries and business opportunities. Moreover, the book presents a number
of case studies relating to the expansion of networking and collaboration
between education and research institutions, and between private and
public entities, as well as the commercialisation of research and innova-
tion outputs.
is book takes a holistic multidisciplinary and multisectoral approach
to provide in-depth analysis and a state-of-the-art overview of the efforts
made by different African countries to tackle various issues relating to
knowledge and innovation management in Africa.
e results of many comprehensive research programmes undertaken
in different countries in Africa and other parts of the world over the last
few years are presented here. More than 27 chapters, covering a wide
range of topics, were considered for possible inclusion in this volume of
the series. e 12 chapters that appear here were chosen following a blind
peer review process. e chapters cover a wide geographical area and were
written by more than 20 renowned international experts from Africa and
the rest of the world.
is volume comprises five sections:
Introduction (2 chapters)
Innovation and Entrepreneurship (3 chapters)
Education (2 chapters)
Capacity Building and Human Capital (2 chapters)
Investment (1 chapter)
Banking and Finance (2 chapters)
In Chap. 2, Kolo proposes some strategic initiatives for African
governments, corporations, non-profits and citizens to take, in an
effort to deploy innovation and knowledge to build the capacity of
6 A. Ahmed

entrepreneurs, thereby enabling them to produce goods and services
that are profitable in the marketplace. Kolo argues that Africa’s role and
presence in the global creative economy are weak. Africa is in a race
against time as the population explodes, driving rapid urbanisation and
the growth of slums, and the need for schools and health centres places
enormous pressure on the meagre resources of states. ese issues are
exacerbated by extraneous factors such as climate change, terrorism and
global economic volatilities. Kolo’s fascinating research should equip
and enable entrepreneurs to produce goods and services for local and
international markets. His proposed initiatives are simple, pragmatic,
feasible, innovative and knowledge-based, and their adaptation could
trigger the change needed to catapult African entrepreneurs into the
global theatre of the creative economy.
Innovation andEntrepreneurship
Following on Kolo’s research, Kamel’s chapter (Chap. 3) describes the
role of an innovative information and communication technology (ICT)-
based entrepreneurial evolution in Africa’s development, helping to realise
business and socio-economic development based on different channels of
information acquisition and knowledge creation and dissemination. is
will in turn allow for the creation of a global information society with
innovative means of communication that can help increase competitive-
ness for individuals, organisations and societies. Using the case of uni-
versity-based incubators, Kamel addresses the developments taking place
in Africa in the space of ICT with an emphasis on the evolution of the
entrepreneurial ecosystem and its implications for business and socio-eco-
nomic development. e chapter demonstrates how ICT, coupled with
skilled human capital and timely infostructure, are vital to improving
the balance in economic and social progress between nations, leveraging
economic growth, boosting capacity to face societal challenges, enhanc-
ing the progress of democratic values, and augmenting cultural creativity,
traditions and identities. Moreover, Kamel demonstrates the growing role
of innovation and entrepreneurship and the emergence of start-ups that
capitalise on ICT to help transform society, boost the private sector and
improve standards of living across the continent.
1 Managing Knowledge andInnovation forBusiness... 7

Continuing on the theme of entrepreneurship in Africa, Raimi, Peluola
and Shokunbi explore the prospects and challenges of managing clusters
as entrepreneurship interventions for SD in Nigeria. According to Raimi
et al., clusters development has the prospect of strengthening Nigeria’s
food industry, by making it strong enough to produce semi-finished and
finished products. e food clusters afford interaction and collabora-
tion among farmers, food processing companies and other stakeholders.
However, the findings of Raimi et al. need to be strengthened with fur-
ther quantitative and empirical research in Nigeria.
In most cases, failure is perceived as a disappointment and drags down
the person experiencing this misfortune, but it is also possible for failure
to be a blessing in disguise. Using the case of the founders of WhatsApp,
Ndedi and Kingsley demonstrate how any failure may lead to innovation
and success. In doing so, Ndedi and Kingsley undertake a thorough lit-
erature review focusing on the linkages between failure, success and inno-
vation. According to Ndedi and Kingsley, success and innovation result
from rapidly fixing mistakes rather than getting things right the first time.
Education
e next part of the book focuses on the important role of educa-
tion in African sustainable business practices. Dafa’Alla, Hussein and
Adam investigate the role of education in achieving SD and whether
it can reasonably be expected to improve on Africa’s state of underde-
velopment. Using Sudan as a case study and building on their previous
research, Dafa’Alla et al. assess the Sudanese education system’s ability
to meet the objectives of the national development plan of the country.
Lessons learned are then generalised to the case of Africa, and recom-
mendations for an ‘Action Plan for Education in Africa’ are made. ey
find that good-quality education and SD are synonymous. Education
drives innovation, which in turn drives economic growth and SD, as
has been clearly demonstrated in many emerging economies worldwide.
Dafa’Alla et al. argue that weak education is the root cause of the under-
development of Africa, and that Africa must build an innovation-based
economy.
8 A. Ahmed

Following on the same theme of education, Khalifa studies the use
of mind mapping (MM) as an unconventional but valuable technique
in knowledge retrieval and critical thinking in medical education and
clinical problems. According to Khalifa, mind mapping is a visual tech-
nique that accelerates the learning process, inspires problem-solving and
critical thinking, and supports effective teaching. However, there is a lack
of significant previous research on using MM in medical institutions in
Africa, and she argues that MM methodologies could be more widely
implemented in most African medical institutes.
Capacity Building andHuman Capital
e first chapter in this section investigates the difficulties faced by many
African countries in building innovation systems in their countries.
Djeflat argues that amongst the components of innovation dynamics,
the issue of design and engineering (D&E) is drawing more and more
attention from international organisations and a growing corpus of
researchers, both in the North and in the South. Yet, D&E raises various
questions related to the concepts, the tools and the instruments it uses,
but more profoundly and in particular, its links with R&D and innova-
tion. It also raises questions regarding the policies needed to build D&E
capabilities. Finally, it raises questions with regards to the practices of
D&E and interactive learning at the enterprise level. To assess the real
situation, Djeflat examined a small sample of 20 Algerian firms (small
and big enterprises), both in the public and the private sector, from 11
different industries. According to Djeflat, D&E is a neglected function
throughout the North African region, and this explains why local indus-
try is still highly dependent on external sources for technical change and
innovation. is is due to a host of factors, namely the low level of policy
awareness, weak linkages with the training system, out-of-date syllabuses,
and little practice of reverse engineering.
e next chapter, by Elish and El Shamy, investigates the relation-
ship between labour productivity, human capital and international R&D
spillover during the period 1982–2011 in Egypt. Elish and El Shamy
estimate a single equation model which employs long-run cointegration
1 Managing Knowledge andInnovation forBusiness... 9

analysis and short-run analysis (ECM) using annual data collected from
the World Bank and the Ministry of Planning in Egypt and the OECD
database. e results show a conventional result for international R&D
and human capital. Elish and El Shamy’s study stresses that human capi-
tal’s absorptive capacity, enhanced by high-quality education, intensifies
the positive effect of R&D spillover on labour productivity.
Investment
In sub-Saharan Africa (SSA), the performance of foreign direct invest-
ment (FDI) differs considerably between Zimbabwe and its neighbouring
countries. Gutu, Anastasiadou, Omar and Osei examine FDI deter-
minants for SSA with particular emphasis on the comparison between
Zimbabwe and Botswana. Using secondary data analysis, their study
examines why Botswana was attracting more FDI than Zimbabwe in the
period 2002–2012. According to the study, Botswana is attractive due to
the stability of the political and legal environments, high human capi-
tal and governance that promotes technological adoption. In contrast,
Zimbabwe’s political instability and the government’s unwillingness to
address the challenges the country is facing impedes FDI attraction and
retention. Gutu et al.’s research is very useful for policymakers as they
plan and implement policies, and for foreign investors for understanding
how different determinants impact on location attractiveness.
Banking andFinance
In the final part of the book we examine the financial and banking sec-
tor in Africa and its impact on sustainable business practices in Africa.
e banking industry is a major driver of economic development for
world economies. By offering different types of services, such as facili-
tating money transfers between countries and ensuring that savers and
10 A. Ahmed

borrowers are brought together in well-organised structures, the industry
determines countries’ economic development and long-term sustainabil-
ity. According to Muriithi and Louw, the Kenyan banking industry is
considered to be the most mature, fastest-growing and largest in East
Africa, thereby making it the regional financial leader. e industry has,
however, been a victim of both global and domestic financial challenges.
Between 1980 and 2000, the country’s financial industry was character-
ised by major financial upheavals that led to the collapse of many banks,
while others were in and out of receivership. Muriithi and Louw explore
the importance of enhancing and strengthening the Kenyan banking
internal control mechanisms and developing sustainability strategies,
focusing on business practices and product development geared towards
healthy economic, social and environmental activities.
In the final chapter of the book, Ndedi assesses the importance of the
Douala Stock Exchange (DSX) in Cameroon. Ndedi argues that without
financial markets, borrowers would have difficulty finding lenders, and
that these structures are seen as platforms for the economic prosperity of
nations, especially in Africa. Accordingly, the future development of the
DSX will occur when market players are able to reach mutually acceptable
compromises regarding the terms of financial transactions. Ndedi devel-
ops an appropriate strategy for sequencing the development of the DSX
by arguing that instruments that require simpler and more easily verifi-
able compromises must be launched in the first place at the DSX. e
chapter also shows that the path of development will depend on eco-
nomic, legal, political, institutional and cultural factors—the framework
that prompts policymakers to ask the right questions in diagnosing the
deficiencies and hurdles. Finally, Ndedi provides guidance for designing
suitable policies for the development and functioning of the DSX that
will contribute to the emergence of Cameroon by 2035.
Finally, this book is intended as a first step in paving the way towards
further reflection on the future position and role of Africa in the world,
and we hope it will be utilised as a guide by policymakers and senior man-
agers to enhance their ability to think strategically towards achieving SD.
1 Managing Knowledge andInnovation forBusiness... 11

References
Ahmed, A. (2005). Digital publishing and the new era of digital divide.
International Journal of Learning and Intellectual Capital, 2(4), 321–338.
Ahmed, A., & Nwankwo, S. (2013). Entrepreneurship development in Africa:
An overview. World Journal of Entrepreneurship, Management and Sustainable
Development, 9(2/3), 82–86. Emerald Group Publishing Limited, UK.
Boettke, P. (2007). Editorial: Entrepreneurial response to poverty and social
conflict: e enterprise Africa project. Journal of the Institute of Economic
Affairs, 27(2), 2–5.
Danofsky, S. (2005). Open access for Africa: Challenges, recommendations and
examples, United Nations ICT Task Force working group on the enabling envi-
ronment. New York: e United Nations Information and Communication
Technologies Task Force.
Hamel, J. L. (2005). Knowledge for SD in Africa towards new policy initiatives.
World Review of Science Technology and SD, 2(3), 217–229.
Mansell, R., & When, U. (1998). Knowledge societies: Information technology for
SD. UN commission on science and technology for development. New York:
Oxford University Press.
12 A. Ahmed

13
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI10.1007/978-3-319-41090-6_2
2
From Innovation toSustainability: Life-
Cycle Polylemmas andStrategic Initiatives
forEntrepreneurship inAfrica
JerryKolo
Introduction andPurpose
e context and aim of this chapter are based on the contention, and
simple but profound and irrefutable evidence, that Africa is experiencing
economic growth but without commensurate development, or at least
not enough for the teeming and desperately poor population of the con-
tinent, despite the continent’s vast natural, mineral and human resources,
and the goodwill and support of the international community. e lag
of development behind growth, two concepts that development schol-
ars categorically distinguish (Fik 2000), is signicant in understanding
and explaining what this chapter terms Africa’s ‘schizophrenic’ develop-
ment experience, as exemplied by the Africa Rising and African growth
tragedy debate (Easterly and Levine 1997; Rowden 2013, 2015; Gibney
2015; Spooner 2015). While the growth/development mismatch places
J. Kolo (*)
College of Architecture, Art & Design, Master of Urban Planning Program,
American University of Sharjah, Sharjah, UAE

the primary burden on political leaders and policymakers to develop
feasible mitigation measures, it also places responsibility on other stake-
holders, including scholars and academics, to engage in diagnosing and
prescribing reasonable initiatives for Africa to work its way out of pov-
erty and despair, thereby achieving sustainable development. is chap-
ter posits that entrepreneurship, fostered and enabled by innovation and
knowledge management, holds enormous potential for Africa to achieve
sustainable development. In the life cycle of entrepreneurship in Africa,
there are perennial polylemmas that must be addressed or mitigated in
order for entrepreneurs to be successful in terms of protability and sus-
tainability. e idea of polylemmas suggests that Africa’s entrepreneurial
challenges and obstacles are deeply rooted, long-standing and formida-
ble. erefore, none of the mitigation measures and options are optimal,
yet choices must be made between the options. e analysis and insights
that may be useful for informed tactical and strategic policy, programme
and project choices is part of the purpose, implication and value of this
chapter for policymakers, technocrats, entrepreneurs and entrepreneurial
advocates in Africa.
Methodology
is chapter resulted from two basic research methods that allow for a
fair and robust exploration and analysis of an issue that is as subjective
yet complex and multifaceted as sustainable entrepreneurship in a con-
tinent as vast and diverse as Africa. One was the desktop method, where
conceptual and empirical materials from various scholarly, professional
and governmental sources were reviewed on the subject of discourse.
e second was a series of unstructured conversational interviews with
entrepreneurs from ve African countries: Kenya, Morocco, Nigeria,
South Africa and South Sudan. Information from the desktop method
provided very rich insights into extant conceptual discussions on innova-
tion, knowledge management and entrepreneurship, as well as insights
on country-specic practices and applications of innovation, knowledge
and entrepreneurship. e interviews were aimed at understanding the
diverse terrain of entrepreneurship across Africa based on the knowledge,
14 J. Kolo

experiences, observations and perspectives of the interviewees. e infor-
mation and insights from both methods were used to develop Table 2.1.
Overview andRelevance ofConcepts
Some of the critical concepts used in this chapter hardly need to be
dened from the standpoint of the literature and professional practice,
as they have already been robustly, almost ubiquitously, discussed and
researched. e relevant concepts are innovation, knowledge economy or
creative economy, knowledge management and entrepreneurship. What
this chapter nds common to all the concepts are, rstly, they are mul-
tidisciplinary in origin, study and application. Secondly, they are widely
used in most elds today for problem-solving, change or improved action.
irdly, there is no universal consensus on their interpretation and, par-
ticularly, their measurement or assessment (El Houssamy 2016; Weheba
2015). Fourthly, they combine, depend on or require knowledge and
skills that are cognitive, experiential and intuitive. Finally, the end result
for all of them is the same: cost-eective problem-solving or improve-
ment in the condition or performance of a phenomenon (situation or
thing). In light of these commonalities, the terms are used and dened
‘operationally’ and annotated ‘apropos’ in this chapter. e use of these
terms in this chapter notwithstanding, quite noteworthy is the rationale
and relevance for their use in anchoring the discourse in the chapter, one
which is discussed next.
e discourse in this chapter is predicated or premised on the conten-
tion, indeed conviction, that the world economy today is powered by
innovation and knowledge (Kolo 2009). is economy is known pop-
ularly as the knowledge economy (KE) or the creative economy (CE).
According to Piotrowski (2015), ‘the term “knowledge economy” was
coined in the 1960s to describe a shift from traditional economies to
ones where the production and use of knowledge are paramount’. He
referenced the four pillars of KE identied by the World Bank as ‘institu-
tional structures that provide incentives for entrepreneurship and the use
of knowledge, skilled labor availability and good education systems, ICT
infrastructure and access, and, nally, a vibrant innovation landscape that
2 From Innovation toSustainability: Life-Cycle Polylemmas... 15

Table 2.1 Business life cycle polylemmas and strategic initiatives for African entrepreneurship
Goal clusters Initiation Planning Financing Operations Sales Stabilisation Modernisation
Concept
Idea
Vision
Research
Design
Protocol
Strategy
Consults
Registration
Permitting
Budgeting
Equipment
Lead team
Staffing
Contracting
Take off
Testing
Production
Refining
Promotion
Marketing
Distribution
Placements
Streamlining
Consolidation
Branding
Expansion
Diversification
Acquisition
Merger
Restructuring
Transfer
Political N/A N/A N/A
Polylemmas No T/A
No seed
funds
No
grants
No T/A
No seed funds
No grants
Bureaucracy
Regulations
Charges/Fees
Bureaucracy
Regulations
Charges/Fees
Bureaucracy
Regulations
Charges/Fees
Initiatives Create Business Enterprise Development Office to provide T/A and conduct business research
Establish One Stop Shop and streamlined permitting programme
Establish business finance grants and low-interest loans
Provide fee waiver and reduction incentives
Contract universities to provide business seminars and training and T/A for local businesses
Offer or promote entrepreneurial education curriculum in schools and universities
Establish a credit bureau
Invest in infrastructure and technology development, repairs and upgrades
Invest in smart technologies to serve citizens and businesses
Provide business references inlocal library (translate as feasible)
Economic N/A
Polylemmas No bank loans
High interests
No credit
No bank loans
High interests
No credit
High leases
No insurance
No bank loans
High interests
No credit
No bank loans
High interests
No credit
No bank loans
High interests
No credit
16 J. Kolo

Initiatives Provide low-interest and flexible business loans
Provide credit counselling and repair programmes with or through non-profits providing business T/A
Partner with universities to provide business capacity training and business planning T/A
Establish business mentoring programme for prospective lenders
Provide smart banking business programmes
Psychosocial
Polylemmas Poverty
No
business
literacy
Poverty
No business
literacy
Poverty
No business
literacy
Poverty
No business
literacy
Poverty
No business
literacy
Poverty
No business
literacy
Initiatives Entrepreneurs should establish business savings account with local banks
Establish and/or repair credit
Attend business training programmes, seminars and training workshops
Provide healthy workplace
Built
Environment
N/A
Polylemmas Poor
infrastructure
Energy cost
No technology
Poor
infrastructure
Energy cost
No technology
Poor
infrastructure
Energy cost
No technology
Poor
infrastructure
Energy cost
No technology
Poor
infrastructure
Energy cost
No technology
Initiatives N/A
Natural
Environment
N/A N/A N/A N/A N/A N/A N/A
Polylemmas
Initiatives
Source: Compiled by the author
Notes: T/A is Technical Assistance. Bureaucracy implies personnel-related hurdles, including corruption
2 From Innovation toSustainability: Life-Cycle Polylemmas... 17

includes academia, the private sector and civil society’. A parallel term,
CE, was rst used by Howkins (2001) to describe the current global
economy, although the term has been popularised more widely by schol-
ars such as Florida (2002). Creativity lies at the heart of the CE, and, as
Howkins (ibid.) noted, ‘creativity is the ability to generate something
new. It means the production by one or more people of ideas and inven-
tions that are personal, original and meaningful. It is a talent, and apti-
tude.’ He noted further that ‘the creative economy has been midwifed
by the technologies of information and communications’, adding that
‘perhaps the greatest impact of the creative economy is not only within
the traditional creative industries but in the way their skills and business
models are being used to create value in other areas of life’. In the CE,
he said, ‘people with ideas– people who own ideas– have become more
powerful than people who work machines and, in many cases, more pow-
erful than people who own machines’.
e contextual relevance of the foregoing brief overview of the concept
of the KE to this chapter is that Africa cannot aord to be left behind,
marginalised or ostracised, by default or because of some handicaps,
from the creative global economy. At the World Summit on Sustainable
Development in Johannesburg, South Africa in 2002, Ngubane (2002)
posited that poor nations must embrace the KE or be left behind in the
global economic race, stating that ‘it is the knowledge and technological
capacity to apply the inputs of labor, capital and resources that make
modern economies work’.
Akin to the concept of KE is that of knowledge management (KM).
As earlier stated, there is a plethora of scholarly and professional literature
on KM from a multidisciplinary standpoint (Barclay and Murray 1997),
although there is no consensus on its denition (Dalkir 2005). In his own
view, Dalkir (ibid.) dened KM as ‘the deliberate and systematic coordi-
nation of an organization’s people, technology, processes, and organiza-
tional structure in order to add value through reuse and innovation. is
coordination is achieved through creating, sharing, and applying knowl-
edge as well as through feeding the valuable lessons learned and best prac-
tices into corporate memory in order to foster continued organizational
learning.’ He noted that ‘the ability to manage knowledge is becoming
increasingly more crucial in today’s knowledge economy. e creation
18 J. Kolo

and diusion of knowledge have become ever more important factors in
competitiveness.’ Again, the contextual relevance of this denition in this
chapter is that African countries must understand and adopt or apply the
basic tenets of KM, even if for the purposes of managing, and protecting
through patents, trademark and intellectual property rights, indigenous
or primordial knowledge that has been used to produce goods and ser-
vices inlocal communities for centuries. It is not unlikely that this type
of knowledge, if unprotected and poorly managed, can lose its value, can
‘migrate’ legally or illegally, or can be lost totally to future generations.
Next is the concept of innovation, which this chapter deems to be the
‘zeitgeist’ of business, management, technology and social enterprise dis-
course and practice today (Elahi etal. 2013). Satell (2013) posited that
innovation ‘has become management’s new imperative’, adding that the
‘innovate or die’ maxim is often heard at conferences and meetings. It is,
he noted, ‘a messy business which creates novel solutions to important
problems’. He went further to delineate what he deems to be ‘the three
pillars of innovation’ as competency, strategy and management. Foster
(2016) cautioned that ‘innovation does not mean simply inventing ideas;
innovation is being exible, adapting your business model and making
changes in order to deliver better products or services to respond to the
needs of your customers’. He added that ‘if you establish the right culture
and are brave enough to challenge thinking, then anyone’s bright idea
can be turned into value adding innovation’. According to Schirtzinger
(2016), ‘true innovation begins with an exciting new idea, but extends to
its execution. So, in its fullest expression, innovation is also about spur-
ring—and successfully managing—organizational change.’ He was prag-
matic in adding that ‘real innovation is really, really hard’. Interestingly,
unlike other innovation analysts such as Shaughnessy (2013), and quite
pertinent to the aim of this chapter, he opted to address what he called
‘10 innovation killers—and how to neutralize them’. Of the ten, the
seven that this chapter nds apropos for the African context are famine
(resource scarcity, mainly budget, people, time and technology); trying to
go it alone; institutional knowledge (dismissing an idea which someone
said they had tried before and was futile); no short-term vision (thinking
of end result and overlooking the ‘now’ hurdles); the ‘right’ way (stuck to
one way and ignoring options); the sunk-cost fallacy (not cutting losses,
2 From Innovation toSustainability: Life-Cycle Polylemmas... 19

but throwing good money at bad); and uncertainty (one’s insecurities).
e other less relevant three are feast (vast resources to work with, leading
to wastage); too much data (data deluge, leading to analysis paralysis);
and all work, no play (the ‘live to work’ type).
While innovation discourse generally tends to focus on the positive
aspects of innovation, Hanekom (2013) observed that ‘innovation can
have a downside’, and in the context of social equity he posed a rather
ethical question: ‘rough innovation we may remain globally competi-
tive, but at what cost to the poorer members of our society?’
e nal concept reviewed for its relevance in this chapter is entre-
preneurship. Judging by the scope and time frame of scholarly, profes-
sional and policy discourses of entrepreneurship, this chapter surmises
that entrepreneurship lies at the heart of market capitalism, industriali-
sation and the creative economy. In the light of the scope of the litera-
ture on entrepreneurship, suce it to say that one of the earliest and
most insightful scholarly analyses of entrepreneurship was by the eco-
nomic doyen Schumpeter (1934), who married the concepts of entrepre-
neurship and innovation by depicting entrepreneurs as innovators who
implement entrepreneurial change within markets. He identied ve
dimensions of entrepreneurship as the introduction of a new or improved
item; the unveiling of a new method of production; discovery or opening
of a new market; tapping into a new source of supply; and restructuring
or re-engineering of business management processes. Another manage-
ment guru, Drucker (1985), described an entrepreneur as someone who
actually searches for change, responds to it and exploits it as an opportu-
nity. In perhaps the most lay terms, the US Department of State (2007)
dened an entrepreneur simply as ‘a person who organizes, operates, and
assumes the risk for a business venture’.
Rationalising Entrepreneurship
What is relevant for this chapter from the referenced denitions of entre-
preneurship is the need to grasp, for policy and planning purposes, what
it entails to nurture or groom Africans who are able, or have the capacity
and wherewithal, to capitalise on opportunities to produce and market
20 J. Kolo

valuable and protable goods and services for consumption both locally
and beyond. Essentially, African governments and entrepreneurs must
understand what it takes to engage protably in the creative economy.
While there is historic evidence that entrepreneurship is an age-old prac-
tice and tradition across Africa (Kolo 2006), the view in this chapter is
that such practice has existed and served only at the subsistence level. e
issue today is the ability of African entrepreneurs to produce and market
goods and services that can command patronage and value in the global
marketplace. is is the critical issue that this chapter addresses in the
light of the extant creative global economy. At the heart of this issue are
the vibrancy, resilience, protability and sustainability of African enter-
prises for the short and long hauls, that is, throughout their life cycle.
In further pondering the reference issue as an African development
scholar, several dicult, troubling and interrelated questions arise that lead
to the contention that African entrepreneurs face several polylemmas in
the life cycle trajectory from business innovation to business sustainability.
Firstly, given the dismal level of international trade by the aggregate of
African countries relative to other regions of the world, what are the pros-
pects that entrepreneurship would now make a dierence in Africa’s engage-
ment in the creative global economy? Secondly, with the relative failure of
‘special’ trade programmes designed to incentivise African trade with the
world, such as America’s 2000–2025 African Growth and Opportunity
Act (AGOA), how and why would entrepreneurship make a dierence?
irdly, with the cascade of domestic political, security, economic, envi-
ronmental, health and infrastructure problems that beset Africa and con-
stantly threaten political stability, governance and the investment climate,
what are the chances for sustainable entrepreneurship in such environ-
ments? Yet, many more similar questions can be posed, while many other
obstacles can be identied, such as climate change, food insecurity, ter-
rorism and xenophobia. Paradoxically—and this is the crux of the ratio-
nale for advocating sustainable entrepreneurship through innovation and
knowledge management in this chapter—these very obstacles, problems
and challenges harbour enormous opportunities for entrepreneurs, as
dened in the literature as strategic risk managers, to be innovative, pro-
ductive and protable within and beyond the shores of Africa. Mugabe
(2009) mounted a strong and evidence-based case for the deployment
2 From Innovation toSustainability: Life-Cycle Polylemmas... 21

of knowledge and innovation for development in Africa, on the grounds
that there are signicant positive changes occurring across all spectrums of
African countries, all pointing to a ripe and conducive time to create an
enabling environment for sustainable entrepreneurship in the continent.
e view in this chapter is that a Marshallian eort across the continent,
especially through interregional and international collaboration, would
help develop the entrepreneurial capacity that would answer some of the
questions posed above, and mitigate some of the development and quality
of life problems currently threatening public interest across the continent.
Business Life Cycle Polylemmas and
Strategic Initiatives
Information from the desktop research (Murray etal. 2010) and personal
interviews conducted for this chapter were used to construct Table 2.1
below. First, an analytical framework consisting of society’s main goal
clusters was developed in order to cluster the information from both
sources. Goal clusters are categories of all people’s needs and desires,
based on the primary societal resources that would be needed or appro-
priate to address the needs. is is critical to understand the real causes
of the problems and challenges of entrepreneurs, and for strategic devel-
opment of initiatives and deployment of resources. Second, ideal phases
were delineated for the life cycle of an enterprise, from cradle (initia-
tion) to Grave (modernisation). Sustainable entrepreneurship is about a
perpetual life for an enterprise, which is a rarity for African enterprises.
ird, for each phase, the polylemmas identied from the literature and
interviews for each goal cluster were summarised. Four, for each poly-
lemma, strategic or actionable initiatives were proposed.
Conclusion
e argument and position in this chapter revolve around Africa’s weak role
and presence in the in the global economy, and the need to strengthen and
expand this role by stimulating, developing and nurturing a robust entre-
preneurial capacity in the continent through innovation and knowledge,
22 J. Kolo

along with other requisite political, economic and institutional reforms.
Entrepreneurship has been the key to the economic success and, to some
extent, political and strategic supremacy of countries around the world.
From Norway’s preponderance in communications technology to Japan’s
excellence in automobile manufacturing and America’s and China’s ubiqui-
tous presence in all economic and industrial sectors, entrepreneurship has
proven to be the sine qua non for success. Not to be left out is the ability of
nations to feed, house and employ their citizens, resulting in political stabil-
ity, self-reliance and patriotism. Finally, entrepreneurship has accounted for
wealth creation and generation all over the world, while the sustainability
of enterprises has accounted for the successful intergenerational transfer of
wealth. All or most of these dividends of entrepreneurship remain a dream
for most Africans. Yet, the demand for the dividends continues to grow as
population and urbanisation rates rise above world averages.
Having examined the key factors of production, namely land, labour,
capital, technology, infrastructure and entrepreneurial skills (Fiks 2000),
this chapter contends that post-colonial African governments embraced,
willingly, blindly and/or in compliance with the dictates of interna-
tional development agencies such as the World Bank and International
Monetary Fund, classical or modern economic models which have inad-
vertently or by design shifted the control, ownership and access of and
to these factors from the vast majority of Africans to a privileged few.
In sum, across Africa today, most people are landless; labour is cheap
but crude and skill-less; access to aordable credit is limited to a few
privileged people; technology is obsolete, non-existent or overly costly;
and knowledge is handicapped by inadequate educational infrastructure.
Add to these population, urbanisation and slum explosions, unaordable
health care, crumbling institutions, and unemployed and very restless
youths (Anderson and Galatsidas 2014; Tinsley 2015). e consequence
of all these is a stagnant or declining standard of living and overall quality
of life for the majority. In this context, innovation and entrepreneurship
become extremely dicult or nearly impossible for the majority of citi-
zens who have the ambition and talent, but lack the production factors
needed to move through the trajectory of innovation or entrepreneurship.
To address Africa’s challenges, there have been advocates, such as
Wadongo (2014) (Afro-realism), Elemelu (2015) (Africapitalism) and
Sarfo (2013), for new development paradigms in Africa. It is in this
2 From Innovation toSustainability: Life-Cycle Polylemmas... 23

context that this chapter advocates unlabelled entrepreneurship, which
deploys innovation and knowledge to provide African entrepreneurs with
the capacity to engage protably in the creative global economy. e
conclusion of this chapter is that innovation is pragmatically the time-
and resource-intensive process of converting ideas into products and/or
services that, rstly, are of value to others and command a price; secondly,
yield dividends to the proprietor or owner of the product or service;
thirdly, bring a sense of accomplishment and satisfaction to the owner;
and nally, encourage or motivate the owner to share dividends with
those who cannot aord to pay for the product/service. At the individual/
corporate ownership level, these four would translate, respectively, into
productivity, prot, self-fullment/corporate success and giving back to
society (service)/corporate social responsibility.
e phases and initiatives proposed in this chapter for the trajectory or
life cycle of African enterprises will require radical changes in the thought
processes, attitudes and viewpoints of those interested in entrepreneurship.
ese shifts will trigger some of the risks of innovation and entrepreneurship
in the creative economy. As Hanekom (2013) opined, for example, ‘policy-
makers have to be more thoughtful about where and how innovation takes
place. Otherwise they risk promoting economic growth that leaves people
even further behind than before.’ What this implies is that innovation is not
risk-free. However, the conviction in this chapter is that there is hardly any
viable or sensible alternative for Africa to become an active and protable
player in the creative economy. Among the strategic imperatives for dealing
with any risk that innovation may portend are mutual collaboration among
all societal stakeholders, leveraging of roles and resources, and vertical and
lateral integration of institutions locally, regionally and internationally.
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2 From Innovation toSustainability: Life-Cycle Polylemmas... 27

Part II
Innovation and Entrepreneurship

31
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI10.1007/978-3-319-41090-6_3
3
The Role ofanInnovative ICT-Based
Entrepreneurial Evolution onAfrica’s
Development: TheCase ofUniversity-
Based Incubators
SherifH.Kamel
Overview
Technology has not only changed the world, it has also increased its
potential (Figueres 2003). Innovative ICT, coupled with globalisation
and the role of societal norms, values and cultures, is constantly aect-
ing societies around the world and helping to transform many aspects of
life, whether at the personal or professional level. It is forcing organisa-
tions and corporations to rethink and re-engineer the way they man-
age their operations and resources and face competition both locally and
globally. Moreover, it is having a major impact on the way development
and competition are taking place. It is fair to claim that the processes
of globalisation are increasingly dependent on ICT (Musa 2006). is
situation has generated new forms and structures of economic, business
and social organisations that are no longer aected by geographic or time
S.H. Kamel (*)
e American University in Cairo, Cairo, Egypt

constraints but depend mainly on teleworking, which is emerging as the
platform for business and socio-economic development in the twenty-
rst century. Examples of such organisations include the growing plat-
form of incubators and accelerators that are spreading round the world,
Africa included, in order to support, nurture, mentor and help develop
tech start-up companies oering a variety of products and services that
are innovation-based and that cater for today’s mobile marketplace.
Today, there are a number of innovative ways to do business in Africa
that cannot be found in other countries, all of which are enabled through
cutting-edge ICTs. African tech-savvy entrepreneurs are coming up with
original, innovative ways to do business, and consequently a lot of intel-
lectual property is being developed in Africa (Arlove 2016).
Africa, a continent with many resources and a variety of economies
in transition, has been investing in building its ICT infrastructure for
many decades in order to overcome its status as the most unconnected
continent when it comes to ICT, although it faces a broad spectrum of
developmental challenges (Figueres 2003). e deployment of emerg-
ing ICT infrastructure in the African continent can also benet from
a unique opportunity by capitalising on the experiences and learning
from the lessons of the past witnessed by other nations in the developed
world. In that respect, ICT can lead to an industrial and societal evo-
lution based on information acquisition as well as knowledge creation
and dissemination, allowing the creation of an emerging information-
based society with innovative means of communication that could help
increase competitiveness for individuals, organisations and societies
(Branscomb 1994).
In 2015, the African population reached 1.1 billion people and is
expected to reach 2 billion by 2050. It is by far the youngest continent
in the world, with over 50 % of the population under the age of 19, and
is known for its huge and young labour force, multiple languages and
dialects and diversied cultures. Algeria is the largest country in terms
of land, and Nigeria has the largest population. In terms of trading, as
an example of the changes that are taking place, Chinese exports to the
continent increased from US$11 billion to US$166 billion during the
period 2006–2016. Economically, Africa has been the second-fastest-
growing continent (Leke 2016). In other words, the transformation
32 S.H. Kamel

process is taking place but is not yet complete. ere is still a lot that
is taking place in terms of building and completing the infrastructure,
improving government laws and regulations, as well as investing in
human capital whether in training, vocational development, education
or lifelong learning at large.
During the 1990s, there was an unprecedented link between the tech-
nological innovation process and economic and social organisations.
Moreover, as the links between economic development, productivity and
the availability of information resources became invaluable, governments
round the world started to invest heavily in building their National
Information Infrastructure (NII) (Petrazzini and Harindranath 1997).
is led to major changes and transformations in the activities and rela-
tionships of individuals and organisations within the society, leading to
the evolution of the information society, where the services provided by
ICT represent a set of challenges and opportunities for the global soci-
ety. However, it is important to note that although access to ICT is a
prerequisite to its use, individual dierences in time and space as well
as capabilities and choice may play a role in the use, value and applica-
tion of ICT (Alampay etal. 2003). Many African countries are facing
massive challenges, including poverty and unemployment, yet again the
continent is becoming, since the 1990s, home to many of the fastest-
growing economies in the world, in many ways due to the growing num-
ber of entrepreneurs that are capitalising on tech start-ups that address
the needs of the continent. e full impact has not yet been realised, but
with sustainability, and scalability, the real impact will be felt across the
continent in the years to come.
In general, the ICT infrastructure makes information more accessible,
with more benets for society (Shapiro and Varian 1999), which puts
more pressure on rms round the world to exploit all possible opportu-
nities to leverage productivity and eciency. Businesses are becoming
increasingly aware of the indispensability of ICT to stay competitive,
with other global implications for productivity, employment and prots
to the extent that organisational operations are becoming unthinkable
without the eective and ecient use of ICT, especially in a global soci-
ety, where information travels across national boundaries (Branscomb
1994). erefore, many nations in Africa have taken concrete measures in
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 33

that direction, such as Egypt, South Africa, Tunisia, Morocco and Kenya,
which have restructured initiatives in telecommunications and informat-
ics as part of an overall strategy that targets socio-economic development
in the continent and where small and medium-sized (SMEs) enterprises
play a vital role. is includes deregulation, encouraging private invest-
ment and foreign direct investments (FDI), and the use of tools such as
public–private partnerships (Kamel 2009a). In the information age, ICT
is an opportunity for the development of Africa because it is a power-
ful tool for economic growth, social inclusion and poverty eradication,
which can facilitate the integration of African nations into the emerging,
digital global marketplace (Annan 2003). Africa stands to gain a great
deal from participating in the globally connected economy. However,
it must rst establish the necessary ICT infrastructure, and government
and economic conditions to attract and maintain an eective position
in the global economy (Ajayi 2004). Moreover, the legal and regulatory
environment for those companies should be put in place to enable the
proliferation of innovative and impact-driven start-ups as well as their
scalability and sustainability. e African continent, with 54 countries
and massive diversity across dierent countries, stands on the brink of a
massive rise-up that can turn its fortunes around. According to the World
Bank, six of the 12 fastest-growing economies in the world from 2014
to 2017 will be in Africa. ey include Ethiopia, Democratic Republic
of Congo, Mozambique, Tanzania, Côte D’Ivoire and Rwanda. It is
important to note that, since 2015, Africa has been attracting some of
the biggest names in international nance, whether state-owned funds
such as China Investment Corporation, or private equity groups such
as Blackstone and the Carlyle Group, or institutional investors such as
Goldman Sachs.
More than one decade into the twenty-rst century, the world is
becoming smaller and the public is rapidly gaining access to new and
dramatically faster ICT (Shapiro and Varian 1999). Moreover, the grad-
ual move towards establishing the information society is irreversible
and will have implications for all aspects of society. e formulation of
information- based companies and societies at large will positively con-
tribute to the creation of the global information society and will lead to
the creation of a powerful platform for knowledge dissemination and
34 S.H. Kamel

sharing that is mobile, dynamic and iterative (Kamel 2009b). Moreover,
the above- mentioned high-tech directions will result in further invest-
ments in telecommunications and infrastructure, as well as digital
platforms such as eGovernment, eCommerce and many more digital
initiatives that began to appear in the mid-1990s (Sorensen and Sayegh
2007). In 2016, in sub-Saharan Africa alone there were more than 42
top digital platforms. e advantage of Africa is the diversication of its
economies across dierent countries. e misconception is that Africa is
one country and is homogeneous, which is not the case. Africa is big and
has similarities across its nations, but also many dierences. It is worth
noting that the world’s nancial crisis in 2008 turned the attention of
many investors away from the traditional markets and destinations of
investments and toward the African continent (Arlove 2016). is repre-
sents a unique opportunity for Africa, and home-grown talents and ini-
tiatives should take the necessary measures to capitalise on that. Some of
those companies are gradually making the news, such as Africa’s rst tech
unicorn, the Africa Internet Group (AIG), which is a privately held tech-
nology company valued at US$1 billion or more. AIG is the parent to a
network of more than ten consumer-driven Internet businesses, includ-
ing but not limited to Jumia and eCommerce platform; Zando, focused
on shoes and clothing; Hellofood, a food delivery platform; Laymu, an
online resale marketspace; Lamudi, a real estate platform; EasyTaxi, a cab
service; and more (Knowledge@Wharton 2016).
e information society is becoming a global force and a fundamental
element of change in the global society (Garito 1996). e information
infrastructure (infostructure) is a factor for socio-economic improvement
and represents a major support mechanism that can assist African nations
in leapfrogging stages of development towards achieving a better standard
of living and quality of life. In the current competitive context, access to
and mobilisation of information are becoming the central aspects of pro-
ductivity and competitiveness, and the investment required to set up ICT
infrastructures directly supports growth and contributes to structural
improvements in various services and industries (Kamel 2009a). e
move towards an information society, and the opportunities it provides,
will eventually be as important as the rst industrial revolution (Kamel
1995a). It is dicult to predict the pace at which this change will take
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 35

place, but the economies that will be the rst to succeed in completing
this change satisfactorily will have major competitive advantages. ere
are examples to demonstrate such development, such as Kenya, where
the business environment is much further advanced as a result of having
improved the legal and regulatory framework that can enable such devel-
opment (Arlove 2016).
ICT andSocio-Economic Change
Change, transformation, competition, innovation, collaborative work
and partnerships could be institutionalised through customised strate-
gies targeting the diusion of best practices and the development of
ICT applications, which are the fundamental objectives in view of the
contribution they can make to leveraging development and growth as
well as strengthening competitiveness. Such a process should include
the liberalisation of the telecommunications sector, the provision of a
regulatory framework, the provision of a broad range of attractive tar-
i options for users, and the organisation of specialised training and
human resources development programmes focusing on the needs of
ICT industries and rendering information to be timely, shared and pub-
licly available (Branscomb 1994). is is because the lack of a basic
telecommunications infrastructure is a severe hindrance to the growth
of the Internet in many countries (Mbarika 2002), especially where
most of the development is taking place in the capitals and major cities
(Kamel 2005). For example, the developments taking place in Africa in
the space of mobile payments are all interesting to follow in order to
analyse their impact on the economy and the society at large (Arlove
2016). ere are multiple ways to look at such new spaces, with various
recent additions including FinTech.
During the 1990s, ICT became a vital platform for business and socio-
economic development with the growing role of the Internet (Kamel
1995b). is led to the development of the global information society,
with new global trends and challenges such as competing in time, time
to market, customer-oriented services, the online society, smart com-
munities, social inclusion, eReadiness, the market economy, intellectual
36 S.H. Kamel

capital, investing in human resources and the sharing of information
and knowledge. erefore, the Internet and open data networks at
large became major driving forces of change in the global marketplace
(Kamel 1999). Changes are taking place globally, and the move towards
an information age, coupled with emerging ICT innovations since the
1980s, has led to rapidly falling costs for ICT and major managerial,
economic and organisational transformations, as well as the creation of a
window of opportunity for massive developments and a chance to accel-
erate business and socio-economic growth in Africa. With the increasing
high-level commitment from African leaders to bring about change in
the way ICT is perceived, more ICT-enabled entrepreneurial initiatives
could transform the way business is done in Africa and consequently
positively aect societies across the continent. It is perceived that such a
trend represents a unique opportunity for Africa’s younger and growing
generations to adapt and adopt new tools and techniques using state-of-
the-art ICT.Africa, more than ever, is prepared to capitalise on the capac-
ities enabled by emerging ICT to help leverage its development process
and engage actively in the global information society, by transforming its
societies into being more socially inclusive, digitally connected and elec-
tronically ready. Today Africa is a cash-based economy, but it is gradually
becoming a digital economy (Sinare 2016).
ICT Evolution inAfrica
Few doubt the signicance of ICT for African economic and social
development (Odedra-Straub 1993). ree major development goals
have been articulated by African leaders who represent the driving force
behind the embarkation on ICT evolution across the continent. e
primary target is improving the quality of life for every African, work-
ing on the integration of the economies of the dierent African nations
and leveraging trade linkages with other regions outside Africa based on
mutual development purposes and growth targets. Consequently, build-
ing the African Information Infrastructure (AII) has become essential for
the future of Africa, since it is perceived to form the backbone of the
comprehensive socio-economic development plans for the continent in
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 37

the twenty-rst century and beyond. ICT is perceived to have the ability
to improve the lives of people with low incomes who have limited access
to services such as health care and education (Qureshi 2007). ICT is an
invaluable platform for the creation of opportunities for underprivileged
communities and societies, especially in a global community transformed
through mobility. Moreover, ICT holds the promise of development by
connecting people to more accurate and up-to-date sources of informa-
tion and knowledge (Ahmed 2007).
Moreover, a number of civil society initiatives are under way, with the
informal sector playing a major role through non-governmental organ-
isations (NGOs) in contributing to ICT development in Africa. NGOs
are very active in contributing to the eradication of poverty, to the social,
educational and political empowerment of the underprivileged with a
focus on women and children, and to universal access to ICT services
through innovative and aordable technologies (Okpaku 2003a). Many
are also involved in mentoring entrepreneurs across the continent,
including in Egypt, such as Injaz (Junior Achievement). ere are also
industry-based initiatives such as the digital factory, which aims to create
capacity in Africa for the development of software applications at global
standards to support the global ICT industry as well as, and more impor-
tantly, to meet the indigenous continental demand (Okpaku 2003b).
Some ICT introduction and diusion initiatives have been nation-based,
such as those in Egypt, Rwanda, Cameroon and Kenya. For example,
the Free-Internet model was formulated in Egypt and migrated to a
number of developing nations in both Africa and beyond. In the case
of Rwanda, with its ambitious Vision 2020 programme approved in
2000, ICT has been anchored into broader economic, social and devel-
opment policies and strategies in the form of the National Information
and Communication Infrastructure (NICI) plan. e essence of the pro-
gramme is to help build the Rwandan information society and to start
integrating it into the global information society.
In the case of Cameroon, an integrated national ICT strategy was
developed, initiated by the United Nations Economic Commission for
Africa (UNECA) and supported by the United Nations Development
Programme (UNDP). e strategy beneted from the input of all stake-
holders in the marketplace including the government, the private sector
38 S.H. Kamel

and civil society. It is always important to engage and empower all stake-
holders. In the case of Kenya, the approach was dierent because, while
the private sector took the lead, the government was reluctant at rst
to embrace ICT for socio-economic development. However, momen-
tum built up in a later stage and was embedded in the nation’s poverty
reduction strategy, which positioned ICT at the core of the national
development plan. Currently, an integrated ICT-driven socio-economic
development plan for Kenya has gone from being supported and driven
only by the private sector to becoming the cornerstone for the devel-
opment of the Kenyan information society (UNECA 2003). Recently,
Kenya produced M-Pesa, which is setting the pace when it comes to
mobile payments in Kenya and beyond. It is a mobile phone- based
money transfer and micro nance service that was launched in 2007. It
then expanded to Tanzania, South Africa, India and Eastern Europe. In
general, the diusion of ICT across Africa aims at supporting and accel-
erating business and socio-economic development across the continent.
e impact of emerging ICT is no longer conned to the technol-
ogy domain. It is predicted that by 2020 over 12 billion, if not more,
computing facilities will be connected to the global information infra-
structure. However, as per the reports of UNECA, there are a number of
priority challenges which hinder development in Africa and the opportu-
nities that ICT oers African nations. ey mainly relate to job creation,
health, education and research, culture, trade and commerce, tourism
and food security, among others. It is important to note that the main
challenge facing African nations is to formulate eective strategies to
bridge the gap between the penetration, use and eective implications
of ICT within the African continent when compared to other regions in
the world. In that respect, the New Partnership for Africa’s Development
(NEPAD) has set a number of ICT development objectives that address
this challenge. ey include doubling teledensity to two lines per 100
people, reaching an adequate level of access per household, lowering cost
and improving reliability of service, achieving electronic readiness for all
African nations, developing a pool of ICT-procient youth from which
Africa can draw trainees, software developers and engineers, and develop-
ing local content based on local culture (Okpaku 2003a). It is important
to note that since the 1990s, many of these elements were realised and
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 39

more are expected to do so moving forward. Universal access to ICT and
the Internet is really coming into place across the African continent. In
2014, the number of Internet users in Africa reached 205 million, repre-
senting 18 % of the population, and the number of mobile phone users
reached 750 million, representing 67 % of the total population, accord-
ing to the International Telecommunications Union.
Universal access is an important element in introducing and diusing
ICT within the community and minimising the inter- and intra-digital
divide, with an emphasis on rural and underprivileged areas and commu-
nities, where around 70 % of the population in developing nations lives
(World Bank 2007). Improving public access is an important step in the
development of the information society for Africa. is could be realised
by setting up universal access funds to encourage infrastructure develop-
ment in rural communities, and establishing community access centres
and telecentres, as is the case in Egypt, where IT access centres have had
major implications for remote locations, reaching thousands of access
locations. Clearly, this could also be replicated in other African nations.
Moreover, public–private partnerships (PPP) could prove to be eective
in the ICT space. In Ethiopia, for example, low-cost personal computers
(PCs) are being supplied to the community to help increase the penetra-
tion rate and usage levels (World Bank 2007). Additionally, in Egypt,
multiple PPP programmes and initiatives have been introduced, such as
Egypt PC 2010, IT clubs, mobile IT units and free Internet, with eec-
tive outcomes. is also applies to mobile telephony, which is constantly
on the rise across the continent.
Role ofHuman Capital inDevelopment
e transformational change could be realised through the proper invest-
ment in human capital. In today’s economic, business and social space,
communities around the world face a set of challenges related to grow-
ing unemployment, changing market dynamics and tough business con-
ditions, among others. However, they are also regularly presented with
a variety of opportunities given the development of new markets, the
growing role of ICT, the rapid population growth especially in African
40 S.H. Kamel

economies, and their associated prospects and implications for global
markets. While the pressures of those challenges will aect investments in
dierent socio-economic directions, it should not aect the continuous
investments in both human capital and in developing the proper infra-
structure needed to help promote and create SMEs and start-ups, given
the size and the demographics of the population in many of the emerg-
ing markets around the world. For example, one of the largest African
nations, Egypt, with 58 % of its population under the age of 25, presents
entrepreneurship with a unique opportunity to thrive. us, policy- and
decision-makers, including the primary stakeholders—the government,
the private sector and civil society—should collaborate and synchronise
their strategies and plans and focus on how to optimise the use of the var-
ious limited resources to cater for the growing lifelong learning needs that
could help establish an enabling environment for an agile and competi-
tive entrepreneurial culture. In a nutshell, investing in people is investing
in the future of Africa.
Consequently, the formulation of innovative strategies, clear objec-
tives and nationwide training and professional development policies that
can support the overall build-up of business culture becomes extremely
invaluable in addressing market and industry needs in terms of provid-
ing human capital with the much-needed skills and capacities that can
positively inuence business and economic development and growth.
Do more entrepreneurs mean more jobs and consequently a better econ-
omy? How can that happen? What is the infrastructure required? What
is needed to entice youth and job seekers in general to engage with the
private sector? How can we change the culture from looking for employ-
ment to looking to be self-employed? Is the environment ready to help
create a start-up culture? Are the skills and capacities that could turn
the society entrepreneurial available? What can be the role of ICT-based
start-ups? Is entrepreneurial education and lifelong learning embedded in
the curricula? e answer to all these questions and more relate directly to
the way education and knowledge is being disseminated and shared, and
the manner in which the culture in the community perceives business
as a profession and entrepreneurship as the way to go. is too relates
to the future of Africa and Africans. Investing in human capital through
awareness and lifelong learning paves the way to the development of skills
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 41

and capacities that are becoming increasingly important to prepare future
generations to grow into agents of change and transform their society.
Investing in people is investing in the future and making the individual,
the organisation and the community at large more agile, more competitive
and ready to compete in a changing and dynamic global marketplace. It is
important to note that while access to capital, among other factors, is key
for entrepreneurs, human capital is the primary building block in creat-
ing an entrepreneurial culture and hence a strong private sector that can
turn around the economy. erefore, lifelong learning, with its dierent
forms and means, should be considered as the engine of socio-economic
development and the base for a start-up culture and a start-up continent.
In every region of the world, Africa included, investing in youth speci-
cally and in human capital at large helps unlock the society’s potential for
socio-economic development and growth. ey want to learn, unlearn
and relearn in a world that is constantly changing to be able to make
a dierence. Human capital remains the game changer and is gradually
becoming the deciding factor in both emerging and developed societies. In
many ways, in my view, human capital is the oil of the twenty-rst century
and represents the most invaluable resource in countries round the world.
In 2013, the emerging markets’ total gross domestic product was
US$44.4 trillion compared to the US$42.8 trillion generated by devel-
oped markets. Having said that, there is never one size that ts all; the
process of adoption, diusion and adaptation varies across dierent
countries. erefore, the content, the approach, the set-up and the tools
to educate a community vary based on culture, norms, values, work pat-
terns and the way business is conducted. Clearly, it is not only academic
degrees, or even extended experiences and diversied exposure, for that
matter, that will enable entrepreneurship to ourish. Rather, the com-
munity will become more entrepreneurial if the environment provides
opportunities for everyone to think dierently and have the space and
time to act creatively and attempt to follow their passion, take risks and
accept failures, all as part of the continuous learning process. It is impor-
tant to understand that in entrepreneurship, mistakes represent opportu-
nities for learning and improvement.
e required education–knowledge–experience infrastructure, in other
words lifelong learning, goes beyond the boundaries of the classroom, school
42 S.H. Kamel

or university. It is the market knowledge and experience that counts, and the
way the community prepares its current and future generations to be ready
to unleash their potential. It is more related to openness, innovation, for-
ward-looking and moving from the traditional and the predictive mindset
into the unconventional and the uncertain. e knowledge shared should
embed creative and timely content using cutting- edge methodologies and
critical thinking and should be driven and focused on catering for the global
job market requirements. Universities and professional institutions round
the world oer entrepreneurship programmes to nurture an entrepreneurial
spirit and provide potential entrepreneurs with the right tools and method-
ologies to launch their start-ups. is should be well diused in the 100+
business schools across the African continent. In addition, this should be
coupled with multiple informal settings such as advisory sessions, men-
torship and awareness campaigns, seminars and networking events. Since
2008, throughout the Middle East and North Africa (MENA), more than
140 programmes, initiatives and organisations have been established to pro-
mote the culture of entrepreneurship. ese include university-based incu-
bators and accelerators, non-governmental organisations, private set-ups
and funds, and chapters of international students and youth associations.
e entrepreneurial culture needs to be nurtured throughout the educa-
tion system and beyond. It is time to establish additional university-based
incubators. ere also needs to be more focus on and encouragement
toward the private sector in schools, teaching youth about entrepreneurship
throughout the curricula as well as developing the appropriate policies and
directions to ensure an impact-oriented entrepreneurial education. is
should include exposure to business successes and failures and role models
in the society as well as extracurricular activities that promote innovation
and creativity. ere is a need for a transformational change in the societal
mindset by appreciating more the role of the private sector and demon-
strating the role it plays that complements the role of the public sector and
the civil society. ey all contribute in dierent ways to the welfare of the
community and that notion needs to be disseminated through degree and
non-degree programmes as well as orientation and awareness seminars and
the media. e community needs expertise in idea generation, leadership,
governance, responsible business, business ethics, problem identication
and solving, project management and more.
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 43

Given the demographics in emerging economies such as most of Africa,
as well as the need to enlarge the private sector through the proliferation
of SMEs, economies in many ways will be shaped by how eective entre-
preneurial education is developed and integrated universally across the
dierent communities. Some would argue that entrepreneurship cannot
be taught and that it is a gift or talent; I would argue otherwise. While
some denitely are born with more talent than others in some respects,
everything can be improved and ne-tuned through proper education,
mentorship, exposure and the opportunity to showcase one’s own capac-
ities and skills. e key strategic objectives of entrepreneurial lifelong
learning include, but are not limited to, fostering innovation, leverag-
ing responsible business, introducing business and management skills
and techniques, helping develop high-growth SMEs, commercialisation
of ideas, empowering and engaging youth, and more. Identifying talent
should be universally based across dierent communities, unlike the con-
ventional wisdom in emerging economies that everything happens in the
capital and the big cities. Talent is everywhere, and more often than not
it is found in remote locations and small villages and towns, where the
need for change and a better life encourages youth to think dierently
and creatively to develop solutions and ideas that could transform their
communities—further proof that it is not just academic degrees, but the
overall educational experience and knowledge dissemination in both its
explicit and tacit ways, that can make a dierence.
For example, among Egypt’s 85 million citizens, 7.1 million work as
civil servants. at leaves a huge population ready for a more robust pri-
vate sector. It would be a big mistake for Egypt not to utilise its most
precious resource, human capital, to establish a strong private sector. e
preparation of future leaders and entrepreneurs in Egypt should be aim-
ing at realising sustainability, societal impact and scalability to accom-
modate the fast-growing population. e ICT platform will be driven
by an incredibly passionate youth contingent that is technology-savvy,
reaching 100 million (117%) mobile users and more than 40 million
(47%) in 2015. is youth contingent possesses the creative minds and
innovative solutions needed to help transform the society while focusing
on the incredible number of untapped opportunities across a variety of
sectors. e notions of productivity, velocity, accuracy and consistency
44 S.H. Kamel

should be at the core of the learning process, since they will be among the
deciding factors in preparing the entrepreneurs who will have the ability
and stamina to handle the pressure and market dynamics while continu-
ing to make a dierence. e future of Egypt, and consequently Africa,
depends on the next generation of business leaders and entrepreneurs
being able to transform the economy through the creation of a robust
and competitive start-up Egypt. It is invaluable to understand that what
really counts is human capital, and that they are ready and engaged to
inuence the economy. e process of building a start-up culture would
eventually lead to creating a start-up society and consequently a start-up
nation, which would in many ways help create an ecosystem in which
more entrepreneurs lead to more jobs and a better economy.
The Impact ofUniversity-Based Incubators/
Accelerators
e development of an entrepreneurial culture should follow a bottom-
up approach that spreads across the community and becomes embedded
in the way people think, plan, work, study and go about doing dierent
things in business and society. e stakeholders in the entrepreneurial
ecosystem are many and diverse; each plays an important role in develop-
ing, institutionalising and promoting entrepreneurship and innovation.
One of the growing and invaluable key stakeholders in the ecosystem
that provides the rich and much-needed body of knowledge associated
with the academic set-up that supports entrepreneurs is the university-
based incubator (UBI). e concept of campus incubators is spreading,
and they are growing in number, impact and role when it comes to the
entrepreneurial ecosystem in the society. Generally, campus incubators
are widely perceived as platforms providing a nurturing environment
for new business ventures and business start-ups that stem from ideas
generated and developed by university undergraduate and graduate stu-
dents (Kamel 2013a). To support such a growing community, some uni-
versities, in addition to developing an incubator, either open oces to
support entrepreneurship or establish technology tracking oces that are
focused on promoting innovation and helping start-ups, especially those
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 45

that are technology-based. Some dene the university incubators as the
equivalent of a career oce, where the ultimate outcome for entrepre-
neurs is a gateway to the marketplace with all the support, opportunities,
mentorship and funding possible (Kamel 2014). Incubators could be the
gateway to the marketplace with the right idea and a value proposition
to the society.
Entrepreneurial universities in general are increasingly becoming essen-
tial agents in generating knowledge and innovation while capitalising on
emerging ICTs. Such a mandate serves their purpose as academic institu-
tions focused on research and education, but also supports their quest to
fortify their invaluable role in knowledge creation, dissemination and trans-
fer as well as the commercialisation of innovative ideas, especially through
technology-based ventures and the creation of start-ups (Kitagawa and
Robertson 2012). Universities could be teaching and researching entre-
preneurship, rather than being entrepreneurial themselves in everything
they do. e latter are those who really have an impact on creating the
entrepreneurial culture in the society (Kamel 2014). It is not just about
teaching entrepreneurship in the classroom; it is all about the case studies,
extracurricular activities, the teaching method, the interaction with indus-
try and business, and the blending of course content and the amalgama-
tion between theory and practice. It is the mindset and the culture that
need to be created and embedded in campus life (Kamel 2012).
e importance of having UBIs is invaluable for the formulation
of a vision and a strategy for the promotion of innovative research in
technology-based start-ups, which is becoming increasingly important
in today’s global competitive economies, and more important for emerg-
ing economies such as most of the African economies that are looking
for a platform to make a dierence and realise socio-economic devel-
opment (Scaramuzzi 2002). Unlike stand-alone business incubators that
mainly provide the incubation, funding and mentorship required by new
business start-ups in a classical environment, the ones located on univer-
sity campuses play an important role in developing solid and eective
relationships between the academic establishment and dierent businesses
and industries across the society (Kamel 2013b). UBIs are intended to
link ICTs, resources and human capital to entrepreneurial talent for the
objectives of accelerating the development of start-ups and consequently
46 S.H. Kamel

accelerating the commercialisation of technology. Respectively, multiple
universities around the world started establishing their incubators, pro-
viding policymakers and aspiring entrepreneurs insights into the vari-
ous facility design, management policy, and value-added aspects of this
emerging tool employed by some entrepreneurial universities as a strategy
for supporting the development of new start-ups and helping economies
at large (Kamel 2014). Such evolution needs to occur in Africa too; the
potential is huge and the resources, ideas, passion and need are there.
UBIs oer many advantages, including access to university facilities,
faculty, sta, mentors, library resources and student support; entrepre-
neurial clinics provide free advice and counselling on campus 24/7 and are
often buzzing with students and mentors (Robertson and Kitagawa 2011).
e growing interest in and passion for UBIs stem from the signicant
potential of the interdisciplinary nature of the environment that could be
created from among the academic disciplines oered on campus, includ-
ing business, engineering, chemistry, biotechnology, art and more, and
the diverse groups of stakeholders o campus involved and engaged in the
ecosystem (Kamel 2013a). In addition, the research outcome that could
result from assessing the incubated start-ups becomes increasingly impor-
tant for businesses, industries and entrepreneurs across dierent sectors
in today’s competitive and changing global marketplace (Manimala and
Vijay 2012). e learning environment on campus provides the proper
context for the creation of the entrepreneurial culture among the youth—
the future leaders and entrepreneurs, the ultimate agents of change.
As early as the 1980s, more than 50 universities in the United States
had established business and technology UBIs. Since then the concept
has spread worldwide across dierent regions, with a growing number of
universities funding UBIs as an integral element of the educational experi-
ence to leverage their research, teaching and service outcomes. Moreover,
the partnership between universities, industries and businesses represents
another eective platform that can contribute to socio- economic devel-
opment, productivity and growth (Kamel 2013b). Campus incubators
are a great t for the learning process: they relate theory and practice and
can eectively guide the interested students not only to become knowl-
edgeable about entrepreneurship but also to become entrepreneurial
themselves (Mian and Oswego 1996). UBIs encourage innovative new
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 47

businesses, help disseminate knowledge (which schools specialise in),
and complement the teaching of entrepreneurship in the classroom by
closing the gap between academia and the business world. With SMEs
growing in number and impact in driving both developed and emerg-
ing economies, universities can stimulate the economy by supporting the
proliferation of start-ups (Scaramuzzi 2002). is is the way to create an
entrepreneurial mindset that can help create the required culture for a
start-up nation, one that can have a positive impact with respect to job
and wealth creation (Kamel 2012).
In general, UBIs are perceived as an important venue for research
through theoretical inquiry and access to faculty and dierent facilities as
well as for helping foster university–industry and business entrepreneurial
linkages and partnerships to support the development and growth of the
incubated start-ups (Mian and Oswego 1996). e model diers across
dierent universities. Experience clearly indicates that no one size ts all.
Some have accelerators that are prot-oriented, others develop their own
incubators or labs that are purpose-oriented, and some establish their
own centres or institutes (Robertson and Kitagawa 2011). However, the
one thing all universities are focused on is leveraging their entrepreneurial
education with hands-on experience that can provide their students and
dierent stakeholders with a platform to apply theory to practice. e
ultimate strategic objective is to create a societal impact on the economy
and contribute to the betterment of society (Manimala and Vijay 2012).
The Entrepreneurial Ecosystem
In this pivotal time for Egypt, the notion of start-ups, a strong entrepre-
neurial culture and an innovative mindset is needed more than ever to
become the driver and catalyst to rebuild Egypt on strong, solid and sus-
tainable foundations. Entrepreneurship is not new to Egypt. Egyptians
throughout history have been known as successful entrepreneurs across
dierent sectors, including trading, agro-business and the textile industry,
moving between provinces in Egypt and across nations in Africa, actively
involved in establishing and growing businesses in dierent sectors. is
mindset shifted some time ago, however, so that the aspiration of many
48 S.H. Kamel

Egyptians more recently has been to work for the government or in the
public sector, to secure a job with minimal risk and challenge. A cul-
ture developed in which the primary focus was on securing a safe job
regardless of the opportunities that presented themselves elsewhere in the
marketplace (Rizk and Kamel 2013). However, that mindset gradually
started to change in the late 1990s with a growing young population that
is technologically savvy, better educated, more exposed and willing to
venture into the business world at a younger age. In 2008, such change
started to take a more denite shape with the proliferation of business
associations, organisations and business plan competitions supported by
investors, mentors, local companies and multinationals (Kamel 2014).
Consequently, since 2010, more than 140 organisations in Egypt and
the region were established and/or started to provide dierent types of
support, whether nancial or non-nancial, to the entrepreneurial eco-
system. Several factors contributed to the change, including, but not lim-
ited to, an average population growth rate of 2.1 % perannum in Egypt,
in a population of 85 million that is overwhelmingly young, with 58 %
under the age of 25, coupled with a growing belief that the nation’s future
can only be improved with a more agile and competitive private sector
(Kamel 2011). Moreover, the change was also assisted by the growing dif-
fusion of ICT usage and increasing investment in entrepreneurial aware-
ness campaigns and educational and training programmes. Accordingly,
over the last decade many cases have emerged in Africa of promising
entrepreneurs who have great ideas for start-ups that can have positive
implications for the societies of the region. Given the demographics of
Africa, and with a growing and young population increasingly exposed
through various technology and social media platforms, there is no short-
age of ideas that can spawn start-ups in dierent sectors and industries
such as health, environment, tourism, education, agriculture, energy,
recycling, music, entertainment and more.
In Egypt, the government has developed several strategies to encourage
entrepreneurship. ey include training programmes, nancing oppor-
tunities and technical support (Hattab 2010). Rules and regulations have
also seen some shifts. Regarding the ease of doing business, Egypt was
considered one of the top global reformers when it came to simplica-
tion of administrative work in 2007 (OECD 2009). For example, the
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 49

creation of ‘one-stop shops’ to consolidate government services in one
location have helped streamline and facilitate the process of starting a
new business (IBRD 2012). However, most of these reforms have tar-
geted large investors and corporations, rather than small start-up com-
panies. e government has also supported entrepreneurship (albeit
mostly SMEs, rather than high-growth innovative entrepreneurship)
through nancial opportunities. For example, public banks such as the
National Bank of Egypt, Banque du Caire, Banque Misr and the Bank
of Alexandria have created departments to address the particular needs of
SMEs (AFDB 2009). Moreover, the Social Fund for Development and
the Industrial Modernization Center, both quasi-governmental entities,
have created SME support programmes (AFDB 2009). Looking at the
entrepreneurial ecosystem holistically, El Dahshan, Tolba and Badreldin
(2010) identied some of the most active organisations in Egypt that
support entrepreneurship. ese organisations include the Information
Technology Industry Development Agency (ITIDA), the Middle East
Council for Small Business and Entrepreneurship, Nahdet El Mahrousa,
Ashoka, Entrepreneurs Business Forum, Endeavor, Alashanek ya Baladi,
the Egyptian Junior Business Association, the American University in
Cairo and the Center for Entrepreneurship at Cairo University. ere are
also many others including Cairo Angels and the American Chamber of
Commerce in Egypt. However, this is a dynamic space that needs to be
monitored on a regular basis given its uid nature and the continuous
changes that take place as players come on board or leave the ecosystem.
e American University in Cairo since 2009 has tried to help build the
entrepreneurial ecosystem by engaging dierent players and becoming
their educational partners, and by bringing everyone together to contrib-
ute what can really be a game changer for Egypt.
Building aUniversity-Based Entrepreneurial
Ecosystem: TheCase oftheAUC Venture Lab
Within the context of emerging economies, UBIs are gradually growing
in numbers to cater for the needs of their societies, especially those with
demographics that are predominantly young and that are interested in
50 S.H. Kamel

establishing a solid, diverse and competitive private sector. In the case of
Egypt, entrepreneurship and investment in human capital for the cre-
ation of a competitive private sector is key. ere is a youth population
that is interested in creating a start-up culture that could transform the
society (Kamel 2014).
erefore, in 2013, the American University in Cairo (AUC) organ-
ised the soft launch of the rst full-edged UBI in Egypt—the Venture
Lab (V-Lab), aiming to translate technologies and innovations developed
by selected start-ups across the country into commercially viable ven-
tures. e V-Lab is managed by the Entrepreneurship and Innovation
Program (EIP) of the AUC School of Business, established in 2010 as
part of the school’s 2010–2015 strategy aimed at promoting and sup-
porting a growing entrepreneurial culture in Egypt. e strategy was
focused on helping to create an entrepreneurial culture supported by
three distinct pillars: innovation, leadership and responsible business
(Ismail and Kamel 2013). EIP was transformed in 2014 into the Center
for Entrepreneurship and Innovation (CEI), which identies and assists
mentors, as well as incubates, connects and supports talented youth and
facilitates their success beyond AUC, into Egypt, Africa and the Middle
East. e V-Lab capitalises on the resources and reach of the university at
large and its state-of-the-art campus facilities in terms of people, knowl-
edge and technology infrastructure (Ismail and Kamel 2013).
At the early stages of building the EIP ecosystem, discussions and
meetings were held with various stakeholders sharing a common entre-
preneurial passion. ese conversations involved faculty, students, alumni
and business leaders with specic interest in the area. To formalise these
discussions, the school established the Entrepreneurship and Innovation
Council to act as an advisory body, which had among its members faculty
and business leaders with an interest in entrepreneurship. Over time, they
became judges and mentors in competitions, acted as angel investors and
provided advice in designing the various EIP programmes and activities.
EIP also established a network of practitioners, business executives and
academics interested in mentoring and coaching entrepreneurs at various
stages of their start-up journeys (Ismail and Kamel 2013). EIP takes a
comprehensive ecosystem approach in designing its action framework,
focusing its activities on six key areas: entrepreneurs, ideas, networks,
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 51

mentors, funding and start-up ventures. e programme focuses espe-
cially on partnerships with other organisations associated with entrepre-
neurship to implement its activities. Table 3.1 demonstrates the primary
focus areas of the framework. Working with young entrepreneurs high-
lighted the need for providing additional in-depth services to serious
early-stage entrepreneurs/start-ups as they worked through their business
modelling and planning, fundraising, and setting up their operations and
partnerships. ese services are best provided to a smaller number of
start-ups through an acceleration/incubation programme. is provided
the motivation to expand the scope of the entrepreneurship ecosystem at
AUC by establishing the AUC V-Lab, as already indicated.
Since 2008, EIP activities have supported more than 5,000 entrepre-
neurs from several provinces in Egypt including Cairo, Giza, Mansoura,
Alexandria and Aswan as well as from other countries in MENA such as
Lebanon and the United Arab Emirates. Since its inception, EIP posi-
tioned itself in the entrepreneurship ecosystem as the educational partner,
becoming the primary platform for knowledge sharing and dissemination
in the space of entrepreneurship and innovation and collaborating with
the dierent main stakeholders in the ecosystem, including Injaz Egypt,
Flat6Labs, Endeavor Egypt, Enactus and others. As indicated previously,
AUC V-Lab, as a university-based incubator, was established to provide
in-depth support services for a small number of serious entrepreneurs
and their start-ups. e ndings from background research conducted
on start-ups in Egypt demonstrated that there is a huge ‘white space’ in
the market (Ismail and Abdallah 2013). Many start- ups were in need of
services that could easily be oered by a university- based incubator, such
as mentorship and coaching, networking and connections, and access to
university facilities, faculty and students.
e business model of the V-lab was based on research on other
university- based incubators in the world (Ismail and Abdallah 2013).
is provided insights into the various business models of university-
based incubators, which helped shape the V-Lab business model.
Globally, for example, universities tended to select companies that
matched their own internal competencies. Many indicated a signicant
interest in technology, and the time period between aliation and incu-
bation ranged from several months to several years. Many also oered
52 S.H. Kamel

multiple incubator types and stages, allowing a diversity of entrepreneurs
to enter their programmes. Compared to the United States, emerging
market programmes tended to oer longer incubation periods (up to
18 months), and university faculty also tended to demonstrate a more
intimate, one-on-one relationship with the incubated entrepreneurs. It
was also found that short-term incubators were a double-edged sword:
on the one hand, they might push entrepreneurs to get their products
to market more quickly, but they might also rush products that need
Table 3.1 EIP primary focus areas
Focus area Description
Entrepreneurs Raising awareness about entrepreneurship among different
participants. They vary in terms of education, demographics,
socio-economic background and age group. This stage acts as
a catalyst for start-up team formation and exposes the
entrepreneurs to the venture process and the
entrepreneurial ecosystem
Ideas Generating attractive ideas, conceptualising business
opportunities and developing business plans; all responding
to market needs in Egypt. Leadership panels, partnerships
with incubators and summer camps represent the major
activities of this area
Network
creation
Collaborating with 28 universities, companies and
international institutions and the involvement of business
executives from a variety of sectors where participants are
exposed to real-life examples of entrepreneurship. Meetings
and discussions are carried out between like-minded
entrepreneurs, industry experts and local leaders
Mentorship Coaching and mentoring potential entrepreneurs through the
development of their business plans and launch of their
start-ups. Furthermore, mentors provide internships in
start-ups. The mentoring process is done through the
university mentors’ network, and supported by faculty
advice, workshops and training
Start-up
ventures
Encouraging entrepreneurs to seek funds. They are connected
to venture capitalists, angel investors and potential
investment partners. EIP also offers financial awards through
start-up competitions. Consequently, some entrepreneurs are
admitted to business incubators and others are assisted in
promoting their ideas to the market. This is done by
connecting start-ups to incubators and accelerators,
supporting incubated start-ups in partner organisations or
providing visibility and access to start-ups
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 53

more time to develop (Ismail and Shabana 2013). AUC V-Lab was estab-
lished to operate in addition to all the above-mentioned EIP activities
and programmes, and oers a few serious entrepreneurs a variety of ser-
vices aimed at assisting the start-up process, increasing business survival
rates and providing avenues for access to funding from angel investors,
venture capitalists or other sources. e V-Lab utilises the university’s
capabilities (knowledge, faculty, sta, facilities, space, brand name and
services) to help companies with strong growth potential launch suc-
cessfully. AUC V-Lab oers workspace, facilities including the library,
as well as engineering, multimedia, and technical labs, funding, business
skills training, seminars, business plan competitions, networking events,
mentorship, coaching, and assistance through professional services such
as human resources, recruitment, communication, marketing and legal
assistance. In addition to access to faculty members, students and facili-
ties of the university, but also unique to the V-Lab, is access to students
for product testing, class projects and internships. Moreover, the V-Lab
organises two regular events: a weekly event where the university com-
munity is invited to meet the start-ups and give feedback on the products
or services, as well as a biweekly event where mentors are invited to share
experiences, both successes and failures, with the entrepreneurs of the
start-ups being incubated.
To date, multiple rounds have been completed, with over 23 start-
ups incubated since the inception of the V-Lab. Initially, over 500 appli-
cations were presented, but only the short-listed start-ups were given
around US$3,000 each, in return for zero equity. e incubation cycle
is designed to last for eight months. e initial cycle included six start-
ups from diverse sectors with products ranging from wearable gadgets to
mobile applications. e V-Lab is funded through sponsorships and the
school budget. UBIs are usually sponsored by dierent businesses and
industries. In the case of the V-Lab, SODIC, one of the leading real estate
development companies in Egypt, and the Arab African International
Bank (AAIB) are the primary sponsors. It is important to have earmarked
sponsors to provide sustainable nancial support to the start-ups in their
initial phase. e V-Lab enables the entrepreneurs of the incubated start-
ups to capitalise on AUC’s world-class facilities and knowledge base, con-
necting them to the university’s alumni network and fostering a thriving
54 S.H. Kamel

ecosystem of innovation, education and business. e V-Lab provides
a space for young, passionate and promising Egyptian entrepreneurs
to develop innovative business ideas and solutions to some of the most
pressing problems in the community. Participants are not supposed to
be primarily AUC students, since the model was developed from the
start to serve Egypt’s young and promising entrepreneurs regardless of
where they are from. In that context, AUC is determined to provide the
mentorship and support network that will give these talented young
people an opportunity to make their dreams a reality. UBIs are estab-
lished to empower entrepreneurs and foster innovation in an attempt to
contribute to socio-economic development through the creation of jobs,
and if the proposed ideas can be translated into successful products and
services, the economy will be in much better shape (Scaramuzzi 2002).
Innovation and entrepreneurship can be a key driver for competitiveness
of the economy and for accelerating inclusive economic growth. In that
sense, this is exactly what the V-Lab was established to realise, with an
additional mission to help ll the existing gaps in the emerging entrepre-
neurial ecosystem in Egypt. One of the primary strategic objectives is to
capitalise on AUC’s intellectual capital and world-class resources, select
a few high-potential innovative start-ups and help transform these teams
into scalable start-ups.
A number of promising start-ups were incubated during the early
incubation cycles, including Mubser, a technology-based start-up pro-
viding cutting-edge technology for the visually impaired around the
world through a wearable gadget that can be integrated into a smart-
phone or through the device’s customised pocket computer. With the
help of algorithms, it can detect the obstacles in front of the user and
notify him/her through a vibration bracelet in the user’s hand and/or
through a Bluetooth headset in the user’s ear. It is important to note that
in 2013, Mubser won rst place in the ICT track at the Idea to Product
competition held in Brazil. Other start-ups incubated at the V-Lab
covered ideas related to media and news, edutainment, transportation
logistics and textiles. A number of the V-Lab incubated start-ups and
their founders have been recognised by a variety of international awards,
including candidates among the 30 most promising young entrepre-
neurs in Africa by Forbes. While UBIs are popping up everywhere,
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 55

AUC’s programme seems to be the rst incubator in the region to sup-
port entrepreneurs across the community. While some are limited to
specic technologies, others only serve their own students. e V-lab
prides itself on being open to entrepreneurs from across Egypt. With
several dierent models on which to base the V-Lab operations, the key
here is to nd a strategy that is right for Egypt, one that can help bring
the dierent stakeholders in the ecosystem together and help realise a
scalable and sustainable impact.
e V-lab has adopted best practices from global university and private
incubators alike, but the team is forging ahead with their own adapted and
localised model, one that can help optimally realise the strategic objec-
tives it was initially created for. e longer incubation option, welcoming
applications from across the country and two start-up competitions a
year are all elements that the AUC School of Business has chosen in order
to maximise its ability to support job creation in Egypt. e model is
gradually being adapted with continuous eorts to improve the manage-
ment and governance structure. To assess the success of the V-Lab, the
university has developed a number of key performance indicators (KPIs).
e main indicators of success are the number of start-ups the V-Lab
creates in addition to the number of entrepreneurs trained through the
V-Lab learning programme, the number of start-ups incubated and sup-
ported by services oered, and the number of start-ups able to access
funding (and the amount of funding) as a result of the V-Lab incubation.
In 2013, a new Swedish organisation was established to provide inter-
national ranking for university-based incubators and to help establish
standards and best practices for their operations. UBI Index ubi-global.
com provides benchmarking and best practice sharing services to uni-
versity-based incubators, as well as advice to corporations and govern-
ments on how to best support these programmes. In 2014, AUC V-Lab
was selected as one of the ve most promising university incubators in
Africa, based on the rst round of incubation. As V-Lab develops its
programmes, it is learning from the benchmarking exercise and also
joining an international network of peers. It is important to note that
UBIs are increasingly becoming the ultimate resource base and the most
convenient environment conducive to the development of successful
technology-based start-ups and hence promoting technology- based
56 S.H. Kamel

entrepreneurship. However, there are issues that remain of primary
importance for continuous research, relating to dierent entrepreneurial
elements in the equation: the individual, the process, the organisation
and the environment.
e experience of the V-Lab resulted in a number of accumulated
experiences that could be summarised in the following: (a) the impor-
tance of using partnership models when collaborating with dierent
stakeholders in the ecosystem including the venture capital funds, the
angel investor networks, and the providers of training and professional
development including non-prot organisations is a critical success fac-
tor; (b) the importance of building on the resources and facilities on
campus, including utilising available services across the university such
as faculty, labs, research centres and students and focusing on areas where
the start-ups could benet from being incubated within a university, is
invaluable. For example, the rst two start-ups incubated at the V-Lab
were created by AUC professors and alumni; both were based on inno-
vations in science and engineering in the areas of biotechnology and
solar energy. In each case, the start-up was working with AUC students
to improve their business plan, implement marketing research, conduct
additional technical research and connect with the AUC network of
funders and mentors. rough this integration with the university, these
start-ups beneted tremendously and contributed to both university and
students. is relationship makes a university-based incubator distinc-
tive from any o- campus incubator; (c) the use of an iterative experi-
mental approach in growing the scope of activities, by creating awareness
about entrepreneurship across the campus among faculty, students and
alumni, followed by the creation of partnerships with key actors in the
ecosystem and expansion of the number of activities, followed by the
phase of building the UBI, then creating a vehicle to fund the incu-
bated start-ups. Such an approach provides the ability to experiment and
learn, to build a stronger network with key stakeholders and to invest
the resources eciently; (d) the creation of locally engaged stakeholders
helps build a solid support base and lay a foundation for long-term sus-
tainability. Individuals and institutions who are engaged in the process,
whether they are from within or outside the university, tend to have
greater interest (Ismail and Kamel 2013). ese stakeholders become
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 57

strong long-term supporters of the UBI, which is invaluable for a scal-
able and sustainable impact on the entrepreneurial ecosystem coupled
with the invaluable role that entrepreneurs play in advancing a country’s
economy (AFDB 2009), which in many ways points to the important
role of universities in fostering and promoting an ecosystem for innova-
tion and entrepreneurship.
The V-Lab Business Model
e V-Lab targets start-ups after the idea stage and prior to entering the
market. is phase ts well with the university-based incubator model,
as at this point entrepreneurs have a general idea of what their product
or service will look like and a prototype or pilot, but still require a sig-
nicant amount of technical and business support. Start-ups entering
the programme must have or be working on a prototype, pilot or proof
of concept for their product or service. e V-Lab is sector-agnostic, but
requires that entrepreneurs have an innovative approach to solving or
lling existing demand with a unique value proposition. rough its
partners, the V-Lab has reached out to students in all 17 public uni-
versities in Egypt to ensure a diverse and interesting pool of applicants.
Start-ups go through a rigid two-month selection process that includes a
detailed application, initial presentations and nally the pitching of ideas
to a panel of seasoned entrepreneurs and investors. e selection criteria
cover three main areas: rstly, the business opportunity or idea must be
original, impact on a problem, ll a market gap, be innovative and t with
the V-Lab service oerings; secondly, the business must have passed the
idea stage and have developed a prototype, and the viability of its revenue
model and cash burning rate will be examined; thirdly, the entrepreneur
must demonstrate commitment to the business, managerial capabilities
and an acceptance of feedback. e selection process is designed to add
value to the entrepreneurs, even if they are not selected for incubation.
Before the nal presentations on demo day, all companies are required
to attend an interactive training programme that focuses on building
business skills. is also enables the V-Lab to work closely with each
58 S.H. Kamel

entrepreneur and evaluate his or her talents, abilities and motivation. e
programme is designed and led by AUC faculty, business practitioners
and executives selected from our mentors’ network.
Based on the selection process, start-ups are admitted into a four-
month acceleration programme. During this period, the V-Lab educates
start-ups on basic business skills, works with them to nalise business
models and develop functioning prototypes of products or services, and
connects them to business leaders and mentors. A ‘start-up boot camp’
training programme explores basics business principles, as coaching and
mentorship is oered in tandem. Facilities including labs, theatres and
mass communications are oered, as well as workspaces. Entrepreneurs
are oered help in recruiting other students, especially interns, to join
their projects. e acceleration phase provides training to students in ve
areas of business management. Firstly, they are taught the basics of plan-
ning a business, including the business model, market, product and value
proposition. ey are introduced to project planning tools and taught
how to create a business plan. e second aspect involves developing a
‘product that works’. Next, launching that product requires skills in mar-
keting, advertising and sales. Financial management explores aspects such
as equity management, nancing, budget and cash ow management, as
well as accounting and taxes. Finally, training on ‘organising for growth’
helps start-ups learn how to manage people, as well as organisational
values/culture, in an early-stage organisation. Upon nishing the four-
month cycle, start-ups are expected to have a nalised business plan, a
working product or prototype and a nancial plan.
e coaching programme supports the team in areas that do not
require deep expertise but rather general management experience.
Coaches are selected based on expressed interest, as well as matching
during events (for example, speed mentoring). Each start-up is assigned
one coach, who is asked to meet with them frequently. Coaches are gen-
erally individuals with relevant work experience and a deep interest in
the company’s idea/business model. ey also should have the capability
to pitch and/or defend the idea in front of investors. Speaking and net-
working events are also held on a regular basis. ese are open to outside
entrepreneurs, and include pitches, speed mentoring, sharing of success
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 59

stories and relevant topic-based speeches. In addition, AUC V-Lab assists
with fundraising by providing access to an angel network and support
in negotiating deals. Promising start-ups may be oered an additional
nine- month ‘incubation’ period. is primarily involves customised sup-
port for the start-up, such as workspace, use of facilities and guidance.
Entrepreneurs may be advised on human resources and legal support and
participate in three- to nine-month mentorship programmes. Table 3.2
lists a sample of the start-ups that have been incubated since the estab-
lishment of the V-Lab.
Table 3.2 Sample prole of AUC venture lab start-ups
D-Kimia is the first biotech spin-off from AUC Labs. Based on knowledge,
research and technologies developed at AUC, D-Kimia develops novel and
affordable diagnostic solutions to detect a broad range of diseases, initially
focusing on the identification of the hepatitis C virus
KarmSolar is dedicated to providing innovative off-grid solar energy solutions
that are commercially viable and easy to use in the agricultural, industrial
and business sectors. Through developing unique approaches to each
project, we develop systems that harness the power of the sun and replace
diesel-powered processes, thereby producing energy that is affordable,
stable, reliable and environmentally friendly
Mubser develops wearable tech to aid visually impaired people in their
everyday lives. Mubser’s pilot product, Sensify, coordinates the user’s
smartphone or Mubser pocket computer to detect obstacles and notify the
user through vibrations on a bracelet and a Bluetooth headset
Bus Pooling is a subscription-based bus service that transports commuters
between home and work. After receiving a request, Bus Pooling matches
individuals living in the same area who share the same work location and
hours, and supplies a bus and schedule customised to meet their needs
Kashef Labs is developing a ground-penetrating radar capable of detecting
the many landmines left by the Axis forces in WWII on Egypt’s borderlands.
Using an unmanned aerial surveillance tool that is lightweight and utilises
minimal power, the radar flies one meter above desert rock and sand to scan
the ground
Jozour is working on producing wooden panels from date palm midribs using
innovative and unique machines. We design and manufacture our own
machines. We also develop different types of wooden boards to be supplied
to furniture manufacturers and interior designers
Creative Bits applications provide snowball technology to help people create
electronic applications and provides an E-robot kits to teach children
programming, electronics and to make their own toys
60 S.H. Kamel

Conclusion
Based on interviews with the EIP and V-Lab teams, programme bene-
ciaries and entrepreneurs, four key lessons learned were identied. Firstly,
it is very important to use a partnership model to collaborate with other
players in the ecosystem. is ensures that synergies are established with
outsiders while strengthening the ecosystem. Secondly, it is critical to
build on the assets and strengths of universities in designing the pro-
gramme and establishing the incubator. For example, there is a need to
focus on areas where there is interaction between the incubated start-ups,
outside students and faculty. In addition, there is a need to link start-ups
with the university facilities, labs and services. irdly, it is advisable to
use an experimental/gradual approach, for example, starting with a small
number of start-ups and focusing on their growth. Finally, the creation
of local stakeholders within and outside the university is an important
factor for the success of the programme.
Partnerships form a base of supporters and stakeholders who care
about the programme and seek its success, which is critical in overcoming
many of the challenges and risks associated with operating in emerging
markets. e V-Lab has developed a number of KPIs to measure its per-
formance and impact. e main KPI is the number of successful start-ups
the V-Lab will create; however, additional indicators include the number
of entrepreneurs trained, the number of start-up ventures incubated and
supported by the V-Lab services, and the percentage of start-ups that
access funding (and the amount of that funding) as a result of being incu-
bated. Mentors’ ability to link entrepreneurs with business executives and
entrepreneurs, as well as the creation of partnerships between start-ups,
business, government and educational institutions, are additional indi-
cators of success. Despite the important role of UBIs in initiating new
ventures and in part in sustaining start-ups, entrepreneurs must learn not
only how to survive, but also how to sustain and scale up on their own.
ICT is transforming the global economy and creating new networks
that cross cultures as well as great distances. e progress made by many
African nations has been remarkable, but they are still a long way from
reaching a competitive stage with the rest of the world on a more scalable
level. e transformation from the formulation of policies and directions
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 61

to the implementation and institutionalisation of such programmes and
projects represents the greatest challenge to strategically deploying ICT
in the African continent. Exciting times are coming Africa’s way with the
changing leadership in the continent. e new leadership is moving the
continent forward by helping individuals and organisations achieve their
potential by having business take the lead.
One of the most important roles to be played in the information age
will be the collaboration among dierent stakeholders, including the gov-
ernment, the private sector and civil society. is role will be determined
by how governance will be exercised in the information-based world.
In that respect, while the framework has yet to be dened, information
society services will probably be provided by the private sector, with gov-
ernments providing a supporting regulatory framework based on greater
public participation and consensus. Development of the information
society in Africa cannot be left to market forces; it deserves and needs the
attention of the highest political decision-makers. us, nations should
prioritise information needs for business and socio-economic develop-
ment in the same way they do for dierent sectors such as industry, agri-
culture and health. Consequently, governments have a responsibility to
take a strategic view in facing the coming information-intensive world.
ese strategies should include creating a shared vision of the new com-
munication era, intensifying the process of information acculturation,
developing the required human capacities and accelerating the develop-
ment of the communications infrastructure. e integration of informa-
tion, communication and computing developments with other social
and economic policy goals is one of the priority issues globally. Table 3.3
demonstrates the path to building a start-up Africa.
African nations will have dierent priorities in the transformation
process and in the use of information for socio-economic and cultural
development. ese priorities will change over time. However, success in
achieving pervasive development lies in the proper design and delivery
of applications that would t the needs and requirements of the sec-
tors targeted. In any case, special attention would have to be directed
to human and professional development, especially to the skills and
knowledge needed to provide employment in an information society and
the incentives needed to provide both the ability and the willingness for
62 S.H. Kamel

Table 3.3 Start-up Africa matrix
Aiming at Sustainability Social impact Economic impact Scalability Nurturing agents of
change
Driven by Youth/passion Information/
communication
technology
Untapped
opportunities
Creative minds/
innovative
solutions
Building a start-up
culture
Focused
on
Responsible
business
Ethics Education/
vocational training
Leadership/
governance
Building a start-up
community
Targeting Entrepreneurship SMEs/start-ups What really counts
is ‘human capital’
Innovation is key Building a start-up
Africa
3 The Role ofanInnovative ICT-Based Entrepreneurial Evolution... 63

citizens to participate in an information society. Unless these prerequisites
are available and eciently maintained, the information society will not
yield its targeted objectives. Africa should focus on its youth, be driven by
innovation and entrepreneurship, and invest in its future leaders—those
who will make a dierence and transform society. ese are most likely
to be those capitalising on the power of technology who are at the same
time knowledgeable and have access to timely, relevant and accurate data.
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69
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI10.1007/978-3-319-41090-6_4
4
Prospects andChallenges ofManaging
Clusters asEntrepreneurship
Development Interventions
forSustainable Development inNigeria:
ADiscourse Analysis
LukmanRaimi, MorufuOladimejiShokunbi,
andStephenBolajiPeluola
Introduction
Clusters have played a signicant role in the technological progress,
new innovations and economic prosperity in industrial districts such as
Silicon Valley, California and Route 128, Boston, Massachusetts in the
USA, Bangalore in India and Hsinchu Science Park in Taiwan (Cai etal.
2007). Learning from the industrial experiences of the world, Nigeria
vigorously pursued the establishment of clusters as an industrial devel-
opment strategy, but these clusters were later abandoned by the mili-
tary government, to be reactivated again by successive governments in
Nigeria. Policy reversal is a common feature not only in Nigeria but in
the whole of Africa as a result of a defective political philosophy in this
part of the globe Mazrui (1986:16) laments:
L. Raimi (*) • M.O. Shokunbi • S.B. Peluola
Yaba College of Technology, Yaba, Lagos, Nigeria

… in a technologically underdeveloped society in the twentieth century, ultimate
power resides not in those who controlled the means of production (entrepre-
neurs and capitalists contrary to the mindsets of many), but in those who con-
trolled the means of destruction (political class with powers, ammunitions and
who have final say on matters of the states).
Refocusing on clusters as entrepreneurship development intervention
(EDI) after years of neglect ts perfectly into Nigeria’s extant agenda; this
agenda seeks to revamp Nigeria’s industrial development strategy with a
view to making it one of the top economies by the year 2020. One of
the industrial strategies that has fast-tracked the technological progress
of America, Europe and emerging economies like Brazil, Russia, India
and China is ocial development and promotion of industrial clus-
ters by both the public and private sectors. At the Annual Continental
Conference of the Pan African Competitiveness Forum in Abuja, Nigeria
in 2013, the Ministry of Science and Technology (MS&T) stated that
the Federal Government had approved the establishment of 9,555 indus-
trial clusters in the country based on comparative advantage and natural
resource endowment in the identied districts. e management of the
9,555 will be in collaboration with the various state and local govern-
ments, as well as the involvement of non-governmental organisations
(NGOs), local development partners, nancial institutions and multina-
tional companies (Amaefule 2012).
e eagerness to promote clusters for strong industrial development
has attracted the attention of academics, leading practitioners and inter-
national organisations because of the inherent opportunities of clusters
(Kuah 2002; Iwuagwu 2011). e economic benets of clusters include
reduced operational costs; emergence of new businesses/spin-os; emer-
gence of new innovations; cheaper technologies; increased specialisation/
division of labour and collaboration among companies in the clusters;
leveraging of social infrastructure; and consistent knowledge sharing for
greater competitiveness (Porter 1998; Ellison and Glaeser 1999). ese
benets will be further elaborated in the subsequent discussion.
Apart from the introduction above, the chapter is organised in ve
parts. e rst part focuses on the conceptualisation of clusters. e
second part discusses the rationale for clusters. e third part examines
70 L. Raimi et al.

the rationale for clusters development. e fourth part examines the
plausibility of developing clusters in the packaged food industry vis-
à-vis the opportunities and challenges. e last part concludes with
recommendations and policy prescriptions on sustainable clusters in
Nigeria.
Conceptual Issues
e term ‘cluster’ emerged from the works of Alfred Marshall and
Michael Porter. According to Kuah (2002), Alfred Marshall articulated
the cluster theory in 1890 as a concentration of specialised industries
operating in districts or localities for mutually benecial economic
interests, or agglomeration economies. Michael Porter popularised the
clusters concept in both in theory and practice. Porter (1990, 1998) pre-
scribed clusters as a desirable and worthwhile industrial strategy based
on competitive advantages or agglomeration economies. ese competi-
tive advantages will be discussed in the relevant part of this chapter.
Furthermore, the Department of Trade and Industry (1998:22) dened
clusters as the ‘concentration of competing, collaborating and interde-
pendent companies and institutions which are connected by a system
of market and non-market links’. From another perspective, clusters are
dened as geographic concentrations of interconnected businesses, spe-
cialised suppliers, service providers, rms in related industries and other
organisations that peacefully cooperate and compete with one another in
particular industries (Martin and Sunley 2003; Porter 1998). Similarly,
Boja (2011) dened clusters as geographical areas with competitive
advantage where companies simultaneously compete and collaborate to
gain economic advantages which are not available in other regions.
Summing up the various denitions above, the term cluster could be
operationalised as the geographical concentration of interrelated small
and large companies in the same value chain, which together collaborate
to promote technological development, wealth creation, regional com-
petitiveness and export of goods and services for long-term relationships.
In all clusters across the globe, the outputs of some companies are the
inputs of others, like a circular food chain. e large and multinational
4 Prospects andChallenges ofManaging Clusters... 71

companies operating in industrial clusters get their raw material,
components and value-added services cheaper and more quickly from the
smaller companies in what could be described a symbiotic relationship.
Some classic examples of model clusters include the wine clusters in
California (USA), the textiles industry in northern Italy, shipbuilding clus-
ters in Glasgow (Scotland, UK), steel clusters in Pittsburgh (Pennsylvania,
USA) and car manufacturing clusters in Detroit (Michigan, USA) (Kuah
2002; Mueller etal. 2006). In Nigeria, there are a number of clusters
in industrial cities such as Nnewi, Aba, Enugu and Owerri. e Nnewi
Automotive Parts Industrial Cluster in particular is known for exports
of fabricated automotive parts to West African countries, while in Latin
America, the Brazilian Shoe Cluster of Sinos Valley is the world’s leading
leather shoes cluster, where leather shoes are produced and exported to
other parts of the world (Amobi 2006).
Beyond the above discourse, the meaning of clusters extends to
knowledge- based institutions and nancial institutions that cluster
together in a particular location, providing training, research and con-
sulting services in various disciplines to society.
Rationale forClusters Development
e cluster is a model of industrialisation which has economic justica-
tion both in theory and in practice. eorists and practitioners argue that
when several companies in related elds or industries cluster together,
their costs of production decline; they enjoy access to multiple suppliers
of raw materials at reduced costs; and they enjoy increased specialisation
and division of labour (Amobi 2006; Ellison and Glaeser 1999; Kuah
2002; Porter 1998). Furthermore, Glaeser (2010:1) restates that:
Agglomeration economies are the benefits that come when firms and people locate
near one another together in cities and industrial clusters. ese benefits all ulti-
mately come from transport costs savings: the only real difference between a nearby
firm and one across the continent is that it is easier to connect with a neighbour.
Several years back, Michael Porter justied the importance of clusters in
his treatise e Competitive Advantage of Nations. He argued that clusters
72 L. Raimi et al.

serving dierent industries have the potential to stimulate competitiveness
in three ways: rstly, they increase the productivity of companies operat-
ing in the clusters; secondly, clusters propel products and services innova-
tion; and thirdly, clusters stimulate the emergence of new businesses or
spin-os within the industrial clusters (Porter 1990, 1998; Amobi 2006).
On the strength of the reviewed literature, there are seven justications
for the development of clusters in clear terms. e rst is that clusters
as industrial strategies reduce transaction costs and lower risk premiums
on the capital of companies (i.e., cost of production is lower in clusters
than elsewhere). Secondly, clusters foster productivity and specialisation
among collaborating small and large companies operating in a particular
industry. irdly, clusters aord companies opportunities to exploit their
specialties, thereby fostering innovation, the emergence of new businesses
or spin-os, and technological improvements of process and products.
Furthermore, companies that operate in well-established clusters are in a
position to work out joint solutions to common operational challenges.
e fth justication is that clusters give companies the opportunity to
build a labour pool, technology, infrastructure and knowledge sharing,
and team competitiveness. e sixth justication rests on the argument
that clusters located in areas where there is greater factor endowment pro-
vide opportunities for utilisation of abundant natural resources, access to
markets and fostering increased upstream and downstream employment
for the growing number of unemployed people. Finally, clusters oer
lower barriers to entry and exit for companies (Porter 1990, 1998; Boja
2011; Kuah 2002; Amaefule 2012).
Having understood the rationale and justication for clusters devel-
opment in both developed and developing countries, it is important to
identify the types of clusters that exist across the globe.
Cluster Typologies Across theGlobe
ere are dierent cluster typologies across the globe, namely: (a) Sectoral
clusters, (b) High-tech clusters, (c) Historic know-how-based clusters, (d)
Factor endowment clusters, (e) Horizontal clusters, (f ) Vertical clusters,
(g) Low-cost manufacturing clusters and (h) Knowledge services clusters.
4 Prospects andChallenges ofManaging Clusters... 73

(a) Sectoral clusters: ese are clusters formed on the basis of the sectors
of the economy where the companies operate. For instance, media
clusters accommodate newspaper houses, TV stations, the lm indus-
try and so on, while commercial clusters house supermarket chains,
bookshops and so forth.
(b) High-tech clusters: e high-technology-oriented clusters are found
in most developed countries where products like ships, aircraft, arms
and armaments, cars and so on are produced. Such clusters are often
supported by research institutions and specialised universities. Some
examples of high-tech clusters are Silicon Valley, the East London
Tech City, Paris-Saclay and several other locations in Germany and
France.
(c) Historic know-how-based clusters: ese are clusters where exper-
tise, mastery of certain skills and historical advantage in the produc-
tion of certain products and services have been centred for centuries.
Notable examples are the London nancial clusters, leather clusters
in northern Nigeria, shoe and spare-part fabrication clusters in Aba
and so on.
(d) Factor endowment clusters: ese are specialised clusters created to
gain competitive advantage as a result of their presence in certain
geographical districts. For example, Burgundy and Champagne clus-
ters in France have for years enjoyed comparative advantages in wine
production over other places because they are located in mountain-
ous districts, where quality grapes are found and grown.
(e) Horizontal clusters: ese are clusters that accommodate many
companies in the same industry, producing the same or similar prod-
ucts and competing for the same market, but deliberately cooperat-
ing and acting like a jointly owned business. Examples are many
companies producing dierent brands of shoes in the shoe clusters,
compute clusters and wrist watches clusters.
(f ) Vertical clusters: ese are clusters which accommodate many com-
panies producing dierent but related products/services that could
be integrated. In these clusters, the products of some companies are
the inputs of others within the industry’s value chain. An example is
car clusters, where companies produce related products like car tyres,
auto engines, upholstery products, iron doors and so on which are
assembled as a complete car.
74 L. Raimi et al.

(g) Low-cost manufacturing clusters: ese are clusters that emerged
in certain regions of the world because of access to cheap labour,
land/rent, low-cost consulting services and aordable energy/over-
head costs. ese types of clusters are often found in developing
countries such as in rural China, Mexico, Argentina, Africa,
Eastern Europe and Latin America, where factor inputs are
extremely cheap.
(h) Knowledge services clusters: ese clusters are established because
of collaborative linkages with institutions that provide low-cost engi-
neers, unhindered access to the low-cost services of other experts/
professionals and low-cost consultancy fees from knowledge-based
institutions.
Developing Clusters inthePackaged Food
Industry: TheOpportunities
e thrust of Nigeria’s extant industrial policy is to accelerate economic
growth and sustainable development through active involvement in agri-
culture, semi-processing, full-edged manufacturing, construction and
services, thereby making Nigeria one of the Top 20 economies with ‘a
minimum GDP of $900 billion and a per capita income of no less than
$4000 perannum’ (Vision 2020 Blueprint 2009:9). To achieve the indus-
trial target above, the clusters oer a realistic and workable model for
actualising Nigeria’s industrial policy. Clusters have the capacity to boost
the total factor productivity of collaborating companies through knowl-
edge sharing, risk pooling, cost sharing and skill-intensive production.
In the developed countries and emerging economies where clusters have
formed the foundation of their industrial development strategy, for-
ward and backward clusters that span dierent industries are encouraged
(Amobi 2006). Nigeria, like the rest of Africa, suers from food insecu-
rity. erefore, an attempt to establish clusters for the food industry will
create a number of opportunities. ese include:
(a) Development of food industry clusters would strengthen Nigeria’s
food industry by making it strong enough to produce made-in-
Nigeria semi-nished products and nished products such as fruit
4 Prospects andChallenges ofManaging Clusters... 75

juices, dairy products, cornakes, milk, packaged eggs and beverages,
thereby enhancing the industry’s competitiveness. Other associated
opportunities include reduction of imports, conservation of wasted
foreign exchange, import substitution, avoidance of dumping and
control over the quality of food consumed by the public.
(b) Establishment of food industry clusters is a proactive strategy for har-
nessing the potentials of the Nigerian food industry. e food clus-
ters, when established, would aord interaction and collaboration
among farmers, food processing and packaging companies, market-
ing agents and distributors/retailers to pursue mutually benecial
interests.
(c) Food industry clusters could serve as an eective mechanism for
attaining food sustainability, that is, attainment of cheap, quality and
regular processed food for Nigerians in the face of hunger, endemic
poverty and extreme deprivation. Other inherent opportunities in
food clusters include the prospect of stimulating more employment,
wealth creation, growth of local technology, poverty reduction and
sustainable economic development.
(d) When food industry clusters are established, Nigerians as entrepre-
neurs will be well positioned to take advantage of investment incen-
tives oered by the National Investment Promotion Council (NIPC)
with a view to acquiring the required machines and equipment for
processing the nation’s abundant food resource endowments into
intermediate raw materials or nished goods for local consumption
and export to earn foreign exchange. Annually, the nation’s rich
vegetables, fruits, cereals, tubers and grains are wasted because of
poor processing and preservation methods.
Forward Integration Cluster intheAgriculture
andFood Value Chain
e forward integration cluster in the food industry entails transforma-
tion of raw materials from the farms or agro-allied companies into semi-
nished and nished foods ready for the supermarkets and open markets
76 L. Raimi et al.

for onward dispatch to the nal consumers. A typical forward integration
cluster in the agriculture and food value chain is depicted in Fig. 4.1
below.
In Fig. 4.1 above, the products of companies in the agriculture and
food industry clusters such as seeds, fertilisers, crop protection chemi-
cals, food ingredients, agricultural services and so on are utilised by the
farmers at the second stage in the value chain for producing agricultural
crops, meat and dairy products. At the third stage, the outputs of the
farmers are sold to traders, who process them into semi-nished products
(like crops, meat and biofuels) which are supplied to the food company
for further processing. At the fourth stage, the food companies process
the semi-nished supplies into nished products such as packaged meat,
dairy products, snacks and beverages, which are sold to retailers in the
various supermarkets, hypermarkets and corner shops. At the fth stage,
the retailers sell the nished products in smaller units to the nal con-
sumers in the neighbourhood.
Fig. 4.1 Agriculture and food value chain (Source: Adapted from: Food
Value Chain KPMG (2013))
4 Prospects andChallenges ofManaging Clusters... 77

Challenges ofFood Industry Clusters
In spite of the limitless opportunities in cluster development, there are obvi-
ous challenges which must be addressed when they surface or avoided out-
right. e rst challenge that the proposed food industry clusters are likely to
encounter is the inability to gain international competitiveness. Existing clus-
ters in Nigeria have not gone beyond producing goods for local markets. is
challenge of poor competitiveness is traceable to weak institutional backing
and policy inconsistency. Nigerian Institute of Food Science and Technology
(NIFST) should therefore take cognisance of this fact in its resolve to pursue
clusters development in the food industry. Secondly, establishing clusters in
the food industry poses a big challenge as such projects require cheap and
reliable infrastructural backbones and an enabling business environment to
reap economies of large-scale production. Unfortunately, Nigeria has unreli-
able power/electricity supplies, bad roads and highways increase the cost of
transportation, the water supply is often irregular, and multiple tax systems
discourage investment in the industrial sector. Poor infrastructure and an
unfriendly business environment could mar the beautiful proposal of food
industry clusters. e third challenge is situated within the connes of the
weak regulatory environment. In Nigeria the civil and commercial laws are
weak, and enterprises cannot thrive in an economy where the civil and com-
mercial laws are weak, inconsistent and anti- business. Without a sound reg-
ulatory environment, the clusters, instead of pursuing collaboration, may be
engrossed in cut-throat competition through price wars and cost-cutting as
well as disregarding environmental and labour standards to gain a competi-
tive edge over other companies. Another critical challenge that food industry
clusters may face is outdated and environmentally hazardous technologies. It
is a fact that shortages in infrastructure and basic services would inhibit and
limit clusters’ ability to produce the quality products and services required
to take advantage of emerging market opportunities locally and internation-
ally. Finally, the challenge of nance must not be underestimated, because
Nigerian commercial banks are reluctant to give loans to small businesses
and new spin-os without the required collateral securities, whereas the
model clusters across the globe thrive because of unhindered access to nan-
cial resources from banks and other nancial institutions in the form of loans
and joint venture partnerships.
78 L. Raimi et al.

Recommendations andPolicy Prescriptions
From the foregoing discourse, it is clear that clusters are important inter-
vention projects required to accelerate industrial development in Nigeria.
e following policy prescriptions are critical for leveraging clusters as
mechanisms for industrial and technological development in Nigeria.
Firstly, there is an urgent need to increase awareness of clusters devel-
opment through workshops, stakeholders’ meetings, retreats and public
lectures on the meaning and essence of clusters and procedures/modali-
ties for establishing and managing clusters in the food industry.
Related to the rst recommendation above, there is a need for the
Ministry of Science and Technology and NIFST to establish food clus-
ters in Nigeria through a private–public partnership (PPP), because most
government-led programmes for industrial development have been inef-
fective in actualising their set objectives.
irdly, it is suggested that clusters development, especially the
government- led model, should provide organised, high-quality entre-
preneurship training and capacity-building workshops for small and
medium enterprises (SMEs) operating in the various sectors of the food
industry and other industries, through provision of appropriate technol-
ogies and infrastructural facilities to designated skills acquisition centres
(SACs) in the industrial cluster for the purpose of promoting greater clus-
ter competitiveness.
For long-term sustainability and competitiveness, it is recommended
that there should be periodic partnership dialogue among all cluster com-
panies and participants for ideas/knowledge sharing, risk pooling, stra-
tegic networking and government engagement for mutually benecial
policies/programmes in the clusters.
It is one thing to establish food clusters; it is another thing to have
eective coordination in the industry concerned. It is therefore suggested
that eective coordination is needed in the food industry in order to
achieve the set objectives discussed above. Particular attention should be
paid to business communication, leadership and conict management,
which are all critical issues for building sustainable cluster synergy.
Lastly, before venturing into food industry clusters development,
there is a need for macroeconomic and political stability in terms of
4 Prospects andChallenges ofManaging Clusters... 79

stable and sound policies on clusters, an eective and transparent
regulatory framework and institutions under the Ministry of Science and
Technology, improved infrastructure, sustainable rules and incentives for
competition, friendly tax policies, a fair legal system, and security for lives
and property in the industrial clusters.
References
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Newspaper, November 11 Edition. Available: http://www.punchng.com/
business/fg-approves-9555-industrial-clusters/ (Acceesed 4 Aug 2015).
Amobi, I.C. (2006). Unleashing of industrial clusters for growth and prosperity in
South East Nigeria. Lead presentation at the Enugu Forum Seminar October,
2006.
Boja, C. (2011). Clusters models, factors and characteristics. International
Journal of Economic Practices and eories, 1(1), 1–43.
Cai, H., Todo, K., Zhou, L. A. (2007) Do multinationals’ R&D activities stim-
ulate indigenous entrepreneurship? Evidence from China’s “Silicon Valley”.
NBER Working Paper No. 13618.
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knowledge driven economy. Cm4176. London: HMSO.
Ellison, G., & Glaeser, E.L. (1999). e geographic concentration of industry:
Does natural advantage explain agglomeration? American Economic Review,
89, 311–316.
Glaeser, E.L. (Ed.). (2010). Agglomeration economics. Chicago: University of
Chicago Press.
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ment strategy jumpstart the country’s industrial takeo? Afro Asian Journal of
Social Sciences, 2(2.4) Quarter IV, ISSN 2229-5313.
KPMG. (2013, November 8). Food value chain KPMG. Available: http://talk-
aboutfoodjb.com/?attachment_id=358 (Accessed 31 July 2015).
Kuah, A.T. (2002). Cluster theory and practice: Advantages for the small busi-
ness locating in a vibrant cluster. Journal of Research in Marketing and
Entrepreneurship, 4(3), 206–228.
Martin, R., & Sunley, P. (2003). Deconstructing clusters: Chaotic concept or
policy panacea? Journal of Economic Geography, 3(1), 5–35.
Mazrui, A.A. (1986). e Africans: A triple heritage. London: BBC Publications.
80 L. Raimi et al.

Mueller, R. A., Sumner, D.A., & Lapsley, J. (2006). Clusters of grapes and
wine. In ird international Wine Business Research conference, Montpellier,
France.
Nigeria Vision 2020. (2009). Economic transformation blueprint. Nigeria: Federal
Republic of Nigeria.
Porter, M.E. (1990). e competitive advantage of nations. NewYork: e Free
Press.
Porter, M.E. (1998). Clusters and the new economics of competition. Harvard
Business Review, 76(6), 77.
4 Prospects andChallenges ofManaging Clusters... 81

83
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI10.1007/978-3-319-41090-6_5
5
Understanding How Failing aJob
Interview May BeaSource
ofInnovation: TheCase ofWhatsApp
Founders
AlainNdedi andKellyMuaKingsley
Introduction
Over the past ve years, many Internet and smartphone users have become
familiar with the name WhatsApp without imagining that a couple of
years earlier, the founders of this famous brand failed a job interview at
Facebook. Because often after a failure people lose direction, and are not
able to bring forward something new or bright, this chapter guides the
reader to the opposite direction by bringing out innovation, and of course
creativity, as tools for achieving success. However, innovation requires
focus. Clearly some people are more talented innovators than others, but
their talents lie in well-dened areas. Innovation requires knowledge, inge-
nuity and, above all, focus from the person wishing to benet from it.
A. Ndedi (*)
Saint Monica University, Comerci, Douala, Cameroon
K.M. Kingsley
Harvard Kennedy School of Government, Cambridge, MA, USA

Ininnovation, as in any other endeavour, there is talent, there is ingenuity
and there is knowledge. But when all is said and done, what innovation
requires is hard, focused, purposeful work. Did the founders of WhatsApp
go through these steps? If diligence, persistence and commitment are lack-
ing, talent, ingenuity and knowledge are of no avail.
Because innovation is conceptual and perceptual, would-be innovators
must also go out and look, ask and listen. e WhatsApp founders’ fail-
ure gave them the opportunity to go out, listen to what was being done
in their various elds and come up with the idea of WhatsApp. Successful
innovators use both the right and left sides of their brains. ey work out
analytically what the innovation has to be to satisfy an opportunity.
is chapter explains that what is remarkable about WhatsApp’s rise to
success is the story of founders Jan Koum and Brian Acton. ey were no
strangers to failure, yet their incredible journey speaks volumes about the
value of tenacity and vision. Today, Jan and Brian’s app (WhatsApp) is
the most valuable messaging platform on the planet, but they experienced
their fair share of rejection by top tech companies, including the one that
eventually bought their service, Facebook. e chapter explains the vari-
ous steps one needs to follow after a failure to learn from this misfortune
and move forward with one’s life. e chapter discusses the WhatsApp
founders’ history, as well as the link between creativity, frustration and
innovation that is at the origin of most incremental and breakthrough
inventions.
Summary ofWhatsApp History
e company WhatsApp Inc. was founded in 2009 by two Americans
engineers, Brian Acton and Jan Koum, both former employees of Yahoo!.
After Koum and Acton left Yahoo! in September 2007, the duo trav-
elled to South America as a break from work (WhatsApp website, 2014).
According to Forbes (2015), in June 2009, Apple launched push noti-
cations, letting developers ping users when they were not using an app.
Koum updated WhatsApp so that each time the user changed their status,
it would ping everyone in the user’s network. WhatsApp 2.0 was released
with a messaging component and the number of active users suddenly
84 A. Ndedi and K.M. Kingsley

swelled to 250,000. Koum visited Acton, who was still unemployed while
managing another unsuccessful start-up, and Acton decided to join the
company. WhatsApp was switched from a free to a paid service to avoid
growing too fast, mainly because the primary cost was sending verica-
tion texts to users. In December 2009, WhatsApp for the iPhone was
updated to send photos. By early 2011, WhatsApp was in the top 20 of
all apps in Apple’s US App Store. Koum then hired an old friend who
lived in Los Angeles, Chris Peier, to make the BlackBerry version, which
arrived two months later (Forbes 2014).
Initial Capital toLaunch theCompany
Following his departure from Yahoo!, Koum relied on his US$400,000in
savings. By February 2013, WhatsApp had a sta of 50 people. Sequoia
Capital invested US$50 million in the company, valuing WhatsApp at
US$1.5 billion. In April 2011, the founders (Jan Koum and Brian Acton)
agreed to take another US$7million from Sequoia Capital on top of their
US$250,000 seed funding, after months of negotiation with Sequoia.
Later, Acton persuaded ve ex- Yahoo! friends to invest US$250,000in
seed funding, and as a result was granted co-founder status and a stake,
who ocially joined the company on November 1, 2011 (Forbes 2014).
Failure Leads toInnovation
Before explaining the process of innovation leading to something novel,
it is important to develop the link between creativity and innovation—
creativity leading to innovation.
Failure intheCreative Process
Webster (1976:54) denes creativity as the ability to bring something new
into existence.
5 Understanding How Failing aJob Interview May BeaSource... 85

ere are many aspects of creativity, but one denition would include
the ability to take existing objects and combine them in dierent ways
for new purposes. us, a simple denition of creativity is the action of
combining previously uncombined elements. Another way of looking at
creativity is as playing with the way things are interrelated. Creativity is
the ability to generate novel and useful ideas and solutions to everyday
problems and challenges (Webster 1976). us, while entrepreneurship
is about making things happen and deals with the practical challenges of
implementation, creativity is the capacity to develop new ideas, concepts
and processes (Miller 1999).
According to Amabile (1998), in management, creativity occurs at
the strategic level in developing alternative approaches to business pro-
cesses, such as strategy formulation and organisational change, and at the
operational level in the development of new products and technological
innovation. In short, it is the desire to think outside the box and chal-
lenge conventional wisdom and ways of doing things within or outside
established organisations.
Amabile (1998:77) suggests that there are three components of suc-
cessful creativity in organisations: expertise, motivation and creative
thinking skills.
Expertise encompasses what a person knows and can do. It denes
the intellectual space that he/she uses to explore and solve problems.
Motivation can be extrinsic (desire to achieve company rewards and
awards) or intrinsic, with the latter being the most critical. Intrinsic moti-
vation refers primarily to passion and interest, or the person’s internal
desire to do something. e person is driven by the challenge and joy
of accomplishment. According to Ndedi (2012), creative thinking skills
refer to the particular way individuals approach problems and solutions
and the techniques they use for looking at a problem dierently, seeking
insights from other elds of endeavour, challenging, assumptions and so
forth. Creativity involves a paradox, a dilemma or an unknown or unpre-
pared for situation.
De Bono (1990) introduces and describes lateral thinking as a con-
trast with vertical logical thinking. In the process of lateral solving, it is
unnecessary to be right at every step, and the process permits a delay in
judgement to allow the interaction of ideas to occur.
86 A. Ndedi and K.M. Kingsley

The Creative Process
As has been explained in the previous paragraphs, to benet from failure,
it is important to positively use the frustration that occurs after a mis-
fortune. Figure 5.1 has a step called ‘frustration’ during which the entre-
preneur can either survive or be broken. If the latter occurs, the person
has lost control of his/her life and is unable to imagine another future
or another word other than failure. Denitively, Jan Koum and Brian
Anton experienced frustration, but the way they managed their frustra-
tion enabled them to move forward with their lives.
According to Kuratko and Hodgetts (2004), the creative process has
four steps:
Preparation
Frustration
Incubation
Illumination
Elaboration
Fig. 5.1 The creativity steps according to Morris and Kuratko (Source:
Adapted from Morris and Kuratko (2002:107))
5 Understanding How Failing aJob Interview May BeaSource... 87

e accumulation of background and knowledge is the rst step in the
development of creativity. During this phase, the potential entrepre-
neur gathers the information that will be useful to him/her in the
future. e experience accumulated by the founders of WhatsApp at
Yahoo! gave them the expertise necessary to think outside the box
when confronted with an issue or problem. is is what happened to
them following their failure to join Facebook and other failures
encountered during that period.
e next step in the creative process is the frustration. After failure, a
person is frustrated with what has happened. e incubation process is
therefore necessary to move forward. e incumbent must take some
time o and try to view the world dierently. During this stage, a
potential entrepreneur or innovator must create his/her own world in
order to explore and gauge alternatives not only for his/her own life,
but also for problems in the surrounding environment.
e illumination step is the most important level in the creative process.
In this phase, a potential entrepreneur has numerous ideas that need to
be evaluated and implemented. e last step, the evaluation and
implementation, requires a great deal of courage, self-discipline and
perseverance.
In sum, creativity involves a process of being sensitive to problems, de-
ciencies, missing elements and disharmonies; identifying the dicul-
ties; and searching for solutions, making guesses or formulating
hypotheses about the deciencies. In January 2009, without doubt,
Jan Koum of WhatsApp went through this, identifying diculties
when he purchased an iPhone and realised that the App Store was
about to spawn a whole new industry of apps.
Innovation
According to Drucker (1984, 1985, 1994), the most innovative busi-
ness ideas come from methodically analysing seven areas of opportunity.
Some of them lie within particular companies or industries, and some in
broader social and demographic trends. Innovation is the specic function
88 A. Ndedi and K.M. Kingsley

of entrepreneurship, whether in an existing business (intrapreneurship),
a public service institution (public entrepreneurship) or a new venture
started by a lone individual in the family kitchen. It is the means by which
the entrepreneur either creates new wealth-producing resources or endows
existing resources with enhanced potential for creating wealth. After tak-
ing a year o to travel in South America, both Brian and Jan applied to
Facebook, and were promptly rejected. It was during that fateful year that
Jan was inspired to create WhatsApp, a simple platform-agnostic messag-
ing app that would allow any Smartphone user to text without incurring
SMS fees. Brian, who was an early employee at Yahoo!, had also invested
and lost millions in the dot-com boom of the early 2000s, but rebounded
by joining Jan in building a start-up from scratch with a unique business
philosophy.
ere are innovations that spring from a ash of genius. Most innova-
tions, however, especially the successful ones, result from a conscious,
purposeful search for innovation opportunities, which are only found
in a few situations. Four such areas of opportunity exist within an exist-
ing industry: unexpected occurrences (for example, failure), incongrui-
ties, process needs, and industry and market changes. ree additional
sources of opportunity exist outside a company in its social and intel-
lectual environment: demographic changes, changes in perception and
new knowledge. It is true that these sources overlap, dierent as they may
be in the nature of their risk, diculty and complexity, and the potential
for innovation may well lie in more than one area at a time. But together
they account for the great majority of all innovation opportunities.
is chapter focuses on the unexpected failure that may be an equally
important source of innovation opportunities. Unexpected successes and
failures are such productive sources of innovation opportunities because
most businesses dismiss them, disregard them and even resent them. In
recent years, Jan Koum and Brian Acton, two former Yahoo! employees,
failed a job interview at Facebook, but did not close their minds to new
ideas (Rowan 2014).
According to Olson (2015), in January 2009, after Koum purchased
an iPhone and realised that the App Store was about to spawn a whole
new industry of apps, he started visiting his friend, where the three would
discuss how having statuses next to individual names of the people, but
5 Understanding How Failing aJob Interview May BeaSource... 89

this was not possible without an iPhone developer. However, early ver-
sions Of WhatsApp kept crashing or getting stuck and at a particular
point, Koum felt like giving up and looking for a new job, upon which
Acton encouraged him to wait a few more months. (Olson, 2015)
To be eective, an innovation has to be simple, and it has to be focused.
It should do only one thing. e founders’ insistence was on focus: All
software bloats to the point when it sends and receives email. e dif-
cult part for them was adding features without making the product
more complicated. ey didn’t want to build a hook-up app with which
one could nd someone weird to talk to. e app was about intimate
relationships. New features are added only after intense discussion and
experimentation, and a conviction that execution will simplify rather
than bloat the service.
Summary
People may lose direction after they experience failure, but innovation requires
focus. Clearly some people are more talented innovators than others, but
their talents lie in well-dened areas. Innovation requires knowledge, ingenu-
ity and, above all else, focus from the person wishing to benet from it. In
innovation, as in any other endeavour, there is talent, there is ingenuity and
there is knowledge. But when all is said and done, what innovation requires
is hard, focused, purposeful work. Because innovation is conceptual and
perceptual, would-be innovators must also go out and look, ask and listen.
Successful innovators use both the right and left sides of their brains. ey
work out analytically what the innovation has to be to satisfy an opportunity.
en they go out and look at potential users to study their expectations, their
values, their failures, their successes and their needs. As has been explained
in this chapter, what remains remarkable about the app’s rise to success is the
story of its founders. Jan Koum and Brian Acton were no strangers to failure,
and their incredible journey speaks volumes about the value of tenacity and
vision in life. (Satariano, 2014). Today, as noted by Nguyen (2014), Jan and
Brian’s app is the most valuable messaging platform on the planet, but they
have experienced their fair share of rejection by top tech companies, includ-
ing the one that eventually bought their service, Facebook.
90 A. Ndedi and K.M. Kingsley

References
Amabile, T. (1998). How to kill creativity. Harvard Business Review,
76(September–October), 77–87.
De Bono, E. (1990). Lateral inking for Management: A Handbook. Penguin
UK (July 1990).
Drucker, P.F. (1984, January/February). Our entrepreneurial economy. Harvard
Business Review, pp.59–64.
Drucker, P. F. (1985). Innovative and entrepreneurship practice and principles.
NewYork: Harper & Row, Publishers..
Drucker, P.F. (1994). Innovation and entrepreneurship. Oxford: British Library
Cataloguing.
Forbes. (2014). Looking inside the Facebook–WhatsApp megadeal: e courtship,
the secret meetings, e $19 billion poker game. Retrieved from http://genius.
com/Jim-goetz-jim-goetz-and-jan-koum-at-startup-school-4sv-2014-
annotated, (January 10th, 2015).
Forbes, (2015). Inside e Facebook-WhatsApp Megadeal: e Courtship, e
Secret Meetings, e $19 Billion Poker Game. Available at http://www.
forbes.com/sites/parmyolson/2014/03/04/inside-the-facebook-whatsapp-
megadeal-the-courtship-the-secret-meetings-the-19-billion-poker-
game/#791ab4542f20. Accessed on the 22nd January 2016.
Kuratko, D.F., & Hodgetts, R.M. (2004). Entrepreneurship: eory, process &
practice. Mason: South-Western Publishers.
Miller, C. W. (1999), Flash of brilliance. Reading, Massachusetts, Perseus
Books.
Morris, M. H., and Kuratko, D. F. (2002). Corporate entrepreneurship:
Entrepreneurial development within organizations, Orlando, FL: Harcourt
College Publishers.
Ndedi, A. A. (2012), Principles on Corporate Entrepreneurship and Strategy. LAP
Nguyen, N. (2014). e founders of WhatsApp prove perseverance wins. Available
at: http://www.popsugar.com/tech/WhatsApp-Founders-Jan-Koum-Brian-
Acton-34113022 (Accessed on the 25th December 2015)
Olson, P. (2015). e rags-to-riches tale of how Jan Koum built WhatsApp into
Facebook’s new $19 billion baby. Retrieved from http://www.forbes.com/sites/
parmyolson/2014/02/19/exclusive-inside-story-how-jan-koum-built-
whatsapp- into-facebooks-new- 19-billion-baby/#2715e4857a0b13af3bc94b
Rowan, D. (2014). WhatsApp: e inside story. Retrieved from http://www.
wired.co.uk/news/archive/2014-02/19/whatsapp-exclusive
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Satariano, A. (2014). WhatsApp’s founder goes from food stamps to billionaire.
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92 A. Ndedi and K.M. Kingsley

Part III
Education

95
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI10.1007/978-3-319-41090-6_6
6
Impact ofEducation Quality
onSustainable Development inAfrica
AdilA.Dafa’Alla, ElmouizS.Hussein,
andMarwanA.A.Adam
Introduction
Africa is a continent in crisis. Despite being rich in natural resources, it
is blighted by widespread poverty, corruption, bad governance and a very
low standard of living in many countries. e contribution of Africa to
global research and the global economy is very low, as is evident in all
statistics coming from reputable international organisations such as the
United Nations Development Programme (UNDP), the United Nations
Economic Commission for Africa and the World Economic Forum.
In Dafa’Alla etal. (2015, 2016), we presented the meaning, goals and
objectives of education as a human right and argued that, realistically,
the existing or prevailing social, political and economic conditions of life
A.A. Dafa’Alla (*) • E.S. Hussein
AIRBUS, Bristol, UK
M.A.A. Adam
Sudanese Knowledge Society, Khartoum, Sudan

are taken into consideration and largely determine the aims of pragmatic
education. is is particularly true for developing countries, which need
to optimise their resources in order to serve their national development
plans and goals as best as they can. Our aim in this chapter is to inves-
tigate the role of education in achieving sustainable development, and
whether it can reasonably be expected to improve the state of underde-
velopment from which Africa suers.
Sudan is considered as representative of many African countries that
have emerged from the colonial phase and are still trying to nd their
footing in the modern world, with varying degrees of success. Like many
African countries, Sudan also inherited a British colonial education sys-
tem that was designed to prepare the Sudanese only for taking up certain
subordinate positions in government oces (Mohamed 2005). It was not
intended to develop among the people capacities to take leadership and
initiative in dierent walks of life. Hence, the aims and objectives of the
education system were adjusted after independence to put more emphasis
on promoting education to serve the development needs of the country
economically, technologically, culturally as well as socially. Accordingly,
in this chapter we will review the performance of the education system
in post-independence Sudan in order to understand and relate major
reforms that took place during this period and assess their impact on the
economic performance of the country. We will then generalise and apply
lessons learned from the Sudanese experience to the problem of underde-
velopment in the whole continent of Africa.
Literature Review
It is not the intention of this section to cover the literature on education
in general. Rather, it will review three important themes central to the
objectives of the chapter, namely the evolution of the concept of educa-
tion as a human right, the importance of the link between education aims
and objectives and the national development plan (NDP), and modelling
education as a ‘system’ using an engineering methodology approach, as
found in the literature.
96 A.A. Dafa’Alla et al.

e United Nations Educational, Scientic and Cultural Organization
(UNESCO) made an eort to harmonise national education systems
with international education strategies and visions. ese strategies
evolved from workforce and socio-economic development drivers to more
humanistic ones. In 1972, UNESCO formulated the vision of ‘Learning
to be’, a concept of lifelong education that meets the challenges of a
rapidly changing world (Faure etal. 1972). is vision was seen as neces-
sary because of its advantages of exibility, diversity and availability at
dierent times and places. It also went beyond the traditional distinction
between initial schooling and continuing education to suggest lifelong
education as the master concept for educational policies. Additionally,
UNESCO’s report (Faure etal. 1972) aimed towards developing a sci-
entic humanism, creativity, social commitment, complete development
and learning society. is was followed by a global commitment dur-
ing the World Conference on Education for All at Jomtien, ailand to
make primary education accessible to all children in order to massively
reduce illiteracy before the end of the decade (UNESCO 1990). At this
conference, a clear tie between human development and contemporary
global challenges was established, and this became the driver of the rec-
ommended Global Education Action Plan for the 1990s. e focus on
universal access to learning and equality in education was fostered by the
Dakar Action Framework to establish tight monitoring, evaluation and
global commitment to Education for All, which were summarised in the
six goals of the Dakar Declaration to be achieved by 2015 (UNESCO
2000). is declaration amounted to establishing education as a human
right. Delors etal. (1996) revisited the global education vision in their
report ‘Learning: e Treasure Within’, in which they advocated a shift
of focus from the local community to a world society, from social cohe-
sion to democratic participation, from economic growth to human devel-
opment, and from basic education to universities. is, together with
fostering the four pillars of learning to know, learning to do, learning to
live together and with others, and learning to be, was a main vision shift,
which suggested a strategy backdrop of lifelong learning.
Although there is clear evidence that education has a positive impact
on national development, it remains less clear how this impact manifests
6 Impact ofEducation Quality onSustainable Development... 97

itself. e Human Development Report (UNDP 1990) identied edu-
cation as one pillar to enlarge people’s choices. e social and economic
development of nations is fundamentally an education process in which
people not only improve their individual capacity but also learn to cre-
ate new institutions, utilise new technologies, cope with the environ-
ment and alter their patterns of behaviour. As such, education becomes a
catalyst for the closely interrelated economic, social, cultural and demo-
graphic changes that become dened as national development aims
(Adams 2002). erefore, education strategies must be at the core of
any NDP, which, besides social and economic development, must pay
attention to diversity, nation building and equality in access to educa-
tion services. Uneven education distribution will deepen and legitimise
social and wealth divisions in society. While building and strengthening
national culture and diversity, the NDP must also balance the other sides
of living in a global, borderless and connected environment. Hence, the
challenges of globalisation will, in turn, be reected in the complexity of
education strategy, policy and plans.
Besides the necessity of integrating the strategic plan of education into
the NDP, the quality of education must be maintained and improved
continuously. One paradigm that enhances the design, evaluation and
evolution is to treat education as a system using an engineering meth-
odology approach. Dierent authors, such as Sinha and Satsangi (1972)
and Miokovic etal. (2011), have applied this approach successfully to
dierent aspects the education system in dierent countries. However,
in order to apply the approach to analyse the whole education system,
rather than just one specic aspect, it is desirable to use a simple sys-
tem that can be easily analysed and understood by all stakeholders in the
educational process; some of them are not necessarily specialists in the
eld. is will extend the benets of the engineering system approach as
well as pave the way for developing eective tools for monitoring educa-
tion system performance. Such an approach was used by Dafa’Alla etal.
(2015, 2016), who modelled education as a simple engineering system
of processes. e system, which is supposed to satisfy certain measurable
key performance indicators (KPIs), identies the individual as input and
the qualied trained graduate as product. In this sense, the education
system is purposefully designed to serve the objectives of the national
98 A.A. Dafa’Alla et al.

development plan in any specic state or country. Consequently, they
modelled the education generically as a closed loop system that is fed and
driven by the society and pays back its return to the society, as shown
in Fig. 6.1. e ow chart shown in the gure summarises the various
elements of their generic educational model together with its dependen-
cies and interfaces. e model provides a natural means to measure its
performance. e ability of the system to meet the demand of the labour
market was the primary KPI through which the success of the education
system could be measured against its general objective of serving the goals
of the NDP.Additionally, the well-being of society and hence the stan-
dard of living of its members is a reection of the success of the system.
However, the education system, though instrumental, is not the only
factor in determining such a complex goal. Other factors, such as type of
governance, good planning, secure funding, ecient management and
Fig. 6.1 Generic education system model as a closed loop to the society
(Dafa’Alla etal. 2016)
6 Impact ofEducation Quality onSustainable Development... 99

so forth also play signicant roles. Accordingly, the well-being of society
and standard of living could only be considered as a secondary KPI.e
model of Dafa’Alla etal. (2015, 2016) is generic and can thus be applied
to and used for the evaluation and assessment of the education system in
any developing country.
Evaluation andCritical Assessment
oftheEducation System inSudan
A good historical perspective on educational development in pre-
independence Sudan since the year 1820 was presented in Mohamed
(2005), while a thorough discussion of the education in Sudan and
its evolution in the context of economic and administration evolution
for the pre-independence period of 1898–1956 was given by Professor
Mohamed Omer Bashir (1983). is section is intended to highlight
and evaluate the education system and its contribution to the well-being
of Sudanese society in the post-independence period only. Like other
African countries, Sudan has inherited a decient education system that
was designed to satisfy the needs of the British colonial power rather than
meet its own national and global objectives. Vocational eciency was one
of the urgent problems of post-independence Sudan. ere was a need
to improve productive eciency and to increase the national wealth and
thereby raise the standard of living. Together with the general national
aims of the country, these objectives were translated into a national devel-
opment plan that stressed Sudanese values, dening its identity, building
the infrastructure and accelerating development. erefore, there was an
urgent need immediately after independence to review and amend the
education system, its aims, goals and objectives against the new direc-
tion set for the country at the time. e new system should bring forth
vocational eciency, develop personality or character, educate for leader-
ship, increase national productivity, achieve social and national integra-
tion, accelerate the process of modernisation, and cultivate social, moral
and spiritual values. In other words, the functional role of education as
a driver for social change and progress was emphasised. However, these
new objectives were not set in stone and were subject to changes through-
out the country’s post-independence history.
100 A.A. Dafa’Alla et al.

In our complementary study (Dafa’Alla et al. 2015, 2016), using
Sudan as a case study, we developed and applied the generic education
model to review the performance of the education system in detail and
identify deviations with time due to education reforms through three
distinct political phases in the post-independence history of the coun-
try. While the initial post-independence phase, Phase 1 (1956–1969),
was characterised by a stable education system that was run smoothly,
eciently and successfully with clear objectives linked to the NDP, the
following two phases, Phase 2 (1969–1989) and Phase 3 (1989–2016),
were characterised by major reforms that were driven by ideological
philosophy and political aims without adequate consultation and were
rushed through in extremely short time frames. It was shown that this
was a deadly combination that brought both the system and the country
to a state of crisis. is manifested itself in skills gaps in the labour market
and, together with other factors, was reected in a weakening economy
and an ever-declining standard of living in the country, leading to mass
emigration—a situation characteristic of many African countries. e
system has simply failed to satisfy both its primary and secondary KPIs
(see Dafa’Alla etal. 2016 for a detailed evaluation).
e aim of modern education is individual development as well as
social advancement. It emphasises the total development of an individ-
ual, including intellectual, social, moral, aesthetic, cultural and physical
development. e spirit of modern education was clearly captured in
the education system in post-independence Sudan. However, according
to Mohamed Khair Othman, nearly all post-independence governments
failed to care about the nationalism of education and restricted it to the
domains of general and educational bureaucracy, allowing education to
proceed through inertia alone, with no strategic objectives or scientic
planning (Othman 2015). Accordingly, he stressed that it is important
for education to take a national role in emphasising citizenship, engage-
ment in democracy and breaking down the boundaries between people
where they live, work and interact. Nevertheless, immediately following
independence, a very well designed, funded and run education system
was adopted to attain the social and economic development dictated by
the newly established NDP.e system produced the trained teachers to
run it as well as the qualied cadre to meet the demand of the labour mar-
ket and aid the execution of the NDP for the benet of the whole society.
6 Impact ofEducation Quality onSustainable Development... 101

To this end, the education system during the initial post- independence
phase, Phase 1, met its overall objectives quite satisfactorily. However,
it was not free from criticism. For example, Mohamed Khair Othman
argued that the British colonial power had created a defective educa-
tion system in pre-independence Sudan, which led to the phenomenon
of educational injustice in the southern part of the country (Othman
2015). He blamed the Sudanese elites for not paying enough attention at
the time of independence to this phenomenon, which created an uneven
distribution of educational opportunities between the north and south,
and questioned how it began and who was responsible for it. is created
the longest and most dangerous dichotomy of educational opportunity
between the two parts of the country (Othman 2015) and arguably was
used politically to justify the separation of the south later on. Likewise,
the competitive nature of the system and the teaching philosophy, which
was based on lling the individual with knowledge and information
that would be tested regularly and rigorously to ensure that the preset
standard was achieved, was at odds with modern education philosophy,
which is based on self-learning while the role of the teacher is to secure
and manage the environment in which the individual is encouraged to
develop their faculties in their own way according to their own abilities,
talents and interests. ere is an implied assumption here that there is
enough variety among the population to ensure that all the skills required
by the labour market will be naturally met without further steering from
the authorities. Such modern practices were used in dierent parts of the
developed world with varying degrees of success. For example, the educa-
tion system in Finland was completely liberal, with absolutely no testing
during the mandatory education stages, which cover the whole childhood
period of the candidate. Following the self-learning philosophy, the chil-
dren in Finland were encouraged to pursue their own interests under the
supervision of highly trained teachers while progressing through the vari-
ous education stages based on their age only without any consideration
of ability. e system was reported to be extremely successful and was
known to produce some of the best graduates in the world. e British
system, on the other hand, while not far removed from the Finnish one,
does include some testing at Key Stage 2 for 10–11 year-olds, the SATS
test, which takes place between the primary and secondary stages at
102 A.A. Dafa’Alla et al.

national level. Asage is the only factor considered for a pupil’s progres-
sion from one stage to the other, results of the SATS test are not decisive
for the progression of the pupil from the primary to the secondary stage
of the mandatory education. e only purpose of the test is to serve as
a dipstick to measure the performance of individual schools, rather than
pupils, against a preset national standard. However, despite the larger
population of the United Kingdom relative to Finland, the country is
now suering from a skills gap of about 1.5 million jobs (Winterbotham
etal. 2014), the majority of them in the elds of health and technol-
ogy, which are lled to some extent by immigrant workers (Lewis 2014).
Indeed, a survey conducted by the Confederation of British Industry
(CBI) found that a quarter of employers who need technicians qualied
in science, technology, engineering or mathematics already reported dif-
culty recruiting, and a third anticipated problems in the next three years
(Groom 2014). is shows that the level of success of the Finnish system
cannot be readily replicated elsewhere. It could also indicate the presence
of other forces in the society acting in a dierent direction, in a manner
strong enough to invalidate the assumption that natural variety among a
population would automatically ensure satisfying the needs of the labour
market, as implied in the self-learning theory cited above. Indeed, when
it comes to developing countries in general, and the underdeveloped,
such as in Africa, in particular, tighter control and balance between com-
plete freedom of choice and meeting the needs of development plans is
highly desirable. e balance can only be dictated by the development
stage of the country. Clearly, this approach helped the education system
in Sudan to perform well in its initial phase following independence and
is still recommended for the country now, as the challenges facing the
country still persist. Once the development plan is running smoothly and
eciently, the system can then be relaxed gradually and proportionately.
However, largely thanks to major reforms introduced to the education
system on the hoof, with no proper thinking or acceptable level of public
consultation following the change of political regimes in May 1969 and
June 1989 respectively, the performance of the education system and
hence its ability to meet the demands of the labour market and NDP
were gradually eroded. e rst major reform introduced in Phase 2 fol-
lowing the Socialist Pro-Arab Nationalism military coup of May 1969
6 Impact ofEducation Quality onSustainable Development... 103

attacked the architecture of the education system and hence the national
curriculum without enough planning or even proper thinking about the
consequences. e education system ladder was changed from three four-
year stages to a six-year primary stage followed by two three-year general
and high secondary stages, with new subjects introduced in the interme-
diate stage. e motive behind the change was mainly ideological and
driven only by political considerations. e funding was inadequate, the
implementation was poor and the result was a deterioration in the qual-
ity of the education standard. In fact, education was not the only facet
of life that was adversely aected during that phase. Corruption was rife,
the economy was weakening and the standard of living was continuously
declining as governance lacked stable direction. Admittedly, these fac-
tors are interdependent, and the situation is too complex to blame one
of them in isolation or even to quantify its share of the blame. However,
the role of education is too signicant to ignore. e performance of the
education system during Phase 2 was weak and its ability to meet the
NDP objectives through satisfying the demand of the labour market was
clearly inadequate.
e impact of the second major reform, which followed the Islamist
military coup of 1989 at the beginning of Phase 3, was even more devas-
tating for education than its predecessor. e change this time attacked
both the structure and the architecture, including the goals and aims,
of education in the country. e three-stage main education ladder was
replaced by a two-stage one consisting of an eight-year foundation stage
and a three-year secondary stage, hence erasing one year from the ladder.
Furthermore, new subjects were introduced to reinforce the country’s
new identity as dened by the regime, at the expense of the functional
and vocational aims of education. It was ideologically driven and aimed
at remoulding the identity of the Sudanese people. Education was seen
as the tool to bring about this identity change. Hence, the vocational
eciency character of the education was replaced by one that emphasised
the character building and individual development role of education.
is structural change was enforced by changing the architecture of the
education system and introducing new subjects to the national curricu-
lum. Consequently, the alignment between the academic and vocational
streams of education was muddled, and target market niches for each
104 A.A. Dafa’Alla et al.

stream were blurred as colleges and polytechnics were converted into uni-
versities oering both Diploma certicates and university degrees (c.f.
Dafa’Alla et al. 2015 , 2016). is move was also criticised by Habib
(2004) in his critical assessment of planning technical education in
Sudan, as it ‘distorted the distinguished identity of the existing techni-
cal institutes and colleges’ and was done without a proper consultation
process: What role will these new degree graduates play? Is there any
demand for them? Who is going to ll the roles that the old colleges and
polytechnics used to, and how can the labour market deal with them?
is was confusing to the labour market and also created a skills gap
which is dicult to ll. It was a radical change to the system that has
resulted in de-linking the education system and the declared objectives
of the NDP and has brought chaos to the labour market. It is not sur-
prising, therefore, that the 2011 Sudan Labour Force Survey (SLFS) has
revealed an unemployment level of 50 % among the working age popula-
tion, a quarter of them with a university/tertiary education qualication
(International Labour Oce 2013)!
It should also be noted here that both of the major reforms discussed
above were introduced and implemented in record short periods of time
of less than six months each. is rush introduced implementation prob-
lems and mistakes that required many years, typically more than 20, to
repair. Indeed, there is talk in Sudan about changing the current eight-
year foundation education stage into a nine-year one. On the one hand,
this proposal is an admission of the problems introduced by the latest
reform and, on the other hand, it will introduce its own new challenges
of a dierent nature, such as dealing with children of the extreme age
range of 7–16 years in the same school building and environment, let
alone the usual problems of any architectural change, such as invalidat-
ing the existing curriculum due to the change of the educational period
from eight to nine years! Equally signicantly, such a change will not
address the problems of teacher training or linking the system back to
the NDP.Note that, like the rest of the workforce in Sudan, the teach-
ing profession has recently suered from uncontrolled mass emigra-
tion of qualied and well-trained teachers at all educational stages. Low
morale, low payment and the deteriorating economic situation leading
to the lowest-ever standard of living were among the main factors for the
6 Impact ofEducation Quality onSustainable Development... 105

emigration of teachers. Interestingly, the last batch of teachers who served
in Phase 2 will retire naturally by the year 2016. Hence, any attempt to
repair the system by reverting back to its predecessor will be hampered by
the loss of their invaluable experience.
Also, both reforms introduced accelerated expansion to the education
establishments. e rst reform in Phase 2 accelerated the expansion of
the state-funded main education schools, while the second one in Phase
3 expanded university education and the role of the private sector in
the eld of education. Neither of the two was adequately funded nor
rigorously monitored. In fact, instead of increasing the expenditure on
education in order to meet and fund the expansion, UNICEF (2008)
revealed that education expenditure in Sudan dropped from 4 % of the
gross domestic product (GDP) and 15 % of total government expendi-
ture in the early 1980s to around 1 % and 3 % respectively in the 1990s.
As a result, schools suered from teacher shortages and were starved of
resources and educational aids. School buildings were run-down, if not
collapsing, as funding for schools maintenance and operation became
scarce. Consequently, schools needed to generate their own income
through private admissions, levying parents and raising public donations
in order to survive. No wonder teachers’ morale was low!
Likewise, the enlargement of the role of the private sector was another
missed opportunity. Instead of following the South Korean example of
utilising the monitored private sector to help expand higher education
and hence allow government to free invaluable resources to expand main
education, particularly primary, in order to achieve their goal of Basic
Education for All and steer the education system to serve their Knowledge-
Based Economy, as noted by Chen (2007), the private educational
institutions in Sudan were managed as commercial enterprises, rather
than educational establishments, with particular emphasis on teaching
medicine. Interestingly, foreign secondary certicates, such as the inter-
national Oxford, American and Gulf certicates, were downgraded rela-
tive to their Sudanese counterparts and hence forced the children of the
Sudanese diaspora, despite proving themselves academically, to apply for
private, rather than general, admission in the Sudanese state and private
universities. is was interpreted by them as an attempt to boost the pri-
vate sector rather than a fair reection of the academic standard of their
106 A.A. Dafa’Alla et al.

certicates. However, in summary, this uncontrolled, ill-thought- out and
underfunded expansion of main and higher education during Phases 2
and 3 has resulted in a bad trade of quality for quantity. e result was
the lowering of the education standard and mass graduation without a
proper link to the demands of the labour market.
e discussion above clearly shows that the damage inicted on the
education system in post-independence Sudan is both visible and deep.
Indeed, the gures for 2014 released by the Ministry of Cabinet Central
Bureau of Statistics (MICS) show that only 36.4 % of children of school-
entry age entered the rst grade of primary school (a drop of 3 % relative
to 1970) and 28.4 % of children of secondary-school age were attending
secondary schools or higher (MICS 2015). is speaks volumes about
the dilemma faced by education in Sudan. e economic indicators for
Sudan are in equally bad shape. e GDP growth rate has dropped by
over 53 %, and the consumer price index increased by 266 % between
the years 2006 and 2013, according to the African Statistical Book 2014
published by the UN African Centre for Statistics (UNECA etal. 2014).
Simply put, these gures show that the education system has lost its way
and so has the country.
Education, Innovation andSustainable
Development inAfrica
As stated earlier, Sudan is used herein as a typical example of an African
country and the ills of its education system are not unique. Indeed, the
educational statistical data for Africa published by the UN African Centre
for Statistics (UNECA etal. 2014) show that Sudan’s statistical gures
are not far removed from the African average. Also, the backward eco-
nomic situation and poverty is a common African issue. is in itself is a
reection of the state of the education system in the continent. erefore,
it is not a coincidence that the contribution of Africa, as a whole, to the
world scientic research literature is next to nil.
Remember that education drives national prosperity and sustainable
development. China, India, Malaysia, South Korea, Singapore and the
other Asian Tigers all have used technology, widespread industrialisation
6 Impact ofEducation Quality onSustainable Development... 107

and education to escape the trap of poverty and build world-class econo-
mies. Human resources development is the single-most important factor
responsible for South Korea’s release from the vicious cycle of poverty
and underdevelopment from which it suered for many decades (Eltayeb
2006). With its scant natural resources, human resources development
played a vital role in modern South Korea’s development. Clearly South
Korea has emerged as an exemplary showcase for national development
powered by human resources development (Eltayeb 2006). Likewise,
Singapore is a city-state with not much land area that is not particularly
rich in natural resources. It won its independence from British colonial
power in 1965 and has a population of only 5.4 million as per the 2013
census. Singapore obtained its independence 18 years after Pakistan, has
no natural resources and has a mere 3 % of Pakistan’s population, but it
has a GDP roughly 20 % higher in nominal terms than Pakistan’s and a
literacy rate of 96 % (Amanulla 2012). It all stems from the innate power
of education. Education drives progress. Education drives intellectual
capacity-building, which drives the ability to know right from wrong,
which in turn drives the overall governance of a country. Education
enhances the ability to think and decide which, in turn, gives the masses
the ability to elect qualied people. Education drives innovation, values,
the ability to see the future and solution-based thinking, which in turn
drives economic growth. In a recent study it was shown that a 20–30
% increase in literacy produces an 8–16 % gain in GDP, while teaching
mothers to read can lead to a decrease in infant mortality of up to 50 %
(Amanulla 2012).
Benchmarking Africa’s education systems against their peer continent
Asia in terms of how education drives development can also provide use-
ful insights. Figures 6.2, 6.3 and 6.4 depict relationships between acces-
sibility to education (as measured by the average number of schooling
years among the population) and quality of education system on the
one side, and sustainable development indicators, such as human devel-
opment, ability to innovate and economic competitiveness for African
and Asian countries, on the other, based on data extracted from UNDP
(2015), WIPO (2015) and World Economic Forum (2016) respectively.
For the sake of presentation clarity, not all countries are labelled in these
gures. e clear strong correlations reected in the gures indicate
108 A.A. Dafa’Alla et al.

Fig. 6.2 Correlation of human development and average years of schooling
for Africa and Asia (Data source: UNDP 2015)
Fig. 6.3 Correlation of global innovation and education quality for Africa
and Asia (Data source: WIPO 2015)
6 Impact ofEducation Quality onSustainable Development... 109

that the longer the members of the society stay in good-quality educa-
tion,the more developed the individuals will be, the greater the ability
of the population to innovate and the better the chance for the country
to gain economic competitive advantage in a sustainable development
environment. Additionally, the gures also reveal that, while the African
countries are generally lagging their Asian peers in terms of human devel-
opment, innovation and economic competitiveness, the countries with
the poorest education quality in both continents are clustering close to
the bottom end of the curves. Sudan, which is used as a case study in
this paper, scores among the poorest, while Singapore and South Korea
are in leading positions. is clearly supports the argument made above,
that countries that have built education-based economies to guide their
development plans are not only standing out relative to other countries
in Africa and Asia but, indeed, comparing favourably with the best in the
world, such as Japan and China, as the gures show.
Hence, although weak education cannot be solely blamed for all the
ills of the African continent, it must be considered a factor of signicant
importance. Other factors, such as corruption; type of governance; lack
of good planning, secure funding and ecient management; and so on
Fig. 6.4 Correlation of global competitiveness and education quality for
Africa and Asia (Data source: World Economic Forum 2016)
110 A.A. Dafa’Alla et al.

are also contributory factors, as noted above. However, education that
builds capacity and fosters innovation is a means to catching up with
lost opportunities, building an ‘innovation-based economy’ and realis-
ing the African dream. Africa is a continent emerging from centuries of
colonisation and still nding its footing in the modern world. However,
it is not a poor continent—it is a backward one. It has a wealth of natu-
ral resources, such as minerals (including diamonds, gold, copper and
more), huge reserves of oil, forestry and agricultural products (timber,
cotton, tea, cocoa, wheat, etc.) as well as livestock—all in abundance.
However, as the late President Kenneth Kaunda of Zambia once put it,
no country can depend on exporting raw materials and importing all its
needs of processed goods to escape the trap of poverty.
e international community has given Africa lots of aid, particularly
to help it face natural disasters. However, it is now generally accepted
that this ‘charity-based aid’ is not helping Africa to escape the poverty
trap, let alone to build its own capacity and develop its own resources.
Sharma (2009) revealed that more than $50 billion of foreign aid is
given to African countries every year to address poverty on the conti-
nent. Although this may seem generous and, to some, a solid strategy to
treat Africa’s ailments, he questioned whether this aid is helping or hurt-
ing Africa. Indeed, Dambisa Moyo, a Zambian economist with a back-
ground that includes Harvard, Oxford and Goldman Sachs, says just the
opposite. In her book Dead Aid: Why Aid Is Not Working and How ere
Is Another Way for Africa, Moyo claimed that foreign aid has been ‘an
unmitigated political, economic and humanitarian disaster’. She strongly
argued that ‘charity-based aid’ cannot provide long-term sustainable
development for Africa. She added that the $60 trillion of this aid that
has been given in the past 60 years is not working, evident from the fact
that the number of Africans who live on less than $1 a day has doubled
in the last 20 years. And most foreign government aid, she argued, had
been pocketed by corrupt politicians (Moyo 2010).
Levels of corruption and bad governance are obviously huge concerns
that need to be tackled in Africa; however, the underlying issue, in our
opinion, is much deeper and rests in the fundamentals and the philoso-
phy of aid-giving itself. Yes, food aid, emergency disaster relief and ght-
ing endemic diseases in Africa need immediate action in the short term;
6 Impact ofEducation Quality onSustainable Development... 111

however, they are neither the long-term problems of poverty and under-
development in Africa nor the cause of Africa’s lack of real contribution
to the world economy. e general wisdom says ‘give the poor a sh,
they will eat for a day; give them a shing rod, they will eat for life’. e
root cause of African backwardness is that Africans do not possess the
fundamental tool required to develop their countries and lift them out
of poverty. is tool is good-quality education, as argued above. What
is required is an innovative education system that promotes innovation,
fosters local talent and spearheads sustainable development. ere are
immense possibilities for greater and more widespread change with the
use of present-day technological advancements as well as with the imple-
mentation of innovative educational programmes. e challenge is to
ensure that innovation plays a constructive role in improving educational
opportunities for billions of people who remain underserved in a rap-
idly developing world (Kuboni etal. 2006). Providing education in new
and unconventional ways is only one of a number of solutions, but it is
through innovation that we can meet the challenges of improved ecien-
cies, lower costs, increased accessibility and greater success in achieving
sustainable development goals through education. is has happened in
the many examples quoted above and it can happen in Africa. e ques-
tion is how to bring it about in a continent handicapped by corruption,
poverty, bad governance and national debt.
In previous papers, namely Dafa’Alla etal. (2015, 2016), we argued
that the education system in Sudan has lost its way. Hence, an ‘Action
Plan’ to repair the situation is urgently needed. e design, implementa-
tion and funding of the education system is a complex problem. Likewise,
introducing radical changes to it is a complex process that requires deep
thinking and wide consultation, as it is linked to the NDP and has reper-
cussions for all facets of life. Hence, major reforms to the system should
not be taken lightly or based on a unilateral decision by any group or
party. Wide societal debate and consultation should take place before
changes are introduced. In other words, changes to the education sys-
tem should be taken out of the political arena and only be introduced
by national consensus. We called upon all concerned and all interested
parties to engage constructively and participate in outlining the required
Action Plan to get the education system, and hence the country, back
112 A.A . Dafa’Alla et al.

on track. It is our aim in this chapter to widen this call to include the
whole African continent. is can be facilitated by calling for an African
conference on education under the slogan ‘Education, Innovation and
Sustainable Development’ to set the African goals and targets for educa-
tion at a high level and to come up with an ‘Action Plan for Education in
Africa’ as an outcome of the conference. en, each country can adopt
and adapt these general goals and guidelines to suit their own national
targets and development phases. A maximum degree of harmonisation
can thus be achieved regarding vocational and functional education aims,
while a high degree of exibility can be granted for others, such as cultural
and character formation aims. A ‘High Bureau’ aliated to the African
Union could then be set up to oversee the implementation process.
From our perspective, the whole world will benet from a vibrant
African continent that is playing its full role and contributing its full
share to world prosperity. e world needs the virgin natural resources
of Africa to keep functioning, and Africa needs the rest of the world to
trade with and develop its resources. Hence, the whole world needs to
come to the rescue of Africa and help it, not to feed its population, but
to build its education system. Clearly, Africa is not in a state to fund this
change at present, and this is where the international community under
the auspices of the United Nations and its agencies, such as UNESCO,
can help. If there is a will, the world can easily divert some of the ‘charity-
based aid’ it is quite happy to pay annually to implement this Action Plan
for Education in Africa as a solution to the long-term problems of Africa
and a means to put Africa back on the world map. e African Union can
act as the custodian to the plan, call for and organise the conference, and
ensure links with other international organisations.
However, in addition to the fact that quality education is synony-
mous with sustainable development and the importance of linking the
education system to the NDP, there are another two main lessons to be
learnt from the Sudanese experience cited above in this regard. First, the
education system has to be indigenous to its environment, as one of the
main weaknesses in the experience of Sudan during Phase 2 was that it
copied large parts of the education system from the Egyptian one (c.f.
Dafa’Alla etal. 2015, 2016). e second important lesson is to take the
educational reforms out of the political arena, and hence the competition
6 Impact ofEducation Quality onSustainable Development... 113

among politicians, and only introduce them by national consensus (c.f.
Dafa’Alla et al. 2015, 2016). is is particularly important in Africa,
where regime change is a regular occurrence and corruption and bad gov-
ernance will undoubtedly hinder the implementation of any plan, no
matter how good it is. erefore, we should stress here that the proposed
Action Plan should not be a mere copy of a European or American sys-
tem. It has to be an indigenous African plan, dealing with local African
issues and hence engineered by African intellectuals in consultation with
their community groups and stakeholders and in reaction to the needs
of their own masses without political interference. Otherwise it will not
work.
Conclusions
Good-quality education and sustainable development are synonymous.
Education drives innovation, values, the ability to see the future and
solution- based thinking, which in turn drives economic growth and
sustainable development. is has been clearly demonstrated in many
emerging economies worldwide.
Although weak education cannot be solely blamed for all the ills of the
African continent, it must be considered a signicant factor in the state of
underdevelopment from which it suers. is was clearly demonstrated
in the case of Sudan, as an example typical of the African continent.
A critical review and assessment of the education system in post-
independence Sudan was undertaken here. e review considered three
signicant phases in the history of education in post-independence
Sudan in which the education system experienced major reforms: Phase
1 between 1956 and 1969; Phase 2 between 1969 and 1989; and Phase
3 from 1989 to 2016.
e link between signicant political events in the country and
major reforms to the education system was evident. While the initial
post- independence phase was characterised by a stable education system
that was run smoothly, eciently and successfully, with clear objectives
linked to the NDP, the following two phases were characterised by major
reforms that were driven by ideological philosophy and political aims
114 A.A. Dafa’Alla et al.

without adequate consultation and rushed through in extremely short
time frames.
ese reforms contributed to the deterioration of the quality of edu-
cation in Sudan and gradually de-linked the education system from the
objectives of the NDP. e current system resembles a ship sailing in
rough seas without a captain.
e damage inicted on the system throughout the years was wide,
deep and fundamental, and it is now in a state of crisis. is manifested
itself in a skills gap in the labour market and, together with other factors,
was reected in a weakening economy and ever-declining standard of liv-
ing in the country leading to mass emigration. e system has failed to
satisfy both its primary and secondary KPIs. e case of Sudan is remi-
niscent of many African countries.
e problem of development in Africa has repercussions worldwide;
therefore, it is benecial for the whole world to ensure that Africa is
playing its full role in world prosperity. Hence, this chapter calls for an
African conference on education to address education as the root cause
of the lack of sustainable development in Africa. e objective of the
conference should be to set African goals and targets for education and to
draw up an ‘Action Plan for Education in Africa’ that supports the build-
ing of an ‘innovation- based economy’ as an outcome.
e plan should reect African values and development needs. It
should be an indigenous African plan, dealing with local African issues
and therefore engineered by African intellectuals in consultation with
their community groups and stakeholders and in reaction to the needs of
their own masses, without political interference.
e African Union should adopt the plan, act as its custodian and
oversee the implementation phase, with support from the international
community through the United Nations and its agencies. Diverting some
of the annual charity-based aid to Africa was seen as a means to fund the
plan.
It was suggested that the conference would be held under the slogan
‘Education, Innovation and Sustainable Development’ and should pro-
duce an ‘Action Plan for Education in Africa’ that is capable of repairing
the damage and putting the education system, hence Africa, back on the
world map.
6 Impact ofEducation Quality onSustainable Development... 115

Acknowledgement e authors are extremely grateful to Drs Badr Eldin
Ahmed Dafalla, Magid Mustafa Elsayed and Awad Elkarim Ahmed Dafalla for
revising and commenting on the manuscript. eir invaluable comments were
incorporated in the manuscript as appropriate.
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7
Use ofMind Mapping (MM)
asanUnconventional Powerful Study
Technique inMedical Education
NahlaaA.Khalifa
Introduction andObjectives
An Overview oftheProblem
Medical students everywhere are overloaded with an excessive quantity
of information, with a restricted amount of time to learn and remember
all the information and to utilise it immediately. Consequently, many
medical students struggle with their individual capability to meet the
demands of medical programmes, courses and syllabuses and thus are
not successful at examination time (Yussof and Baba 2013; Anderson and
Graham 1980).
Many medical educators throughout the world use the traditional
method—PowerPoint slides—as the chief information distribution
N.A. Khalifa (*)
Clinical Nutrition Department, Faculty of Applied Medical Sciences, King
Abdulaziz University, 54539, Jeddah 21524, Saudi Arabia

platform in their lectures. PowerPoint is described by Garber (2001) as
the use of slides, disordered with text, often with unconnected additions,
leading to little expressive learning and student dullness. As a traditional
method, PowerPoint presentations can be developed, but there is a draw-
back to this educational method. Lectures and text slides are linear rep-
resentations that cannot express the rich interrelations among medical
ideas and concepts. is results in linearity more than connectivity, less
critical thinking and less expressive learning, which are important in the
education and development of future medical practitioners.
e quick, sustained transformations in medical science, and the need
for future medical practitioners to remain capable, requires an alteration
in the educational techniques by which medical students are trained.
Lately, the number of studies on learning methodologies used in medical
education that might help students study and ultimately integrate infor-
mation has increased (Dolmans etal. 2005; Kim et al. 2006; Zajaczek
etal. 2006). Dierent authors have documented the need for alternate
methods of teaching and learning that will empower medical students to
recall enormous amounts of information, develop critical thinking skills
and resolve a range of complicated clinical problems.
Pudelko (2012) reported that mind mapping (MM) is a multisensory,
non-linear teaching and learning approach that has recently surfaced in
higher education as a means to support students’ critical thinking and
encourage a deeper level of integrated information.
While the MM teaching and learning strategy has appeared in the lit-
erature, its usage by medical educators in Sudan is unknown. As Sudanese
medical educators, fostering an environment that improves students’
critical thinking and their ability to master the quantity of information
required to succeed in medical institutions in Sudan is one of our prin-
cipal roles.
Definition andTools ofMM
Tony Buzan, the inventor of mind mapping, denes MM as a powerful
graphic technique that acts as a master key to unlock the brain’s poten-
tial by creating a visual display of a concept using mind mapping tools
120 N.A. Khalifa

that include images, keywords, lines and colours in a distinct, uniquely
powerful, structured manner. MM can be used in all aspects of life where
critical thinking and enhanced learning will boost human performance.
The Key Elements ofMind Maps andEvidence
Supporting MM
Many studies emphasise the usefulness of MM in many kinds of occupa-
tions including research, teaching, learning, unifying, problem- solving
and so forth. Mind maps are built on several key elements, which have
been veried to play an important function in liberating thinking capacity.
Radiant Structure
Anokhin (1973) reported that the brain works on the basis of associa-
tion and is capable of connecting thousands of ideas. Mind mapping is
a pattern of radiant thinking application, which stimulates all parts of
the brain that work in communication, starting with a central thought
that radiates to innite space, as opposed to the normal linear method of
thinking, which restricts thinking and information retention and recall
(Buzan and Buzan 1994). e radiant structure of the mind map encour-
ages longer continuous thinking as it is much simpler to nd new con-
nections between the branches of the mind map, resulting in a natural
ow of thinking that tries to ll in the blank spaces.
Basic Ordering Ideas (BOIs)
Basic Ordering Ideas (BOIs) is well dened as the initial - level topics that
come out from the mind map central idea like headings of chapter in a writ-
ten book on certain subject. BOIs consider as the main concepts that assist to
create the utmost number of associations as putting and arranging thoughts.
Ideally, the initial - level topics should be wide-ranging to provide for a greater
range of associations. e author of the Mind Mapping Software Blog (2008)
Chuck Frey considers good BOIs for adjustment of the MM quality.
7 Use ofMind Mapping (MM) asanUnconventional Powerful... 121

Single Keywords
A keyword is generally a word that will produce as much correlated
meaning as possible. In MM keywords open up thinking and stimulate
the mind to see more details that were previously unseen. By trying to
choose a word that most suitably conveys a subject, the brain is forced
to think more actively rather than only gathering or repeating informa-
tion. A study done by Howe (1970) on note-making and note-taking
reported that keyword notes given to students were more ecient in
terms of understanding and recall than complete sentence summaries or
text notes. Keywords generate many associations.
Interesting Colour
Colour is one of the most forceful and entertaining parts of MM.It recov-
ers memory, excites creativity and inuences how one communicates
with others. Psychologists have discovered that colour helps one process
and store images more competently than colourless (black and white)
scenes, and to better memorise them as a result (Journal of Experimental
Psychology 2002).
Influence ofImages andIcons
Images are an excellent memory aid. Our ability to remember images is
far better than our memory for words. A study by Anglin etal. (2004)
conrmed the power of pictures, while one by Haber (1970) also supports
the value of imagery. McArdle (1993) found that adding visuals such as
photos or maps to a presentation increases the amount of information
recalled by as much as 55 %. Mind mapping stresses pictures, visual imag-
ery, drawings, doodles and symbols. Using imagery arouses the brain’s
imagining and visualisation capacity, which produces huge creativity ben-
ets and improves the memory’s storing and recalling abilities.
Icons impart clearness and appropriate meaning to topics and are
promptly understood by the brain. Small visual symbols such as triangles,
122 N.A. Khalifa

circles, ticks and crosses strengthen the benets of using imagery in mind
maps, for example denoting category, hierarchy, priority, status and so on.
Relationship Arrows
Association arrows explicitly link dierent topics together throughout the
map and present multidimensional direction to thoughts, thus promoting
dierent and extremely creative thinking (White and Gunstone 1992).
Emphasising (Chunking)
Emphasising, or chunking, is a technique used in mind mapping to
gather and emphasise the main branches within a boundary to make spe-
cic topics or ideas in the mind map visually noticeable alongside the rest
of its content, thus making these ideas simpler to memorise and connect
to others. According to Frey (2008), short-term memory is usually only
eective in storing seven items of information, and chunking can aid in
using this storage space more competently.
Whole Brain Thinking
Using all of the above mind mapping elements produces a functional
arrangement of a range of cognitive purposes and processes in a way that
uses both the right and the left sides of the brain. e two brain sides
cognitive function is primarily discover by Sperry (1968), who set that
the thinking cap of the brain (Cerebral Cortex) is separated into two main
hemispheres that perform a range of intellectual tasks (cortical skills). e
right brain works using images in a non-verbal way and takes over in
dealing with emotion, colour, form and shape, rhythm, and perceptive
information. e right brain processes information rapidly, in a non-lin-
ear and non-sequential style. e left brain is found to work in a linear
way, recording things in a consequential order. It is related to analytical
thinking and logic, dealing with naming and classifying language, things,
reading, writing, mathematics and representative inference together with
7 Use ofMind Mapping (MM) asanUnconventional Powerful... 123

seeing things in black and white. An individual’s mental ability is based
on how they use their brain. Mind mapping is one approach to using both
sides of the brain (ambidextrous). When using MM, thoughts are dif-
fused and stream between lines and relations, which is linked with imagi-
nation and creative thinking as opposed to the linear approach (Fig. 7.1).
Research Studies onMM inEducation
Mind maps have been shown to be a simple but powerful technique
for learning and have had surprising success in education all over the
world in the 40 years since Tony Buzan rst invented the method. e
techniques of MM have been embraced by students of all ages to help
them understand, generate ideas, revise and recall information related to
their subjects. Important studies have shown the potential of MM as a
powerful tool for learning and teaching.
Promote Creativity
A study by Al-Jarf (2009) showed that the spatial layout of a mind map
provides a better overview that makes new associations more noticeable
and generates an unlimited number of ideas, thoughts and associations
related to any subject. Mind mapping software oers prominent advance
for enhancing the aptitude of anyone to MM yield ideas as it is built over
Fig. 7.1 Mind map vs linear note (devised by author)
124 N.A. Khalifa

several key parts, which have been veried to play an essential function
in releasing thinking capacity. Mind Map unify ideas by thinking with
greater clarity to learn associations between ideas and put an innovative
viewpoint on things and seeing all the correlated issues and study alter-
natives in bright of the large image Visualize ideas’ by creating a visual
display of a concept through using MM tools, which include images, key
words, Lines, and colors, in a powerful structured manner. e subjects in
the study conrmed that the MM tools stimulated creative thinking and
enabled them to more rapidly conceive and shape ideas for their writing.
Augment Memory
Compared to conventional learning methods and note-taking, the cortical
skills of mind mapping have been shown to signicantly increase informa-
tion recall. A study by Wickramisinghe etal. (2007) revealed that a major-
ity of medical students using MM found it more useful for memorising
information in a structured way compared to their former study methods.
Toi (2009) conrmed that MM can help children remember words
more easily than using lists, with up to 32 % improvement in memory.
Additionally Farrand etal. (2002) found that mind mapping improved
medical students’ long-term memory of precise information by 10 %.
Boost Teaching Confidence
Boyson (2009) found that using MM for lesson preparation helped
teachers develop lessons plans and teaching methods, and improved their
recall of the subject material. is can enhance teaching condence and
help smooth management of classes and boost teaching condence.
Mind Mapping was found to be a valuable approach for presenting
novel concepts, attract a whole-class concentration, and assist in peo-
ple in planning and build up projects and assignments more eciently
(Goodnough and Long 2002).
Learning Process Empowering Medical Education
e rst study regarding the potential utility of MM in medical education
was conducted by Farrand etal. (2002). ey examined the advantages
of the mind map learning technique compared to traditional note-taking
7 Use ofMind Mapping (MM) asanUnconventional Powerful... 125

for medical students’ long- and short-term recall of written informa-
tion. e investigators found that the mind map technique signicantly
improved long-term memory of information.
D’Antoni and Pinto Zipp (2005) reported that of 14 physical therapy
students studied, ten found that MM helped them arrange and assimilate
the material presented in their course. Many of the study participants
enjoyed being creative when making mind maps, employing a variety of
designs, symbols, colours and keywords.
A study of undergraduate medical students to determine the eciency of
using MM to improve reliable recall from written information concluded
that MM was a competent study technique when applied to written mate-
rial and improved recall of information and memory (Farrand etal. 2002).
Willingham (2007) reported that; critical thinking happens when stu-
dents enters behind the surface structure of a problem and knowhow the
problem can be explained, and possesses the content knowledge impor-
tant to solving the problem.
e extra capacities of pictures and colors that are uniquely to mind
maps does not enable just memory but also deliver a wide range of
medical students to distinguish the intra and inter relationships between
thoughts, which exposes the way of real-world thinking prevalent in the
clinical location. Srinivasan M et al. (2008).
Spencer etal. (2013) published a study entitled ‘Radiant inking and
the Use of the Mind Map in Nurse Practitioner Education’, which stated
that the MM graphical method increases the visualisation of relationships
and connections between thoughts, which helps in information attain-
ment, data holding and inclusive comprehension.
Descriptive unpublished data on the use of MM in note-making (teach-
ing) and note-taking (learning) in a general pathology course for students in
a clinical nutrition department shows that using MM resulted in high grades
among student (23.8 % received A+, 19 % A, and 21 % B+) (Fig. 7.2)
Presentation Effectiveness
A study done by Mento etal. (1999) on a number of managers using
mind mapping, showed a successful way in remembering and managing
126 N.A. Khalifa

information, which are held and kept in connected and organized man-
ner rather than linear.
Project Preparation
Holland etal. (2003/2004) reported that Mind Mapping is consider as
forceful approach that help in designing and planning projects and improve
the written skills of assignments. Contributors will be capable to of plan-
ning and organizing their thinking for any type of project.
Writing Improvement
Written work based on the use of MM was well schematised and linked
ideas with more associated detail. It improved the work of students at all
stages as they became more imaginative in creating and combining ideas
for their writing (Al-Jarf 2009).
23.8%
19%
21.4%
9.5%
7.1%
9.5%
4.8%
2.4%
0
2
4
6
8
10
12
(95-100) (90-94) (85-89) (80-84) (75-79) (70-74) (65-69) (60-64)
A+ AB+BC+ CD
+D
Number of Students
Grades Distribution
Fig. 7.2 Pathology nal exam result for second-year clinical nutrition
students who used mind mapping in education (devised by author)
7 Use ofMind Mapping (MM) asanUnconventional Powerful... 127

Thoughts Organisation
A Mind Map is considered as brain storming showed in one picture
therefore it assist in thinking with greater clarity to discover connections
between ideas and characters and nd keys to problems by places a inno-
vative viewpoint on things and seeing all the correlated issues and study
alternatives in bright of the large image. is had been approving by
results of Mueller etal. (2002) study which expressive how the use of
Mind Maps to suggest patient care at Front Range Community College
settled an increased critical and inclusive thinking.
Although the MM teaching and learning technique has appeared in
the literature, its use in Sudanese medical education is unknown. While
computerised databases are ingenious and useful, NO data was found in
a search for the current literature review (Use of mind mapping in medi-
cal education in Sudan).
Specific Purpose oftheLiterature Review
e purpose of this literature review is to present evidence of MM’s eec-
tiveness in improving research and education (teaching and learning),
and to progress understanding about using MM to improve students’
critical thinking and their ability to handle the quantity of information
necessary to succeed in Sudanese medical institutions.
Methodology
Literature Searching
• Targeted Search
e literature was obtained through library databases (PsychINFO,
PubMed, MEDLINE PsychINFO and EMBASE). It includesbothempir-
ical and conceptual published literature on the denition, characteristics
and uses of MM in medical education up to April 2016.
128 N.A. Khalifa

• Search Strategy
e search strategy primarily involved looking for the following key-
words and phrases: mind mapping, medical education, critical think-
ing, visual education, and Sudan. e reference lists from reports and
published studies were searched for more sources. A number of elec-
tronic journals specialising in medical education, Tony Buzan’s website
(inkBuzan.Com), and scientic studies and research on MM were
examined. e general search mechanism revealed information from
consultation papers, discussion papers and opinions of medical educa-
tors, and all which were examined for evidence related to the present
integrative literature review objectives.
Selecting theArticles andReview Resources
Inclusion Criteria: the inclusion criteria include articles (reviews, use
of mind mapping in learning, teaching, critical thinking and outcomes
required), chiey in Sudan.
Topics of Interest: topics of interest are: mind mapping learning and
teaching types, Sudanese medical education system.
Evaluating the Evidence: nal selection of articles was done by thor-
ough review of each studied article by two persons to minimise omissions
and errors.
Discussion
Medical educators face many challenges in preparing students to recall
huge amounts of content and to develop associations between concepts,
especially with the rapid growth and transformation of clinical practice
and medical education. Medical educators are responsible for preparing
graduates who are skilled in analytical reasoning and problem-solving in
a variety of clinical practice locations, which requires them to use teach-
ing strategies that improve communicative learning instead of depending
on traditional methods involving rote memorisation.
7 Use ofMind Mapping (MM) asanUnconventional Powerful... 129

e medical educator must generate magnicent learning experiences
for the enhancement of critical thinking in order to improve students’
eectiveness as evidence-based independent clinicians.
e evaluation in this study focuses on the usefulness and creativeness
of one teaching approach, mind mapping, compared to more traditional
methods. A study by D’Antoni etal. (2005) identied MM as a cred-
ible teaching and learning approach that actively engages the mapper
(learner) in assimilating material in a non-linear, meaningful way, which
boosts critical thinking.
e combination of images and words makes mind maps a rich optical
channel for pioneering and imaginative vision. Visual presentations are
more eective than verbal presentations. e presenters who used visual
language were stronger, more exciting, brief, specialised, reliable and
better prepared. ese ndings agree with the results of Howe (1970),
which showed that keywords were more ecient by far than sentence
summary notes or whole text notes in terms of recall.
Farrand etal. (2002) stated that MM is a successful study method
when applied to written material and is likely to motivate a greater level
of managing for memory creation.
Mind Mapping increases the mind’s potential for entire brain think-
ing by using both cortical sides together—the left brain (numbers,
linearity, logic, words) and the right brain (creativity, images, colour,
curves, space)—which increases the brain’s power. is is conrmed by
the ndings of Sperry (1968), who reported that the more assimilation
there was between the left and right brain actions, the more the brain’s
performing turned out to be synergetic, which means that every cortical
skill encourages the actions of other parts so that the brain is operating
at its peak.
Medical educators should encourage the use of MM techniques for
learning collaboratively, taking notes, brainstorming, presenting and
organising ideas, and studying. Moreover MM can be used in problem-
based learning, medical care process; identify disease causes, diagnoses
and planning treatment.
130 N.A. Khalifa

Conclusions, Recommendations
andImplications
Many studies have veried the eectiveness of MM in education. Mind
maps can be used as a teaching method to improve critical thinking in
medical education by inspiring students to link information across disci-
plines and recognise relationships among the clinical and basic sciences.
e use of mind maps in medical education may benet more students
with diverse learning types. Mind mapping was found to be a useful tool
for creative thinking and collaborating with others.
e literature review showed that Sudanese medical educators are not
at present using Tony Buzan’s mind maps as a method for conveying
and assimilating information in medical education programmes. is
primary data is the rst of its kind on the potential usefulness of mind
mapping in medical colleges in Sudan and can be used to explore plans
to address the assumed obstacles.
Considerable work will be required to promote mind mapping as a
tool that can promote critical thinking skills. Informing higher educa-
tion ocials about the MM approach and what it can achieve may lead
to their support for the use of MM as a learning and teaching approach
within medical education and health care programmes in Sudan
Nevertheless, before mind maps become generally accepted as a study
technique, attention has to be given to ways of improving inspiration
amongst users. Mind mapping is a stimulated technique for students to
employ that can improve memory and help create a unique environment
for managing information.
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Part IV
Capacity Building and Human
Capital

137
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI10.1007/978-3-319-41090-6_8
8
Design andEngineering Capacity
Building foraSustainable Development
ofAfrican Economies: TheCase
ofAlgeria
AbdelkaderDjeflat
Introduction
Over the past half century, important technologies increasingly have
become associated with elds of applied science and engineering. As men-
tioned in several contributions (Bell 2007, Salter and Gann 2001), design
and engineering (D&E) activities constitute what might be considered the
‘core’ of Science Technology and Innovation (STI) systems in advanced
industrial economies. On the other hand, sustainable development rests
on proper policies and adequate capabilities in STI.Sustainability can be
achieved through the design of products that comply with environmen-
tal regulations through proper D&E capabilities. is simple reality has
not been clearly perceived in African countries as it has in other parts of
the developing world in recent years. is has led gradually to a wide gap
A. Djeat (*)
Maghtech– Clerse CNRS (UMR 8019), University of Lille, Lille, France
Oran University, Oran, Algeria

between advanced and least developed countries (LDC) economies in terms
of D&E capabilities. is is perhaps as important as the digital divide,
which has been well covered in the literature yet has not attracted much
attention from either policymakers or researchers. As Bell put it (2007),
there are some indications that global inequalities with respect to the design
and engineering component of STI systems in LDCs may be much greater
than they are in connection with other components such as R&D.
From a dierent perspective, R&D and innovation systems have polar-
ised the attention of researchers in LDCs, including in African countries, at
the expense of D&E, and it is only recently that D&E has been at the heart
of the innovation process. e commodity boom in African economies
has brought massive imports of technology in various sectors of industry,
broadly dened, as we will see. While the sustainability issue has appeared
on the agenda, the learning potential of these international transactions has
not always been properly grasped. Yet it would be of enormous importance
if proper D&E policies were worked out. is unprecedented window of
opportunity for learning via these channels will be lost if no action is taken
and the level of awareness remains at its current level.
is chapter examines the current situation of D&E in African indus-
try. To assess the real situation, we looked at a small sample of 20 Algerian
rms from both the public and private sectors, including both small and
big enterprises from various areas of industry. is exploration enabled
us to identify some of the key issues and make some recommendations
for policymakers, as well as to suggest some future areas of research. e
rst section addresses the concepts and tools of D&E, followed by a sec-
tion that looks briey at the situation of D&E in Africa. e next section
analyses the function of D&E in Algerian industry. Finally, the last sec-
tion concludes and makes some recommendations.
Concepts andTools ofDesign
andEngineering (D&E)
e proper denition of D&E is a key issue which needs to be claried
before we engage in an assessment. e design process is principally con-
cerned with how things ought to be. It involves thinking ahead creatively
138 A . Djeflat

in order to make a technical object that ts the requirements of users or
clients. is process of creation often involves developing new combina-
tions of existing technologies. e design problem-solving process evolves
through a series of iterative and overlapping phases (stages): from prob-
lem identication, through development of dierent conceptual solu-
tions, to designing a favoured solution and working out the details of the
physical artefact (Salter and Gann 2001; Yazdani 1999). It is a recursive
practice, a continuous cycle of trial and error focusing on the creation of
a physical product and drawing upon the fundamental laws of nature
(Constant 2000). In a more precise manner, Bell (2007) denes D&E
capabilities as those that transform knowledge from a generally appli-
cable form into increasingly specic and concretised forms. Engineering
is the application of scientic knowledge to solving problems in the real
world. While science (physics, chemistry, biology, etc.) allows us to gain
an understanding of the world and the universe, engineering enables this
understanding to come to life through problem-solving, designing and
building things. Engineers can be distinguished from other professions
by their ability to solve complex problems and implement solutions in
cost-eective and practical ways.1
e development of the eld of engineering has made a signicant
dierence in the scope and the speed with which new knowledge is trans-
lated into technical change. Technological capabilities are needed to carry
out various kinds of D&E activity, ranging from initial studies to lifelong
upgrading (Bell 2007). ese activities include a series of successive tasks,
namely: studies, concept elaboration, basic design, fabrication, procure-
ment : these are two dierent steps commissioning start-up and, nally,
upgrading. e rst step is always a process of ‘discovery’ as put forward
by Haussmann et al. (2005). D&E in an important stage in the innova-
tion process (Bell and Dantas 2009). It is also key to embodying sustain-
ability concerns such as pollution reduction, longer life-cycle and more
robust products, eco-ecient energy consumption and so forth. In newly
industrialising countries, adaptive and design capability are more impor-
tant than R&D (Intarakumnerd and Virasa 2004).
1 Source: What is engineering http://whatisengineering.com/ (visited May 2016).
8 Design andEngineering Capacity Building foraSustainable... 139

D&E feeds from the R&D sphere and contributes to it through
feedback and accumulated experience and experimentation. It also
feeds from other spheres, such as technician skills and craft capabili-
ties, and from below the basic operator skills and capabilities (Arnold
et al. 2000). is is where most of the DUI (doing, using, interacting)
occurs and where the technology use and operations and maintenance
provide the opportunity to foresee incremental changes. is is at the
rm level. Externally, recent studies suggest that the technology required
by the business sector does not come from fundamental or even applied
research generated by R&D laboratories, but is generated by D&E activ-
ities spawned by interaction with customers, suppliers and competitors.
is helps to explain why clusters, competition and linkages with other
rms are so important to the technology development process. In addi-
tion, the ICT revolution has drastically modied the D&E function
(2000). Applications for computer- aided design (CAD) amongst others
brought signicant advantages in handling general data in D&E by the
1970s. It is now clear that we are moving to a dierent world with recent
technological advancements such as 3D printing. Nonetheless, designers
still rely on tacit knowledge and face-to-face exchanges to solve prob-
lems and innovate (Bucciarelli 1994; Henderson 1999; D’Adderio 2001;
Nightingale 1998; Salter and Gann 2001).
The Situation ofD&E inAfrica
ere is a growing awareness of the importance of design and engineering
for African development along with the need to re-industrialise African
economies. Calestous Juma’s Hinton Lecture to the Royal Academy of
Engineering in the UK (Juma 2006) emphasised its role in ‘redesign-
ing African economies’, focusing heavily on engineering capabilities in
connection with infrastructure development, but recognising its much
wider signicance across other sectors of the economy (cited by Bell
2007:72). Product design and process improvement are important in the
emerging innovation systems (EIS) (Djeat 2011) as a whole in view of
the dierent paths innovation trajectories are likely to take. Industrial
policy requires increased productivity based on intensive research into
140 A. Djeflat

local raw materials, which are better adapted and usually more eco-e-
cient and more sustainable as inputs to manufacturing, and the acquisi-
tion of engineering design and fabrication skills, as well as adaptation of
modern technologies and machinery (Emovan 1999).
e ability of a developing country to produce engineering goods is
especially important, partly because this requires skills in metal process-
ing and fabrication that are fundamental to manufacturing as a whole.
Moreover, the engineering sector functions as the training ground for
a wide spectrum of managerial and entrepreneurial skills. It also plays
a fundamental role in the assimilation of foreign imported technology.
e non-R&D dimensions of technology development may be especially
important for the vast majority of enterprises in developing countries
that are not engaged in R&D, are far from the technological frontier, and
do not require cutting-edge R&D to improve their competitive standing.
Achinivu (1999), using the oil sector in Nigeria, distinguishes between
rehabilitation engineering, which allows for the possibility of reverse
engineering, and classical design engineering. Reverse engineering and
reverse design are opportunities to introduce sustainability concerns.
e reality is that D&E suers from many shortcomings in the
African continent. Several studies have analysed D&E in Africa, namely
the African technology gap: United Nations Conference on Trade and
Development (UNCTAD) (2003), the African Technological Outlook
(2011), International Development Research Centre (IDRC) studies on
STI in Africa, and others. ey all conclude that there is little D&E in
Africa and that capital goods and design engineering are almost all for-
eign due to passive imports of relatively simple-to-use technology with
low levels of technical eciency and sometimes high environmental
risks. Industrial engineering as a distinct function has been rather absent
in the face of excessive use of turnkey products. Design capabilities are
inadequate and often simple testing is called D&E. e lack of local
research and design capability is one factor keeping African producers at
the bottom of the global value chain (GVC) and outside complex prod-
uct segments.
ese weaknesses have several root causes. e rst one is the legacy
of import substitution and the eects of structural adjustment pro-
grammes (SAPs). Following independence, state-led and elite-managed
8 Design andEngineering Capacity Building foraSustainable... 141

development strategies targeted industrialisation as a central part of the
development agenda in many African countries. e import substitu-
tion industrialisation (ISI) model that most African countries adopted
in the 1960s and 1970s mobilised investment for domestic industries
(nurturing the infant industries). Burgeoning initiatives to develop D&E
in industry in some countries included unpacking the technology bundle
and disembodying the engineering component. D&E was bought from a
dierent source, with the possibility of outsourcing certain tasks locally.
In parallel, several schools and universities introduced engineering train-
ing in their syllabuses. e second era started in the early 1980s, when
SAPs set batteries of measures such as liberalisation, corrective signals
and incentives for the manufacturing sector. is liberalisation process
led to industry restructuring and pushed rms to further reduce costs,
downsize personnel and cut down on maintenance expenses, an impor-
tance source for the development of D&E capabilities. is led to the
brutal end of the development of domestic engineering in industry. Since
the 1990s, de-industrialisation in several African countries has led to the
de-engineering of domestic industry (Djeat 2014). e collapse of the
demand for domestic design and engineering (e.g., for petroleum engi-
neering in Algeria) has resulted in substantial losses of high-level human
capital through brain drain, political conicts, civil war and so on.
Secondly, Africa suers from the eect of the Dutch disease (for com-
modity producers), which made it easier to resort to foreign sources for
D&E, and the neglect of local competencies both in the industrial sphere
and in the training sphere. is contributed to the de-engineering phase
of African countries and resulted in the loss of interest in the engineer-
ing function and the decline in eort made initially by local industry.
is is also reected in the research sphere in engineering and technology
in several sub-Saharan African countries. With the exception of Ghana,
where the proportion of researchers in engineering reached 19.4 % of the
total number of researchers, it does not exceed 8 % in the other coun-
tries : Malawi (6 %), Mozambique (4.8 %), Senegal (4.4 %), Tanzania
(7.4 %) and Uganda (1.9 %) (NEPAD 2010). It is reected through the
weak demand for D&E consultancy. Out of 138 consultancy bureaus in
Algeria, only four are explicitly geared towards engineering consultancy
(Ministry of Industry 2011).
142 A . Djeflat

e third problem is the foreign-dominated D&E sector in Africa.
e failure or lack of regulation in relation to foreign engineering rms
has been damaging to local capacity. Local content laws often do not
exist, and when they do exist, they are often not appropriately enforced
to ensure knowledge transfer from foreign companies to local engineers
(Wright 2013). Learning-centred arrangements with international engi-
neering companies supplying design, engineering and project manage-
ment services for industry and infrastructure projects in Africa are rare.
Fourthly is the major decit in engineers. As pointed out in earlier
studies, the rst and most critical skills shortages are in engineering (Lall
1992). Apart from building and construction and civil works, where the
rates of locally supplied services appear to be signicant, the remaining
sectors rely heavily on engineering services supplied by foreign rms. For
example, with only 880 men/year (300 engineers and 580 technicians),
the local supply of engineering does not exceed 20 % of local needs in
Tunisia. e country suered a decit of 2,920 men/year, that is, about
4,867 specialists in engineering.
Several obstacles have hindered the development of engineering. Lack
of organisation of the sector, limited nancial tools designed to cater for
the specic needs of the activity, heavy taxation, lack of guarantees and
lack of incentives are the most important problems reported. To over-
come the weaknesses of local engineering, Tunisian rms resorted to for-
eign engineering services through two channels. In the rst one, local
rms hired the services of foreign engineering rms directly, namely in
the mechanical and electrical industries and in the fabrication of trans-
port equipment.
The Situation ofD&E inAlgeria: Empirical
Findings
A brief historical analysis shows that the engineering function beneted
from an early awareness at the level of policymaking. From the beginning
of the industrial strategy, which was part of the rst development plan
(1967–1969), the steel sector was managed by a group of recent gradu-
ates of the top French training institutions, including the Polytechnic of
8 Design andEngineering Capacity Building foraSustainable... 143

Paris, the Ecole des Mines and Telecom Paris, where most of the French
elite are trained.2 Two sectors managed by these brilliant engineers, the
energy (electricity) sector and the steel sector, were particularly active in
the development of D&E capabilities. In the steel sector, a decision was
made very early on to open a design oce and put local engineers in
direct and permanent contact with foreign partners in mixed professional
teams. Foreign engineers were compelled to carry out their D&E in these
oces. Local engineers had to work with them on all stages through
to the realisation of the projects and be involved in the design process.
e teams, led by polytechnicians,3 were comprised of competent, well-
trained and dedicated members. ree specialised companies were cre-
ated to lead the development of eective D&E capabilities; one of these
teams, for example, managed to design a complete gas cylinder unit.
All this drive for D&E came to a halt in the late 1970s when the new
labour legislation, called the General Statute of Workers (SGT),4 aligned
the salaries of engineers with those of administrative personnel, which
reduced the motivation and commitment of the former. Later, in 1980,
the government decided to restructure the industrial sector to be domi-
nated by state companies, allegedly to encourage greater eciency.5 By
restructuring industry, the link between D&E and production was bro-
ken, with no possibility of interactive learning. Moreover, the teams of
workers who had managed to accumulate D&E know-how throughout
the 1970s were dispersed.
Importance of Engineering Personnel e engineering function varies in
terms of size from one sector to the other. Its importance is measured
in terms of size of personnel, that is, the proportion of engineers in the
professional group. e results show that the proportion of engineers is
small (5–20 %) compared to the proportion of technicians, who are the
2 I am indebted for this section to the kind contribution of Mr Omar Lassel, former Head of
Engineering at the SNS Company, the major state-owned steel company in the country.
3 Mohamed Liassine, who was Director General of the steel complex, later became Minister of
Industry.
4 Established by law n° 78–12 of 5 August 1978.
5 e restructuring of Algerian enterprises was promulgated by the Presidential decree of 4 October
1980.
144 A. Djeflat

dominant group (70 %) in some companies in the professional group. In
addition, not all engineers are involved in the D&E function. e pro-
portion of engineers involved eectively remains the same, while in some
cases, for example electricity, D&E is performed entirely by technicians.
Involvement of Workers in D&E e majority of rms in the sample (60
%) do not involve workers in the D&E function as a result of a lack of
capacity to adequately manage workers and the excessive centralisation
of decision-making (e.g., in the agricultural machinery sector). is is
an indication that the view that D&E is the domain of highly qualied
engineers, and eventually technicians, but not of workers still prevails.
e DUI process is completely ruled out.
Relationship of D&E and Training Institutions Companies in the sample
appear to be fairly open to the training world: 53 % recruit newly gradu-
ated engineering students. ese are from petrochemicals, pharmaceu-
ticals, energy and building materials sectors. e rest (47 %) who do
not recruit their engineers from the training system (agro-food, energy,
liqueed natural gas (LNG), mechanical industry, chemical industry and
plastics) oer dierent explanations. ese include the existence of their
own training facilities (energy sector), internal obstacles such as weak
recruitment function (the LNG case), lack of experience and inadequate
prole (agricultural equipment) and the quality of engineering graduates,
which is considered below standards (in the case of plastics and printing).
Sources of D&E Used by Local Firms To satisfy their D&E needs, local
rms use dierent sources. Nearly half of them (46 %) use their own
D&E services which they have developed over the years. ese include
both public and private companies across all sectors. Bearing in mind the
de-industrialisation and de-engineering phenomenon, the score seems
fairly high. e second-most important source are the research centres
(27 %) used by the agro-food and chemical industries. Algeria has a rela-
tively active research community in both agronomy and biotechnology
and hosts the African Agency for Biotechnology (AAB). Local universi-
ties come in third (9 %), showing the negligible role they play as a source
of D&E services. eir technological trajectory has been dierent from
8 Design andEngineering Capacity Building foraSustainable... 145

the trajectory of industry, as we have shown in previous work (Djeat
1992). Consultancy bureaus also occupy a relatively negligible position
(9 %). It is surprising that foreign companies are rarely used (4.5 %),
given that many technologies in various development projects are rela-
tively new and sophisticated and require the help of technology suppli-
ers. Finally, own retired personnel (engineers and technicians) are in a
weak position (4.5 %), essentially used only by the agricultural equip-
ment sector.
Integration of the D&E Function Within the Organisation e D&E func-
tion appears to be well integrated within the organisation in 60 % of
cases. us, the potential for interactive learning appears relatively high
for a number of companies from both the public and the private sec-
tor and in various industrial sectors (agricultural equipment, energy, oil
rening, petrochemicals, pharmaceuticals, building materials and print-
ing/plastics). In the rest of the sample, D&E is not well accepted. Several
reasons are put forward for not accepting the D&E function within the
organisation, ranging from the lack of motivation of personnel to the
dominant position of the informal sector.
ree reasons given are of particular interest. e rst is the preference
for foreign sources of D&E: this preference comes also from the con-
sumers and users. For example, farmers tend to prefer imported agricul-
tural machinery, such as tractors and combine harvesters from European
and US companies, over that produced locally. e second is the lack
of condence in the concepts and ideas of local personnel within the
company. Often, the engineers and technicians who come up with bril-
liant ideas leading to important improvements in the production process
receive no reward. For example, in a public lamp company, one of the
technicians managed to improve the productivity rate of the lament
production process from 60 % to 120 %, through re-engineering the
design of the process. In the face of total ignorance and lack of recogni-
tion, he stopped proposing the new incremental changes he had in mind.
e third reason given is the signicant role played by the informal sec-
tor in discouraging the use of local products and services. Competitive
products are imported informally and provide tough competition for
146 A . Djeflat

home-grown products and services. is is the case in the mechanical
sector, where spare parts are imported through informal channels.
e Decision-Making Process (Governance) In big state companies, the
decision-making process is centralised at head oce level, giving little
freedom to the production units of the group. is is the case in the LNG
sector. e reasons can be attributed to the complexity of the process,
where the production units are not considered qualied to interfere with
the process. is view, largely held by major industrial public compa-
nies, has often annihilated any form of initiative to bring in technologi-
cal change at the shop oor level, in total ignorance of the doing, using,
interacting process taking place at this level.
Conclusions andRecommendations
Based on this analysis, some conclusions can be drawn and recommen-
dations made to promote D&E as a tool for innovation and accelerated
growth and development in Africa.
e rst conclusion is at policymaking level. D&E cannot be pro-
moted if the level of policymaking awareness of its importance remains
low. It rests on three important components: rstly, reinforcement of
the importance of the industry option at the level of decision-making
in the face of a growing tendency to encourage services and ready-made
products and technologies; secondly, the need to encourage productive
enterprises in relation to importing ones to reverse the trend of de-indus-
trialisation; and thirdly, the need to encourage, through proper laws and
regulations, the development of the D&E function at the enterprise level.
e second conclusion relates to the issue of training and capacity
building. Various forms of training are involved: traditional training at
the university level (adding more sessions through revision of the cur-
riculum and enhanced internships) and in high technical schools, as well
as at the industry level, both in-house regular training and continuous
training to update the knowledge and capabilities of both management
and employees in the eld of D&E.e ICT revolution has made life-
long learning crucial. Several suggestions can be made to improve the
8 Design andEngineering Capacity Building foraSustainable... 147

recruitment of engineers from the training system and to provide a prole
better adapted to the requirements of industry. It relates also to updat-
ing the curricula in universities and training centres and regular review
of training programmes, training that is better adapted to the specic
domains of activity, more specialised training for engineers and techni-
cians, deeper engineering training and project management, continuous
training, and more internships. e reinforcement of links with universi-
ties and high schools is vitally important. Developing partnerships with
foreign rms to use more locally trained engineers and technicians and to
train them in D&E needs to be systematically explored in major indus-
trial projects.
e third conclusion is that awareness of the relationship between
D&E and the research and development sphere is severely limited. It is
important to raise this awareness and to institute policies and strategies to
enhance the linkages between research and D&E both at policymaking
level and at enterprise level.
e fourth conclusion concerns the creation of more D&E consul-
tancy bureaus in various elds. ese are relatively scarce in African
countries (only seven bureaus for all the industry needs currently in
Algeria) and often companies, particularly the small ones that are unable
to import these services, feel the decit. ey are both process-based and
product-based.
e fth conclusion is centred on the role of consumers and users in
enhancing D&E through actively encouraging locally designed and engi-
neered products. is role could be even more proactive through open
source or open innovation, a proper policy of involving consumers and
users in the design of the products.
e sixth conclusion is centred on the need for a strategy to provide
access to technology and know-how through imitation. D&E requires
in this particular case the development of capabilities to unbundle the
technological package through reverse engineering and possibly reverse
design, and to incorporate both local design and local inputs. e poten-
tial of reverse engineering as a tool for innovation requires specic skills
and capacity building. Exploring reverse engineering in a more system-
atic way, which is within reach of African capabilities in view of the
important learning and competence building which has taken place, is
148 A. Djeflat

crucial. For instance, engineers in South Africa, facing persistent levels
of unemployment in the country, are rediscovering the potential of using
labour-intensive road construction techniques (Bell 2007).
Finally, existing D&E models may not be appropriate for analysing the
evolution of network forms that occur in late industrialising countries, in
particular the importance of networks in the development of D&E capa-
bilities, as shown in the example of Petrobras in Brazil (Bell and Dantas
2009). e proposed multi-stage approach to build D&E capabilities
(Salter and Gann 2001) mentionned earlier could be applied to African
economies both to the industrial and the mineral sector (possibly to the
agricultural sector as well).
Further research is needed on why African industry D&E did not
evolve to the adaptive capacity and generative stage. Another ques-
tion is how to involve communities in the entire design process, from
problem identication to idea generation, concept evaluation, detailed
design, fabrication, and testing and evaluation. Finally, what prospects
for South-South collaboration to develop joint D&E capacity in particu-
lar in industries where countries have common interests—for example,
oshore oil, particular kinds of mining, particular kinds of infrastructure
projects and so forth.
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153
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI 10.1007/978-3-319-41090-6_9
9
Absorptive Capacity ofHuman Capital
andInternational R&D Spillover
onLabour Productivity inEgypt
EmanElish andHanyElshamy
Introduction
e theoretical and empirical economic literature provides evidence that
knowledge transfer between countries or regions has contributed to the
productivity growth of other geographic areas (see Coe and Helpman
1995; Coe et al. 2009; Kao et al. 1999; Litchtenberg and Brouno 1998).
In addition, empirical evidence has been also presented with respect to
the direction, the magnitude and the effectiveness of different channels
through which such spillover effect is transmitted.
However, few studies have examined the effect of international R&D
spillover transmission from industrial countries to developing countries.
ose that have been conducted in this respect focused on the macro
E. Elish (*)
Department of Economics, Faculty of Business Administration, Economics
and Political Science, e British University, Cairo, Egypt
H. Elshamy
Associate Professor of Economics and Acting Head of Economics Department,
Faculty of Commerce, Tanta University, Cairo, Egypt

level and the overall effect on total factor productivity. Very few empirical
studies have been conducted on how international R&D spillover affects
labour productivity in developing countries.
e main objective of this chapter is to survey the literature on interna-
tional R&D spillover transmitted from industrial countries to developing
countries and its effect on labour productivity, then to build a model whose
basic assumption suggests that, technology and innovation can be transmitted
to the Egyptian manufacturing industries through various channels. However,
the effect of international R&D spillover can be insignificant in enhancing
labour productivity if there is a low absorptive capacity of human capital.
Hence, the chapter will examine the relationship between the labour
productivity of the Egyptian manufacturing industries, relative to inter-
national R&D capital stock, and human capital.
e chapter is organised as follows: the second section discusses the
literature pertaining to international R&D spillover and how it affects
productivity in developing countries. e third section outlines the
methodology and model application, using time series analysis to exam-
ine the effect of international R&D spillover and school enrolment on
labour productivity in the Egyptian manufacturing industries. e fourth
section analyses estimation results and interpretations. e final section
concludes with the main findings and recommendations of the research.
Literature Review
International R&D was originally discussed in several studies, the most
significant being Coe and Helpman (1995) (as cited from Coe et al.
2009). ey contributed new estimates of R&D spillovers that differed
from those of earlier research studies, which only examined spillover
across sectors or industries for a single country.
eir estimates of R&D spillovers used a pool of macroeconomic data
for 21 OECD countries plus Israel over the period 1971–1990. ey
estimated the relation of a country’s total factor productivity as a func-
tion of the domestic research and development capital stock and for-
eign R&D capital stock as a proxy for the stock of knowledge embodied
in a country’s trade position. All the measures of foreign and domestic
154 E. Elish and H. Elshamy

research and development capital were constructed from the business sec-
tors’ research and development activities.
e model used the estimated elasticity of total factor productivity in
relation to domestic and foreign R&D capital stock. In another study,
Coe et al. (1997) estimated elasticity of the total production function
in relation to the change in domestic and foreign R&D capital stocks,
imports of machinery and equipment, and secondary school enrolment
ratio. Another contribution of the Coe and Helpman model (1995) is
using this function as empirical evidence that research and development
spending in industrial countries can be transmitted to developing coun-
tries and increase these countries’ total productivity.
Many studies advocated this model but using advance statistical
techniques. Coe et al. (2009) adopted the modern panel cointegration
method that was not available in the early 1990s. In addition they did an
expansion of the panel to the same model.
Another study by Kao et al. (1999) used the same model and adopted
methods of OLS, FM and DOLS estimators in panel data. e study
concluded that the estimated coefficients in the Coe and Helpman model
(1995) are subject to estimation bias, but they have correct signs. However,
the results support the argument for international R&D spillover.
Litchtenberg and Brouno (1998) examined two important character-
istics of the Coe and Helpman model (1995). Firstly they argued that the
foreign R&D weighting scheme suffers from ‘aggregation bias’ and sug-
gested a less biased weighting scheme. ey also corrected an indexation
bias and found that the more a country enjoys trade openness, the more
probability of gains from R&D spillover.
Muller and Michaela (1998) argued that the choice of an appropriate
model for behaviour of panel data can affect the results of the Coe and
Helpman model (1995), in other words, the choice between fixed coef-
ficient methods previously used in the model and the use of a random
coefficient model in this study. Applying the model using fixed regression
gave unreliable results when compared to random coefficient analysis
results.
e channel through which international R&D is transmitted was
debated in several studies on the macro level (across borders of countries)
and on the micro level (across firms or industries in the same country).
9 Absorptive Capacity ofHuman Capital andInternational R&D... 155

Cincera and Bruno (2001) distinguished between rent spillover of tech-
nology transfer that occurs from trading transactions of factor imports and
machinery that embodies innovative technology on the one hand, and
international knowledge spillover across countries via foreign direct invest-
ment, international research collaboration, scientific publications or brain
drain on the other hand. Both are difficult to measure due to high collin-
earity between them. Wolf and Ishraq (1993) depicted a channel of R&D
spillover embodied in new investments that enter a sector in the economy.
e absorptive capacity of a recipient country for international R&D
spillover was taken into consideration when analysing the magnitude of
impact on productivity. Several determinants of absorptive capacity were
suggested in various studies.
e first is the quality of human capital as an important catalyst for
absorption (Sunkwark and Young 2006). ey built their assumption on
the idea that domestic human capital is an important factor in under-
standing the foreign high technology embodied in imported goods and
absorbing it for domestic use. McNeil (2007) specified the quality of
the labour force and capital accumulation as two vital determinants of
absorptive capacity of spillover.
e second is the technology gap between countries, where studies
questioned the impact of international R&D on total factor productiv-
ity with a wide technology gap in developing countries (Blomstrom and
Kokko, as cited from Bouoiyour 2005).
Zhu and Bang (2007) showed that innovation in information tech-
nology has played a significant role in facilitating the transmission of
international R&D spillovers among OECD countries and Israel and
consequently improving productivity growth.
Finally, Coe et al. (2009) added a group of institutional determinants
which impact the absorptive capacity of international research and devel-
opment spillover in recipient countries. ese include the ease of doing
business, the quality of the tertiary education system, the strength of patent
protection laws in the country and their effectiveness in copyright protec-
tion, and the origin of the country’s legal system. All these determinants
were found to be highly correlated to the improvement of total factor
productivity through enhancing the absorptive capacity of spillover.
Other contributions were made to the literature of international R&D
spillover by examining its impact on other economic variables. Costa
156 E. Elish and H. Elshamy

and Stefano (2004) focused on the effect of technology innovation spill-
over on economic growth. ey made use of the dynamic growth model,
which facilitates the evaluation of regional convergence and innovation
on long-run labour productivity, without the technology index that is
usually used in the technology gap model for developing countries.
Borras, Serrano and Simarro (2011) examined the effect of intersec-
toral direct and indirect knowledge spillover on a sector’s labour pro-
ductivity on a disaggregated level. eir interpretation of knowledge
included innovation, research and development, and tacit knowledge.
Gera, Wulong and Frank (1999) presented an empirical model that
estimates the effect of information technology investments and R&D
spillover from the information technology sector on labour productiv-
ity between Canadian and US industries. ey relied on the Coe and
Helpman (1995) model for estimating foreign research and development
capital and domestic research and development capital. ey agreed
on the transmission channels introduced in this model. However, they
regressed the annual average labour productivity rate of an industry on
the information technology and non-information technology invest-
ments for five sub-periods from 1971 to 1993. ey regressed the mean
values of the research and development variables over the same results.
eir result showed a significant effect of international R&D spillover
from information technology sectors on labour productivity for both sec-
tors, with low significance from non-information technology sectors.
Empirical studies of international R&D in relation to total factor pro-
ductivity in few Middle East countries like Morocco and Egypt were
conducted but with a narrow scope. McNeil (2007) examined the effect
of international R&D spillover on total factor productivity through its
diffusion in the intermediate products imported from OECD countries
to the Egyptian and Moroccan manufacturing sectors. He used the same
model which Coe and Helpman model (1995) have used. In addition,
his study showed the significance of cross-border research and develop-
ment spillover on total factor productivity, where Human capital, is a
core determinant of the magnitude of spillover in the model. Bouoiyour
(2005) conducted a study on the Moroccan manufacturing industries,
indicating that the channel of R&D spillover is through foreign direct
investment, which has a significant positive effect on domestic labour
productivity. He introduced the technology gap as a measure of absorptive
9 Absorptive Capacity ofHuman Capital andInternational R&D... 157

capacity. It is calculated as the ratio between total factor productivity
of foreign firms to the total factor productivity of domestic firms. is
technology gap is a condition set in the model to have a higher positive
magnitude effect of international R&D on domestic labour productivity.
e final conclusion of this literature survey, from which this chapter builds
its basic assumptions, is that international R&D can be transmitted from
industrial countries to developing countries through different mechanisms.
It can significantly affect total factor productivity given the presence of high
absorptive capacity. e main catalyst of this capacity is the quality of human
capital, a narrow technology gap and innovation in information technology.
Methodology
In this section, we first present the empirical model used to estimate
the effect of R&D spillover and human capital on labour productiv-
ity growth in the Egyptian manufacturing sector. We then discuss the
methodology used to construct the international R&D spillover and
capital stock.
Empirical Model
e empirical model depends on Cobb-Douglas production function.
is model was developed by Corves (1997) and Gera et al. (1999):
YLHKRD e
tttt t
t
=
aaaa
12
3
40
(9.1)
where α1, α2, α3, and α4 are the output elasticities of labour input,
human capital, capital stock and international R&D capital respectively.
α4 represents the rate of exogenous technical change. All of the other
variables are explained in Table 9.1.
From Eq. 9.1, we can derive the following equation that expresses the
labour productivity growth rate of the manufacturing sector in Egypt.
158 E. Elish and H. Elshamy



y
y
L
L
H
H
K
KR
D
æ
è
çö
ø
÷=+
æ
è
çö
ø
÷+æ
è
çö
ø
÷+æ
è
çö
ø
÷+æ
è
bb bbb
01 234
RD
çç ö
ø
÷
+Î
(9.2)
Where 
y
y
æ
è
çö
ø
÷ is the labour productivity growth;

H
H
æ
è
çö
ø
÷ is growth rate of the
human capital; 
K
K
æ
è
çö
ø
÷ is the growth rate of the capital stock; and

RD
RD
æ
è
çö
ø
÷ is the
growth rate of the international R&D.
Measurement ofR&D Spillovers
We calculated the international R&D as follows:
First, we calculated R&D expenditures for the G7 countries (USA,
UK, Germany, France, Italy, Japan and Canada) by using the STAN
dataset.
Second, we calculated the values of R&D at constant prices.
Table 9.1 Sources and descriptions of data
Variable Description
Expected
sign Source of data
YLabour productivity in
manufacturing sector in Egypt.
Y = GDP in manufacturing
sector divided by employment
Dependent
variable
Ministry of
planning in
Egypt, annual
series
L Employment level in
manufacturing sector in Egypt
− Ministry of
planning in
Egypt, annual
series
H Years of primary schooling + World Bank
K Capital stock. It is calculated
from the investment data by
using the PIM technique
explained in this section
+ Ministry of
planning in
Egypt, annual
series
RD International R&D, which is
calculated from the R&D
expenditure data by using the
PIM technique explained in this
section
+ STAN dataset,
OECD
9 Absorptive Capacity ofHuman Capital andInternational R&D... 159

ird, we transferred these data from flows to stock by using the
Perpetual Inventory Method (PIM)1 by applying Eq. 9.3 for the bench-
mark year and Eq. 9.4 for the rest of the years (Elshamy 2009).
RD RD
=
+
flow in
Average annual growth rate Depreciation
1982 83/
rate
(9.3)
RD RD
i
iRDi
=
--
()
+11 Depreciation rate flow in year (9.4)
Measurement ofCapital Stock inEgypt
We calculated the international R&D as follows:
First, we collected the investment data for the manufacturing sector in
Egypt during the period 1982/83–2010/11.
Second, we calculated the values of investments at constant prices.
ird, we transferred these data from flows to stock by using the
Perpetual Inventory Method (PIM) by applying Eq. 9.5 for the bench-
mark year and Eq. 9.6 for the rest of the years.
K=
+
Investment flow in
Average annual growth rate Depr
1982 83/
eeciation rate
(9.5)
KK
ii
=--
()
+11 Depreciation rate Investment flow in year i (9.6)
Empirical Results
is section discusses the estimated results of Eq. 9.2. Regression was per-
formed on a time series data consisting of 29 years (1982/83–2010/11)
for the manufacturing sector in Egypt. First we conducted the cointe-
gration analysis. Table 9.2 shows the results of the Augmented Dickey
1 For more details about this method, see Elshamy (2009). Details of these findings can be inter-
preted as follows: in the Egyptian manufacturing sector, international R&D has a positive
influence.
160 E. Elish and H. Elshamy

Fuller (ADF) test on the first difference based upon the Mackinnon P
values at various lag lengths. e preferred lag length based upon the
Akaike Information Criterion (AIC) indicate that cointegration is gener-
ally accepted.
Table 9.2 shows the estimation results using cointegration analysis. We
find that labour productivity has a positive and significant relationship
with the growth rate of human capital, capital stock and international
R&D. However, the relationship between labour productivity and the
growth rate of employment is negative and significant. All of these results
are correct according to the economic theory.
Details of these findings can be interpreted as follows: in the Egyptian
manufacturing sector, international R&D has a positive influence on
labour productivity, with a 1 % rise in international R&D increasing
labour productivity by 5.6 %. Moreover, in the Egyptian manufactur-
ing sector, human capital has a positive influence on labour productivity,
with a 1 % rise in human capital increasing labour productivity by 1.2 %.
Table 9.3 shows the error correction mechanism (ECM). It indicates
the same results as cointegration. Most importantly of course, the lagged
Table 9.2 Cointegration analysis
Dependent variable (growth of
labour productivity) Coefficients Significant
Independent variables
Constant 0.007 *
Growth of labour input −0.411 ***
Growth of human capital 0.012 **
Growth of capital input
International R&D spillover
0.019
0.056
*
***
CDRW 1.75
ADF tests Favoured lag
length = 2
Favoured lag length
= 2
ADF(0) 0.004 0.003
ADF(1) 0.052 0.022
ADF(2) 0.041 0.006
ADF(3) 0.031 0.004
*** = significant at 1 %
** = significant at 5 %
* = significant at 10 %
ADF figures show the Mackinnon approx P-value
9 Absorptive Capacity ofHuman Capital andInternational R&D... 161

error is negative and significant. is confirms the acceptance of the
long-run relationship, which is further validated given that there are no
problems with any of the diagnostic tests presented (the AR(1) test for
first-order residual autocorrelation, the ARCH(1) test for autoregressive
conditional heteroscedasticity and the Jarque-Beta test for normality).
Conclusions
is chapter empirically analyses the relationship between labour produc-
tivity, human capital and international R&D spillover during the period
1982–2011, by estimating a single model equation which employs long-
run cointegration analysis and short-run analysis (ECM). e analysis
uses annual data from 1982 to 2011.
Conventional results for international R&D and human capital are
found. It is inferred from the model that significant role played by interna-
tional R&D and human capital has strongly shaped labour productivity.
ese results are consistent with all literature surveyed in this research
chapter, which supports the basic assumption that international research
Table 9.3 Error correction mechanism (ECM)
Dependent variable (LFDI) Coefficients Significant
Independent variables
Constant 0.006 *
Growth of labour input −0.366 **
Growth of human capital 0.009 **
Growth of capital input 0. *
International R&D spillover 0.048 **
Lagged error −0.116 ***
No. of observations 29
F- statistics 8.33 ***
Adjusted R20.76
DW 2.15
AR(1) 1.42
ARCH(1) 1.82
Normality 2.12
*** = significant at 1 %
** = significant at 5 %
* = significant at 10 %
162 E. Elish and H. Elshamy

and development spillover is transmitted from industrial countries to
developing countries like Egypt. In addition, this spillover affects labour
productivity given the quality of human capital formation in Egypt.
e more developed the educational level of human capital in the indus-
trial sector, the more significant its role will be in absorbing international
research and development spillover and benefiting labour productivity.
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164 E. Elish and H. Elshamy

Part V
Investment

167
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI 10.1007/978-3-319-41090-6_10
10
Foreign Direct Investment inZimbabwe
andBotswana: TheElephant
intheRoom
MavisGutu, ConstantiaAnastasiadou,
MaktobaOmar, andCollinsOsei
Introduction
Sub-Saharan Africa (SSA) has 54 countries, some experiencing good
inflows of foreign direct investment (FDI) and economic expansion,
whereas others are shrinking as FDI inflows are weak. Africa’s inability
to attract significant levels of FDI requires close attention, because FDI
is crucial in capital formation and for stimulating sustainable economic
development in the region. However, FDI is unevenly distributed among
nations and regions (UNCTAD 2015; IMF 2013; Asiedu 2013; Anyanwu
M. Gutu (*) • C. Anastasiadou • C. Osei
Edinburgh Napier Business School, Craiglockhart Campus,
Edinburgh Napier University, Edinburgh, EH 14 1DJ, UK
M. Omar
Coventry University, William Morris, Priory Street City, Coventry,
CV1 5FB, UK
Coventry University Business School, UK

2011). is chapter examines FDI determinants for the SSA region with
particular emphasis on the comparison between Zimbabwe and Botswana.
Africa as a whole has recently gained more prominence as an attrac-
tive location for FDI, and the SSA region’s FDI inflows are increasing.
However, FDI into the African region remains relatively stagnant, as evi-
denced in Fig. 10.1.
Foreign Direct Investment Defined
FDI is considered a firm internationalisation strategy. e firm establishes
a physical presence in the host country by acquiring and transferring
resources such as capital, technology, labour, land, plant and equipment,
giving investors partial or full ownership, and is long lasting (Cavusgil
et al. 2013; IMF 2004).
Foreign Direct Investment: Empirical
Determinants
Determinants of FDI generally fall into four categories, as shown in
Table 10.1.
ese motives will be integrated into the discussion of the variables in
relation to Zimbabwe and Botswana.
0
500000
1000000
1500000
2000000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
US$ Millions
World Developing economies: Asia Developing economies: Africa
Fig. 10.1 FDI trends in US$ million: World, Asia and Africa, 2002–2012
(Source: Adapted from UNCTAD: UNCTADstat)
168 M. Gutu et al.

The State ofFDI inZimbabwe andBotswana
Zimbabwe and Botswana, with populations of 14.2 and 2.2 million
respectively, have received varying amounts of FDI, as shown in Fig.
10.2.
FDI in Zimbabwe is substantially lower than in Botswana (Fig. 10.2).
Historically, FDI in Botswana is low (Selelo and Sikwila 2012) but higher
than in Zimbabwe. e following section analyses the factors that explain
some of these differences in FDI attraction.
Table 10.1 FDI categories and objectives
FDI category Objective
Resource-
seeking
Market-
seeking
Efficiency-
seeking
Strategic-
asset- seeking
MNEs aim to invest in host country in order to benefit from
lower-cost resources, such as natural or physical resources,
cheap labour, technological and managerial
MNEs enter foreign countries with the main objective to
increase market share and sales growth
MNEs attempt to rationalise resources and market-seeking by
centralising production in host country while servicing
multiple markets. The aim is to reduce transaction costs
through economies of scale
The long-term internationalisation strategy of a firm’s objective
through acquisition of host country assets or by forming
strategic alliances
0
500
1000
1500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
US$ Millions
Botswana Zimbabwe
Fig. 10.2 FDI inows in US$ million: Zimbabwe and Botswana comparison,
2002–2012 (Source: Adapted from UNCTAD: UNCTADstat)
10 Foreign Direct Investment inZimbabwe andBotswana... 169

Factors Influencing FDI Location Choice
Political Factors
Political Stability
Political risk arises where a host government can change the rules of how
businesses operate without notice. e assessment of the political envi-
ronment by multinational enterprises (MNEs) varies according to loca-
tion, as the degree of political instability as a determinant could be more
profound in some countries than in others (Alcantare and Mitsuhashi
2012). Political risk in the twenty-first century is widespread, with host
governments’ political institutions (political parties, trade unions and the
legal system) being the major sources, as they create, enforce and apply
laws that mediate conflict and governmental policies on the economy
and social systems. Political instability negatively impacts on FDI inflow
as it may interrupt business activities and alter investors’ perceptions
on location choice, and violence could harm the operations of the firm
(Jakobsen 2010; Reiter and Steensma 2010).
ough political risk is a threat to FDI inflows, opportunities such
as higher returns on investment offered in politically unstable environ-
ments could support a firm’s achievement of its internationalisation strat-
egy (Jime’nez et al. 2014; Rios-Morales et al. 2009). During the period
1998–1999, Angola attracted the highest FDI inflows among SSA coun-
tries, even though it was considered politically unstable. e returns in
petroleum were huge compared to the risk, thus attracting FDI (Asiedu
2002).
Comparing the political environments of Zimbabwe and Botswana
for the period 2002–2012, Zimbabwe’s reflected instabilities (Fig. 10.3),
with the negative scores largely associated with pre- and post-election
periods. Furthermore, controversial political events (Land Acquisition Act
1992; Indigenisation Act 2007) destabilised the business environment,
impacting negatively on FDI inflows (Copley et al. 2014; Marawanyika
and Latham 2014). However, the introduction of new policies by the
170 M. Gutu et al.

inclusive coalition government (2008–2012) resulted in an improvement
in FDI inflows.
By comparison, Botswana, perceived as successful and as a model
African country characterised by political stability (Fig. 10.3), with cred-
ible, regular, peaceful elections—though the same ruling party has been
in power since 1965—attracts constant flows of FDI (Hendricks and
Musavengana 2010). Furthermore, there is observance of property rights,
correlating with FDI attraction, as ownership advantages (Dunning
2000) are important, as they grant MNEs the right to exercise control
of host country subsidiaries (Gwenhamo 2011; Busse and Hefeker 2006;
Globerman and Shapiro 2002).
Figure 10.3 compares political stability and absence of violence or ter-
rorism in Zimbabwe and Botswana.
Additionally, FDI is attracted to a host country with the propensity
to uphold the rule of law and respect voice accountability. Zimbabwe’s
tolerance of voice is limited (Fig. 10.4) and internal conflict impacts neg-
atively on FDI. In contrast, Botswana’s index is stable and continuously
shows signs of improvement, hence it is a favourable location for FDI
inflows.
Figure 10.4 illustrates the dimension of these variables.
-2.00
-1.50
-1.00
-0.50
0.00
0.50
1.00
1.50
2002 2003 2004 2005 2006 200720082009201020112012
Range
BOTSWAN
A
ZIMBABWE
Fig. 10.3 Political stability and absence of violence/terrorism: Zimbabwe and
Botswana comparison, 2002–2012 (Source: Adapted from World Bank –
Worldwide Governance Indicators)
10 Foreign Direct Investment inZimbabwe andBotswana... 171

Corruption
Corruption is defined as the demanding of bribes from firms in return for
the right to operate in a sector, country or location, or the misuse of pub-
lic power for private benefit (Hill 2014; Rugman and Collinson 2012). It
is prevalent in the public sector, and it undermines the decision- making
process and retards participants’ capabilities (Mudambi et al. 2013; Osei
and Gbadamosi 2011). Institutional structures make it difficult to mea-
sure corruption; however, as it increases the cost of doing business, it neg-
atively impacts on FDI inflows (Omar and Osei 2015; Al-Sadig 2009;
Egger and Winner 2005).
e association of natural resources with corruption results in noticeable
adverse effects on economic development and governance, thus making the
location unattractive to FDI (Asiedu 2013; Mudambi et al. 2013; Sparks
2011; Reiter and Steensma 2010). Companies that perceive corruption as
an unfair practice do not invest in environments that appear to promote
corruption. Clinton (2014) viewed corruption and a host country’s lack of
capacity (human capital, technology, level of openness) to absorb FDI as
contributory impediments to inward FDI.
Zimbabwe has more negative corruption indicators than does Botswana
(Fig. 10.5), with 2002 being the worst year owing to the land invasions.
Zimbabwe does experience some FDI inflows—though the amount is
-2.0
0
-1.5
0
-1.0
0
-0.5
0
0.00
0.50
1.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
ZIMBABWE VOICE BOTSWANA VOICE
ZIMBABWE RULE OF LAW BOTSWANA RULE OF LAW
Fig. 10.4 Voice accountability and rule of law: Zimbabwe and Botswana
comparison, 2002–2012 (Source: Adapted from World Bank – Worldwide
Governance Indicators)
172 M. Gutu et al.

insignificant—because corruption can have a positive impact on FDI, as
some MNEs will enter locations shunned by others based on underhanded
negotiations by the host government (Egger and Winner 2005).
e Botswana government’s active efforts to control corruption have
produced positive indicators, with the highest score recorded in 2003.
Transparency International ranked it as the least corrupt country in
Africa (Njau 2013; Transparency International 2012; van Wyk 2010;
Economist Intelligence Unit 2008). Botswana’s positive ranking in terms
of corruption confirms its attractiveness to FDI.
Taxation Policy
Favourable taxation policy and low tax rates (Suh and Boggs 2011)
are incentives for investors and therefore attract larger amounts of
FDI inflows (Gondor and Nistor 2012). Countries with small mar-
ket size normally enact favourable taxation policies to attract FDI,
with the Netherlands (Halvorsen 2012) and Botswana falling into
this category.
-80%
-6
0%
-4
0%
-2
0%
0%
20%
40%
60%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
BOTSWAN
A
ZIMBABWE
Fig. 10.5 Control of corruption: Zimbabwe and Botswana comparison,
2002–2012 (Source: Adapted from World Bank – Worldwide Governance
Indicators)
10 Foreign Direct Investment inZimbabwe andBotswana... 173

Zimbabwe’s tax system is complex, and some aspects are rigid. A
change in taxation policy and the introduction of incentives could lure
MNEs (Trading Economics 2014; Bloch 2013).
By comparison, Botswana has low taxes with investment incentives
(e Heritage Foundation 2014), creating a positive attitude towards
investments.
Country Brand andImage
e negative image the world has of Africa may be due to a lack of infor-
mation about the continent, which consequently affects the ability of
individual countries to attract FDI (Osei and Gbadamosi 2011; Cleeve
2008). is is why managing national economic development presents
a marketing or business challenge. It requires countries to be managed
as brands in order to reap the benefits of full participation on interna-
tional markets (Magobo and Wakeham 2014; Marundu et al. 2012).
us the current Zimbabwe brand image, represented in its name, flag
and political ideology to portray its functionality, has not yielded the
intended benefits. is is due to the period of hyperinflation, the land
invasions and, more recently, the indigenisation law, which was per-
ceived as having grabbed assets from firms (Kwinika 2015; Dzirutwe
2014; Maswanganyi and Karombo 2013; Ndlovu 2013; Coomer and
Gstraunthaler 2011; Plaut 2011).
On the other hand, Botswana has an exemplary African country
brand created through conscious efforts. In 2008, the president of
Botswana, Festus Mogae, launched ‘Branding Botswana’, appointing
a company solely to promote and position Brand Botswana on the
global map, thus sustaining competitive advantage (Setshogo 2008).
In order for Brand Zimbabwe to correct the negative image currently
associated with it, substantial effort and participation from country
stakeholders and massive promotion internally and externally are
crucial.
174 M. Gutu et al.

Economic Factors
Macroeconomic factors (inflation, exchange rates, GDP, unemployment
rate, disposable income, consumer confidence and labour costs) and host
government policies affect where companies invest. us weak institu-
tions often lead to poor macroeconomic policy implementation and
negatively affect consumer confidence (Ahmed and van Hulten 2014;
Inekwe, 2013; Cleeve 2008; IFC and FIAS 1997). Hence, host countries
experience growth from FDI when they have liberalised trade policies, an
educated workforce and where the macroeconomic environment is stable
(Adams 2011).
Inflation
High inflation rates deter international investors as they have a negative
impact on business profitability and could signal poor economic con-
ditions. Inflation rate is also an indicator of monetary and macroeco-
nomic stability that determines a country’s economic growth prospects,
an important consideration for market-seeking FDI (Suh and Boggs
2011).
e hyperinflation era in Zimbabwe, triggered by the land redistribu-
tion programme, reached a peak in 2007, resulting in the Zimbabwean
dollar losing value. e government relied on money printing to finance
activities, resulting in further weakening of the economy and leading
to its total collapse (Coomer and Gstraunthaler 2011). However, the
Zimbabwe dollar was abandoned in 2008 and a multi-currency regime
was introduced in 2009, leading to stabilisation of the inflation rate. e
resultant stability of inflation confirms the effect of inflation on location
attractiveness, as in 2009 FDI inflows marginally increased.
Botswana’s inflation rate (Fig. 10.6) is relatively stable and fluctuated
within normal limits from 2002 to 2012. Botswana’s highest rate of infla-
tion was 12.7 % (2008), which, combined with the global financial crisis,
10 Foreign Direct Investment inZimbabwe andBotswana... 175

impacted negatively on FDI inflows. However, the overall stability in
Botswana’s inflation could make it a more attractive location for FDI
(Suh and Boggs 2011).
Exchange Rates
Flexibility in exchange rate policy, with an absence of unfavourable
exchange controls, has a positive impact on investors’ location decisions.
In an imperfect market firms tend to invest in a host country experienc-
ing a devaluation of currency, as borrowing in the host country becomes
cheaper (Owusu-Antwi et al. 2013; Basu and Srinivasan 2002). e
depreciation of the currency increases location attractiveness to FDI as
exports increase (Schmidt and Udo 2009). e volatility of the exchange
rate can attract or discourage FDI (Owusu-Antwi et al. 2013).
In Zimbabwe, the use of the multi-currency regime introduced in
2009 has stabilised the economy. e exchange rates follow international
markets and hence there is no domestic exchange risk.
Botswana’s official currency is the pula. Exchange controls were abol-
ished in 1999, increasing the country’s attractiveness to FDI. e pula is
pegged against major currencies and is convertible with them.
1234567891
01
1
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Zimbabwe 140.06 431.7 282.38 302.1171096.68 24411 00000
Botswana 8.0328 9.1899 6.9457 8.6102311.5552 7.08112.7022 8.0273 6.948888.45817 7.54028
0
5000
10000
15000
20000
25000
30000
Inflation %
Fig. 10.6 Ination: Zimbabwe and Botswana comparison, 2002–2012
(Source: UNCTAD, UNCTADstat (data is not available from 2008 to 2012 for
Zimbabwe))
176 M. Gutu et al.

Gross Domestic Product (GDP) Per Capita
e GDP per capita is considered a determinant for FDI as it is a good
indicator of the purchasing power of a country (Vinesh et al. 2014;
Bayraktar 2013).
Zimbabwe’s GDP tends to fluctuate. In 2002, it was higher than
Botswana’s, but the deteriorating economic and political environment
resulted in a subsequent fall as companies closed down. Low GDP
indicates uncertain purchasing power, thus market-seeking FDI could
consider the location unattractive. Zimbabwe’s income base is distorted
owing to high levels of unemployment, with many people working in
the informal sector where GDP cannot formally be accounted for. GDP
could be important when analysing the purchasing power of a country
and useful when firms are considering market-seeking FDI (Vinesh et al.
2014), thus making Zimbabwe unattractive to market-seeking FDI.
Botswana’s GDP shows an upward trend, with a high level of eco-
nomic activity positively impacting on FDI inflows. About 57 % of
its population are formally employed as compared to Zimbabwe’s 5
%. e purchasing power of the country is improving with the rise
of middle- income earners. Botswana’s highest contributor to GDP
(99.78 %) in 2012 was exports of its commodities from the mining
sector.
Figure 10.7 shows a comparison of GDP per capita purchasing
power parity (PPP) between Zimbabwe and Botswana for the period
2002–2012.
Unemployment
While recognising the importance of FDI in job creation through techno-
logical spillovers (Adams 2011), FDI has also been linked to the destabi-
lisation of domestic employment, degradation of working conditions and
exclusion of host country nationals from high-paying positions (Mucuk
and Demirsel 2013). e ratio of jobs created as compared to the amount
of FDI is small, which could be attributed to the capital-intensive pro-
duction and labour-saving techniques used by MNEs in host countries.
10 Foreign Direct Investment inZimbabwe andBotswana... 177

Ideally, the number of jobs created by FDI inflows should exceed those
lost in the host country through FDI-related activities such as job lay- offs
resulting from mergers and acquisitions and closure of local firms (Gohou
and Soumare 2011) for FDI to be beneficial to a host country.
While Zimbabwe’s unemployment rate is increasing, Botswana’s is declin-
ing (Fig. 10.8). In Zimbabwe, resource-seeking FDI in the mining sector
initially reduced unemployment as mining workers were recruited. However,
due to the depletion of alluvial diamonds and the limited capacity of current
MNEs in deeper minerals extraction expertise and technology, workers were
laid off, worsening the unemployment situation. us, resource-seeking FDI
has a negative impact on employment (Gohou and Soumare 2011).
Botswana’s unemployment rate is 7.5 % (Fig. 10.8). Government is the
single largest employer with 47 %, others being mining (3.5 %), agricul-
ture (2 %), and self-employed and informal (35 %) (Botswana Country
Profile 2014). e government actively funds programmes that create
jobs and reduce unemployment and continues to stimulate economic
growth (Bakwena 2012). Although FDI is concentrated in Botswana’s
mining sector, with 3.5 % of the labour force, it does not seem to play
0
2000
4000
6000
8000
10000
12000
14000
16000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Botswana Zimbabwe
Fig. 10.7 Zimbabwe and Botswana GDP per capita PPP, 2002–2012 (Source:
Adapted from UNCTAD, UNCTADstat)
178 M. Gutu et al.

a major role in employment creation (World Bank 2011; Alter 1994).
us, Clinton (2014) mentioned that poverty reduction is the responsi-
bility of the government.
Labour Costs
Labour costs could be linked to the quality of labour, with labour- intensive
industries attracting low labour costs as compared to capital-intensive
industries (Chan et al. 2013). A firm’s major objective is profitability.
us a location where profit realisation is linked to low production costs
such as low wages influences FDI, particularly in resource-seeking FDI
(Halvorsen 2012; Kurtish-Kastrati 2013). In contrast, Demirhan and
Musca (2008) found no clear link between wages and FDI. However,
when labour costs are insignificant, the skills of the labour force can have
an impact on FDI location.
ough Zimbabwe has an educated workforce, the labour market is
skewed because of the high rate of unemployment. e economy is unable
to absorb most of its highly trained, educated and skilled people, leading
to skilled people taking up low-paid employment. Resource-seeking FDI
directed towards the manufacturing sector could absorb the unemployed
at lower cost (Halvorsen 2012; Kurtish-Kastrati 2013).
0.6
0.7
0.8
0.95 0.95
0.4 0.4
0.238
0.07
50.075
2002 2003 2004 2005200720092012
Zimbabwe Botswana
Fig. 10.8 Unemployment rate: Zimbabwe and Botswana comparison,
2002–2012 (Source: Adapted from Indexmundi 2014)
10 Foreign Direct Investment inZimbabwe andBotswana... 179

Botswana has a sophisticated and educated workforce. It has higher
costs of labour, and its public sector offers the highest wages in the
SSA region. However, the high labour costs (skilled and unskilled) do
not correlate with productivity, and total factor productivity such as
transport and Internet connectivity costs place a barrier on the diver-
sification of FDI from the mining sector, because MNEs associate
quality and productivity with profitability when considering locations
(Chan et al. 2013).
Disposable Income
e income distribution of a host country can negatively or positively
impact on FDI location choice (Huifang 2006). Studies suggest that FDI
increases production and raises income levels.
Zimbabwe is classified as a low-income economy, with a gross national
income per capita (GNI) of US$1,035 or less (e World Bank 2013).
e implementation of radical policies saw middle-income earners
disappear as foreign companies offering attractive wages closed down.
Additionally, the low-income earners’ disposable income was reduced
further, decreasing the consumption rate of goods and services.
Botswana is ranked as a middle-income economy, with a GNI of
US$4,126 to US$12,745 per capita and GDP per capita of US$14,696 in
2012 (e World Bank 2013). e economy is growing and FDI inflows
into the mining sector have contributed to the development of the econ-
omy and increased disposable income. e potential higher demand
for products due to higher employment, increased wages and economic
growth as a result of the multiplier effect attracts FDI (Ezeoha and
Cattaneo 2012).
Socio-Cultural
A social and cultural atmosphere that is sufficiently flexible to embrace
foreign influence can encourage FDI (Suh and Boggs 2011). ough
MNEs tend to invest in countries that are culturally close to their own
home culture (Omar and Osei 2015), FDI inflows can create social
180 M. Gutu et al.

divisions owing to the gaps created by wage differentials (Chintrakarn
et al. 2011; Georgieva et al. 2012).
Demographics
Countries with strong demographics could use FDI in labour-inten-
sive manufacturing industries leading to job creation and capital
accumulation, thus resulting in increased efficiency and technologi-
cal capabilities. Demographics could influence FDI inflows as cheap
labour could be made available by shifting rural labour into manufac-
turing, potentially influencing FDI inflows ((Neogi 2013; Research
and Markets 2005).
Zimbabwe has a population of 14.2 million, and Botswana 2.2 mil-
lion. eir population annual growth rates stand at 4.38 % and 1.48
% respectively (World Bank 2012). Zimbabwe’s market size is bigger,
making its demographics attractive to FDI. However, instability in the
economic and political environment prevents the country from benefit-
ing from FDI.
Both countries have the same ability to attract Western FDI based on
cultural affinity, since they are both former British colonies. However,
they differ in their capacity to attract FDI because Botswana’s economic
and political atmosphere is more conducive to inflows.
Human Capital
e host country’s human capital is of importance in the determination
of FDI, due to a direct correlation between workforce skills set and FDI
attraction (Choong 2012). erefore, the success of human development
hinges on the involvement, commitment and motivation of the host gov-
ernment in pursuing policies that enhance the skills level of the popula-
tion and build human resource capabilities (Clinton 2014; Reiter and
Steensma 2010). Technology-intensive FDI is directed to countries with
a highly educated workforce, consequently further developing human
capital, while a host country with a less skilled workforce initially attracts
less technology-intensive FDI and the pace of development is slower.
10 Foreign Direct Investment inZimbabwe andBotswana... 181

us, the educational level of human capital and managerial skills are
determining factors for firms to invest in a particular sector in a host
country (Bayraktar 2013; Nkechi and Okezie 2013).
Zimbabwe had the highest educated and skilled workforce in Africa
prior to the reforms that commenced in 2000, with a literacy rate of
95 %. e land reform programme led to a rise in external debt, a drop
in GDP and increased political instability. Furthermore, this prompted
the political and economic emigration of skilled Zimbabweans to neigh-
bouring countries, as well as abroad, leaving Zimbabwe with a reduced
skilled workforce and a severely depleted pool of available talent, affect-
ing resource capacity (Nkechi and Okezie 2013). erefore, Zimbabwe’s
human capital base could be creating a barrier to FDI inflows because of
the reduced pool of talent.
Botswana’s population was historically mostly rural, with its human
capital mostly unskilled. In 1987, the government implemented the
World Bank global education promotion programme, offering free
primary and junior high school, subsequently elevating its literacy
rate to 85 % (Tabulawa 2011). us its labour market now is gen-
erally educated. In effect, the importance of host country govern-
ment involvement in the development of human capital to facilitate
FDI attraction cannot be overemphasised (Reiter and Steensma 2010;
Clinton 2014). However, Botswana has limited human capital with
the right skills, and shortages in semi-skilled and skilled manual work-
ers are still experienced as more people opt for white collar jobs in the
public sector. Botswana’s human capital’s limited skills set could be
impacting on attracting higher levels of, and more diversified, FDI
(Basu and Guaringlia 2007).
Infrastructure
Infrastructure is categorised as soft (transparent institutions and wider
reforms) and hard (highways, rail and airports) (Glass 2009). Generally,
good infrastructure is linked to the promotion of productivity and
reduction of production costs, while poor infrastructure is considered a
major constraint in low-income countries (Vinesh et al. 2014; Behman
2012). However, underdeveloped infrastructure could attract FDI in
182 M. Gutu et al.

construction and telecommunications (Marr 1997). But where infra-
structure is under government control, there appear to be inefficiencies
in service delivery (Suh and Boggs 2011; Glass 2009; Kessides 2004).
Hard Infrastructure
Most of Zimbabwe’s hard infrastructure is in desperate need of rehabilita-
tion. Roads, railway, hospitals, schools, water and sewage, and power have
deteriorated as the government has little capacity or financial resources
to restore them. e state of hard infrastructure could be an incentive
for MNEs to invest in this sector (Marr 1997). However, the continuous
interruptions of power and water supplies affect normal business opera-
tions and result in MNEs incurring additional costs in doing business,
making the country unattractive to FDI.
In comparison, Botswana has developed its location advantages
(Dunning 2000) in a number of ways. e government has played a
significant part in improving its infrastructure (road networks, dams and
coal mining), with further plans to invest in railway and information and
communication technology. With the increase in middle-class income
earners and growth in GDP per capita, the demand on infrastructure for
water supplies and utilities is expected to grow, thus creating an opportu-
nity for FDI (Behman 2012).
Soft Infrastructure
Zimbabwe’s soft infrastructure is complex, inconsistent and lacks clarity
as government policies, the banking system and other organisations lag
behind world standards. ere is ambiguity and conflicting legislation,
making the legal framework uncoordinated. According to Ezeoha and
Cattaneo (2012), all aspects of soft infrastructure are important when
evaluating location attractiveness.
Botswana has effective state institutions in place, making the legal
and regulatory framework environment transparent. Processes and pro-
cedures are enforced, making FDI applications and approvals efficient,
thus encouraging FDI inflows.
10 Foreign Direct Investment inZimbabwe andBotswana... 183

Natural Resources
A host country’s comparative advantage in the natural resource sec-
tor attracts resource-seeking FDI. Most FDI to Africa, particularly the
SSA region, and Zimbabwe and Botswana is targeted towards natural
resources, especially the extractive industry (Ezeoha and Cattaneo 2012).
Zimbabwe and Botswana are both rich in natural resources. In Zimbabwe
most of the vertical FDI in the extractive industry originates from China.
ere has been no noticeable improvement in economic growth, unem-
ployment or poverty reduction from realised mineral revenues. us,
natural resources have no significant impact on economic development,
but increase corruption tendencies (Mudambi et al. 2013; Sparks 2011;
Jenkins and Edwards, 2006).
Botswana is the second-largest diamond producer in the world by
volume and the largest producer in terms of output value (UNCTAD
2003), contributing 40 % to GDP. Consequently, mining sector FDI has
transformed its economy. e availability of natural resources in some
cases makes a location attractive (Asiedu 2006), as seen in Botswana.
Legal andRegulatory Framework
e state of the legal regulatory framework influences MNEs in loca-
tion choice. Protective and restrictive trade policies might prohibit
international competition, as they protect the domestic market while
suppressing firms’ options for managing operations (Ahmed and van
Hulten 2014; Dewit et al. 2009). erefore good governance, in the form
of legal and regulatory frameworks, constitutes one of the determinants
of FDI (Buss and Hefeker 2006; Globerman and Shapiro, 2003; 2002).
Employment Law
Locations with more labour union involvement deter FDI, as firms are
reluctant to move production facilities to those locations (Floyd 2003).
Zimbabwe’s trade union movements are closely monitored by the gov-
ernment, which interferes in most aspects of the law and economy, and is
184 M. Gutu et al.

detrimental to FDI inflows. In Botswana, the size of the population and
its small market led to noticeable shortages in skilled human resource.
However, the country made favourable changes to its policies, making
it easier to employ foreign workers, in order to close the gap in human
capital and make the labour market flexible (Suh and Boggs 2011).
Company Law and Business Regulation
Locations that display weaknesses in institutional structures may bes-
hunned. Evidence has shown that some countries within the SSA region-
fall into this category (Marr 1997). In order to mitigate this drawback,
most foreign investors use joint ventures and merger as mode of entry. A
weak legal and regulatory framework in the host country also facilitates
easier exit for MNEs (Georgieva et al. 2012).
e laws and business regulation frameworks in Zimbabwe can
be changed arbitrarily (Land Acquisition 1992; Indigenisation and
Empowerment Act 2007), without weighing the impact on society and the
economy, and negatively impacting on FDI (Jenkins and Edwards, 2006).
In comparison, in Botswana the regulatory framework is adhered to, as
the government respects company laws and business regulations, which
are viewed as a necessity for doing business. e stability in the legal and
regulatory framework prompted De Beers Diamond Trading Company
to relocate from London to Botswana in 2013 (Kariuki et al. 2014; van
Wyk 2010), a favourable FDI indicator.
Openness toTrade andBilateral Agreements
Openness to trade is described as the ease and cost by which goods and
services, factors of production (capital, labour and skills) and technology
can flow in and out of a country freely (Anderson 2005). Countries that
have active membership with various trading partners often attract FDI, as
there are benefits that accrue from being a member that are beneficial to
investors. Minimal government interference in the economy leads to FDI
inflows (Brafu-Insaidoo and Biekpe 2014; Globerman and Shapiro, 2003).
10 Foreign Direct Investment inZimbabwe andBotswana... 185

Zimbabwe is a member of various trading organisations, and has bilat-
eral trade agreements with neighbouring countries, such as the Trade
Agreement Group. All the arrangements provide frameworks for further
liberalisation of trade. Botswana’s openness to trade facilitated the place-
ment of its commodities on the global market. e country’s 2014 eco-
nomic freedom score was 72, and it was ranked the 27th freest economy
out of 178 countries in 2014, taking second place in the sub-Saharan
African region of 54 countries (Van Wyk and Lal, 2010).
Figure 10.9 shows a comparison of the two countries.
Conclusions
is chapter has addressed foreign direct investment in SSA, with par-
ticular emphasis on the comparison between Zimbabwe and Botswana.
It is clear that FDI inflows differ significantly between Zimbabwe and
Botswana. FDI is an important topic that has received a great deal of
attention from researchers. However, this particular research is unique,
as the study concentrates on an area that has not been explored before.
is chapter brings into sharp focus the crucial determinants of FDI in
these neighbouring countries with contrasting fortunes in FDI attrac-
tion. Essentially, the fortunes of these countries hinge largely on how
their location variables have been managed. In addition, the significance
of FDI determinants may vary from country to country.
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
0.50
1.00
2000 2002 2004 2006 2008 2010 2012 2014
Range
Period
Zimbabwe Gvt
Regulatory Quality
Botswana Gvt Regulatory
Quality
Zimbabwe Gvt
Effecveness
Botswana Gvt
Effecveness
Fig. 10.9 Regulatory quality and government effectiveness: Zimbabwe and
Botswana comparison, 2002–2012 (Source: Adapted from World Bank –
Worldwide Governance Indicators)
186 M. Gutu et al.

Specifically, the results from the research showed key determinants
that affect location attractiveness for Zimbabwe and Botswana. Political
stability, economic, socio-cultural, technology and legal factors are
key considerations when MNEs consider investing in a host country.
However, the evidence from this study shows that these key determinants
are not universally applicable as FDI determinants, as economies differ
geographically, in addition to the factors listed above. Caution should be
applied when analysing and applying these determinants. e FDI loca-
tion attractiveness in relation to Zimbabwe and Botswana is generally in
line with the theories of foreign direct investment, albeit with different
experiences and results, depending on implementation.
With a bigger market than Botswana, and a larger human capital
base, Zimbabwe could create favourable conditions for MNEs to provide
FDI. Dependence on advantages from risky FDI considerations alone
is not enough to pull Zimbabwe into a favourable FDI position, as all
the other determinants are more critical and provide a wider and bigger
attraction rating for FDI.
In accordance with FDI theories and key determinants findings, this
chapter concludes that Botswana has systematically and consistently
improved its political and economic environment for the period under
study (2002–2012), in an effort to be an attractive country for FDI. e
political environment is stable, corruption is not tolerated, taxation is
low, GDP is high, legal and regulatory frameworks are favourable, and so
is the highly educated human capital—all key determinants for attracting
FDI. e recognition of and adherence to the principles that govern FDI
inflows have been observed for the benefit of the economy, resulting in
higher inflows of FDI as compared to neighbouring Zimbabwe. During
the same period, Zimbabwe was experiencing political instability due to
the implementation of unfavourable policies (land seizures, controversial
elections and indigenisation) and high taxation rates were announced.
All this culminated in a falling GDP, high unemployment and poverty,
a depleted workforce and rampant corruption. ough Zimbabwe has
the capability to recognise the key factors for attracting FDI, it has not
been consistent in its policy application, causing confusion in both the
political and economic environment, creating an unfavourable environ-
ment that does not attract meaningful FDI to redress the political and
economic woes.
10 Foreign Direct Investment inZimbabwe andBotswana... 187

Political stability is one of the key determinants making Botswana
an attractive place to do business. Zimbabwe and Botswana are similar
politically in that their ruling parties have been in government since inde-
pendence. However, Botswana has a stable political environment that
respects democracy, shuns corruption, allows voice and upholds the rule
of law. Zimbabwe seems to be the opposite in all these factors.
It is interesting that two neighbouring countries with similar colonial
backgrounds can have paradoxically different results in their economies, as
the result of a conscious but different application of and attitude towards
similar policies that have a direct bearing on attracting FDI. e results, over
the period in consideration, clearly show that one country prefers to reap the
benefits from positive and consistent implementation of beneficial policies,
while the other appears to wilfully ignore international norms and theories,
and haphazardly carries out policies that are both detrimental and counter-
productive to FDI attraction, leading to dire economic consequences.
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194 M. Gutu et al.

Part VI
Banking and Finance

197
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI10.1007/978-3-319-41090-6_11
11
The Kenyan Banking Industry:
Challenges andSustainability
SamuelMuiruriMuriithi andLynetteLouw
Introduction
e banking industry plays an important role in an economy and is
often regarded as the engine that drives economic development and the
lifeline of the economy and society in both developed and developing
nations (Adeyemi 2007; Kumbirai and Webb 2010). As such the bank-
ing industry is able to inuence a country’s economic development and
long-term sustainability by oering dierent services (UNEP FI 2007).
e main services provided by the banking industry include facilitating
money transfers between countries and ensuring that savers and borrow-
ers are brought together in well-organised structures, as well as borrow-
ing and lending, agency services, trade facilitation and money control
S.M. Muriithi (*)
School of Business and Economics, Daystar University, Nairobi, Kenya
L. Louw
Department of Management, Rhodes University, Grahamstown, South Africa

(Nagaretal. 2011; Kashyap etal. 2002). ese services by the banking
industry are instrumental in enhancing world development and nancial
stability.
In Africa, the banking industry is playing an increasingly important
role in sustainable development. Across the African continent, numerous
banks are championing sustainability and re-engineering their operations
in order to integrate the environment, technology, social responsibility
and governance (UNEP FI 2005). e growing trend toward sustain-
ability is evident in countries like Botswana, Kenya, Nigeria, Senegal and
South Africa. ese countries have introduced strategies and mechanisms
meant to make their banking industries sustainable in the long run.
Despite the importance of the banking industry for economic and
social development and its focus on sustainability, the banking indus-
try worldwide has experienced several nancial challenges which have
threatened to cripple the industry, thereby negatively aecting the eco-
nomic performance of most countries. Notable banking crises occurred
in the 1940s–1950s, 1980s–1990s and from 2007–2009. However, the
2007–2009 nancial crisis is considered the worst, as it almost brought
major world economies to a standstill, with most nations still recording
negative economic growth, a trend that may continue for several years
(Grant ornton 2013). e period has been described as the most tur-
bulent in relation to the world economy (Deloitte 2012).
It has been asserted that the past and present challenges facing the bank-
ing industry worldwide can be associated with lack of strong leadership and
management (Donnelly 1994). e banking industries of African coun-
tries, among them Kenya, have also been victims of poor leadership and
management, especially between the 1970s and the 2000s, a situation that
has threatened the industry’s sustainability (Waweru and Kalani 2009).
e purpose of this chapter is to examine the Kenyan banking indus-
try in relation to performance and sustainability. First, the chapter exam-
ines the overall importance of the banking industry and the challenges it
faces. Second, it focuses on the Kenyan banking industry, including its
history and the reasons for its poor performance and recovery. ird, the
chapter addresses the contemporary Kenyan banking industry. Finally,
the future of the Kenyan banking industry in terms of performance and
sustainability is explored.
198 S.M. Muriithi and L. Louw

The Importance oftheBanking Industry
Given the positive role played by the banking industry in a given econ-
omy, it is essential to identify the specic activities performed by the
banks in order to steer development and sustainability. ese activities,
which include borrowing and lending, agency services, facilitating trade,
and money supply control, will subsequently be discussed.
Borrowing and Lending e banking industry provides a number of
economic services to its customers. e leading service is borrowing and
lending to customers. rough its role of borrowing and lending, the
banking industry facilitates money supply by taking deposits from cus-
tomers and then lending the money to those who need it (Kumbirai and
Webb 2010:35). ese services not only increase the production capacity
of the community or nation but also accelerate the pace of economic
growth and sustainability (Russo and Ugolini 2008).
Agency Services e banking industry provides a range of investment
services to its customers. Upon opening various accounts, such as current
and savings accounts, the banks oer services like settling of indebtedness
between customers by facilitating credit transfers, standing orders, clear-
ing cheques, access to loans and overdraft facilities, payment of dividends
and debt transfers (Hoyle and Whitehead 1982:42; Kumbirai and Webb
2010). By doing so, banks have become the lifeline of businesses and the
gatekeepers to capital provision. Similarly, banks provide loans and credit
to millions of businesses and individuals throughout the world (UNEP
FI 2007).
Facilitating Trade In addition, the banking industry plays an impor-
tant role in facilitating trade within and between countries and providing
logistical support. is role has eased business operations and ensured the
survival of businesses which would otherwise nd it dicult or impos-
sible to operate. e specic activities that the banks facilitate include:
foreign exchange transactions, executorships and trust services, export
trade payments, tax advice, investment management and stock blocking
(Hoyle and Whitehead 1982:42). In an eort to oer overseas trading
11 The Kenyan Banking Industry: Challenges andSustainability 199

services, some banks have set up branches in foreign countries special-
ising in trade nancing and advising. e branches, for instance, are
able to provide a comprehensive network of services for businesses and
persons interested in foreign transactions. e banks or their branches
have also acted as sources of information on overseas trading opportuni-
ties and challenges. e results of such activities are savings in time and
money, as well as smooth business transactions among businesses located
in dierent parts of the world (Economic Commission for Africa 2011;
Kumbirai and Webb 2010).
Money Supply and Control e banks, through the coordination
eorts of the central banks, are able to facilitate money supply and regula-
tion in an economy. is enables commercial banks to control the money
available in the economy by gathering small savings from customers and
combining them into larger deposits which are then channelled into the
right enterprises (Kumbirai and Webb 2010). By controlling money sup-
ply, the banks are able to regulate the level of sustainable development in
an economy.
The Challenges oftheBanking Industry
Although the banking industry has played, and continues to play, a criti-
cal role in facilitating world economic development, the industry still
continues to face a number of challenges. e main challenges are non-
performing loans, global nancial diculties, poor leadership and sus-
tainability pressure.
Banks’ Non-performing Loans e challenge of banks’ non-performing
loans continues to plague the banking industry worldwide. e problem
is mostly associated with the crisis resulting from ‘rapid accumulation of
nonperforming loans in the banking industry and a deterioration of asset
quality in the face of increased credit risks’ (Fofack 2005:5). In Africa, for
instance, the proportion of non-performing loans reached over 30 % of
total loans. is was the highest level ever for the developing world. In
fact, during the Asian nancial crisis of 1997, which was said to be the
200 S.M. Muriithi and L . Louw

worst, the rate did not exceed 25 % of total loans (Fofack 2005:5). e
problem of non-performing loans is not unique to Africa. According to
Kroszner (2002), non-performing loans are closely linked to banking cri-
ses and overall sustainability. In Japan, for example, the banking industry
continued to suer the eect of non-performing loans experienced in the
1990s, leading to the loss of billions in yen as a result of the collapse in
asset prices (Sultana 2000). e Japanese government had to intervene to
rectify the situation in an eort to regain market condence and ensure
a stable nancial environment (Waweru and Kalani 2009:13). As such,
non-performing loans impact negatively on the banking industry and
present challenges to realising its sustainability.
Global Financial Crisis Between 1970 and 2000, the world witnessed
several nancial crises that greatly hindered smooth operations of the
banking industry worldwide. Given the critical role played by the bank-
ing industry in economic development, nancial crises have an adverse
eect on the economic stability of countries. Many banks collapsed dur-
ing the global crisis of 2007–2009, leading to worsening economic situ-
ations in many countries. In spite of the deteriorating global nancial
situation, some countries’ banking industries were able to withstand the
pressure and continued to prosper against all odds. For instance, the
Canadian banks remained relatively stable, while the neighbouring US
banks continued to experience major nancial shocks (Elliot 2008). e
global nancial crisis posed a serious threat to banks’ sustainability and
overall performance (UNEP FI 2005).
Poor Leadership e role of eective leadership is instrumental in the
attainment of successful performance by banks. Besides the positive
role played by the banking industry, the industry has been in the spot-
light due to its undesirable leadership practices. According to Donnelly
(1994:12), ‘management and leadership issues are critical’ to bank suc-
cess. It is interesting to note, however, that leadership has received very
little attention within the banking industry. In fact, the biggest chal-
lenge facing the banking industry could easily be summarised as ‘poor
leadership’ (Waweru and Kalani 2009). It is further notable that those
involved in banking management ‘lack the skills to provide leadership in
11 The Kenyan Banking Industry: Challenges andSustainability 201

a deregulated environment’ (Donnelly 1994:12). With poor leadership,
no sustainability mechanisms will work.
Sustainability Pressure Like elsewhere in the world, the need for sus-
tainable banking practices has put pressure on African banks to com-
ply. e major drivers of sustainability within the banking industry
have been the development of regulatory frameworks aimed at mak-
ing nancial institutions responsible for their environmental and social
impacts, expansion of international standards and governance code, and
increasing pressures from stakeholders (UNEP IF 2005). However, even
with these eorts, various challenges still hinder the attainment of the
desired level of sustainability. Such challenges include corruption, cur-
rency uctuations, political interference, inadequate infrastructures and
poor technical know-how (UNEP IF 2005). ese challenges threaten
African banks’ competitiveness and survival, a situation that also aects
the Kenyan banking industry.
The History oftheKenyan Banking Industry
Between the years 1963 and 1982, the Kenyan economy was very pros-
perous compared to those of its neighbouring countries. e prosperity
of the industry was attributed to good monetary and scal policies insti-
tuted by the government. is made the nancial industry very industri-
ous, resulting in sound economic growth (Central Bank of Kenya,1994).
In the 1980s and 1990s, several countries, both developed and devel-
oping, experienced severe banking crises which aected their nancial,
social and economic performance. To overcome the challenges, the
International Monetary Fund (IMF) demanded that countries overhaul
their banking systems (IMF 1998). Kenya was no exception, and as such
had its share of banking crises.
e crises in Kenya started in 1982 after the government relaxed nan-
cial control measures, making way for an increase in the number of nan-
cial institutions. Unfortunately, this action by the government opened up
what had been a professional and disciplined career to non- professional
business people whose interest was in prot and self- gratication
202 S.M. Muriithi and L. Louw

(Ambutsi 2005). As a result, professional management was replaced
by poor governance, mismanagement and political interference, which
led to the collapse of a number of banks (Ambutsi 2005). To rectify the
situation, the Central Bank of Kenya introduced strict measures in the
industry between 1994 and 2002. ese measures included the establish-
ment of a reserve and deposit protection fund, insurance schemes and an
increase in minimal capital requirements for bank starters (Central Bank
of Kenya 1994). However, despite these strict measures, 32 banks were
liquidated or put under receivership, with 14 of them collapsing in 1993
(Central Bank of Kenya 2004). e situation deteriorated further, and by
1998 37 banks had collapsed despite the Central Bank of Kenya’s eorts
to salvage them (Kithinji and Waweru 2007; Ngugi 2001). In 1998, the
losses arising from non-performing loans stood at Ksh. 80 billion, or
30 % of advances, an increase from Ksh. 58.4 billion in 1997 (Central
Bank of Kenya, 1999). By world standards, the Kenyan non-performing
loans were too high (30 %) in 1999, putting the banks at even greater
risk in recovering them. By the year 2000, the Kenyan banking indus-
try had plunged into a crisis mostly associated with under-capitalisation,
high levels of non-performing loans, political interference, corruption
and poor governance (Honohan and Laeven 2005). is meant that the
sustainability of the banking industry was severely aected.
Causes ofPast Poor Banking Performance
inKenya
e banks’ overall poor performance has been blamed on non- performing
loans, weak internal control measures, political interference, corruption
and lack of leadership.
Non-performing Loans In the past, the major challenge within the
Kenyan banking industry was non-performing loans, which accounted
for 42 % of banks’ loan portfolios. According to the Kenyan Central
Bank, non-performing loans were loans not serviced as per the contract
with the borrower, thus subjecting the nancial institution to poten-
tial losses (Central Bank of Kenya 2001). In an eort to address this
11 The Kenyan Banking Industry: Challenges andSustainability 203

challenge, the Central Bank of Kenya demanded to be a partner in con-
trolling the bad debts at a manageable level (Economic Report on Africa
2002:143). However, the actions taken by the Central Bank of Kenya to
assist banks in reducing non-performing loans was just one way to react
to the worsening performance of the banks. Unfortunately, more banks
in Kenya did not perform well and eventually closed down. Between the
years 2000 and 2001, ve banks were put under statutory management,
while one building society was placed under investigation. ree of the
banks were able to reopen, one was liquidated, while one remained under
statutory management (Economic Report on Africa 2002:143). For two
years the non-performing loans stood at Ksh. 73.6 billion (2001) and
Ksh. 76.1 billion (2002) respectively. A summary of the Kenyan banking
industry non-performing loans during the period of the worst nancial
crisis is represented in Table 11.1.
Table 11.1 shows an increase in non-performing loans from Ksh. 31.8
billion in 1995 to Ksh. 74.6 billion in 2003, or 134.6 %. During the same
period, the year 1999 had the worst non-performing loan rate of Ksh. 97.2
billion. Similarly, the loans issued during the same period ranged from
Ksh. 180.2 billion in 1995 to Ksh. 270.1 billion in 2003. Likewise, 1997
was the worst performing year, with total loans of Ksh. 284.2 billion. is
indicates that compared to loans given during the same period, non-per-
forming loans far exceeded what was issued, a very gloomy picture for the
banking industry. It is also notable that the period 2001–2003 showed a
Table 11.1 Kenyan banking industry non-performing loans 1995–2003
Year
Non-performing loans (in Ksh.
billion)
Total loans (in Ksh.
billion)
Percentage
(%)
1995 31.8 180.2 17.6
1996 37.9 213.7 17.7
1997 69.0 248.2 27.8
1998 83.5 268.6 31.1
1999 97.2 284.2 34.2
2000 90.2 272.9 33.1
2001 73.6 245.0 30.0
2002 76.1 255.0 29.8
2003 74.6 270.1 27.6
(Source: Waweru and Kalani 2009:14).
204 S.M. Muriithi and L. Louw

decrease in non-performing loans compared to the three previous years.
e decrease was not as a result of good policies but was attributed to the
collapse of some nancial institutions, including Trust Bank and Euro
Bank (Waweru and Kalani 2009:15). Similarly, some banks wrote o part
of their loans in order to ensure healthy balance sheets (Central Bank of
Kenya 2003). According to Waweru and Kalani (2009:15), non-perform-
ing loans were attributed to poor decision- making by individual inves-
tors, although this could be caused simply by bad luck or poor economic
eventualities. Comparing non-performing loans to those of developed
countries like Japan and Spain, Waweru and Kalani (2009) maintain that
bank managers may have been aware of the repercussions of their actions
but still acted wrongly because of competition pressure and the desire for
high prots. In Kenya, almost 50 % of bank failures were associated with
non-performing loans resulting from insider lending during the 1980s
and early 1990s (Sokpor 2006). By world standards, the Kenyan non-
performing loans were too high (30 %) in 1999, putting the banks at
even higher risk of recovering them. e non-performing loans for simi-
lar developing countries stood at 7.7 % for Taiwan (2002), 16.81 % for
the Philippines (2001), 24 % for Zimbabwe (2000), 11 % for Nigeria
(2000) and 3 % for South Africa (2000) (Batino 2001; Central Bank of
Kenya 2001). e Kenyan government’s inability to manage its banking
crisis was alarming compared to similar economies. It is also notable that
a large proportion of non-performing loans were associated with govern-
ment-owned and controlled banks as well as some well-capitalised banks
(Beck etal. 2009:7). Again, the banks’ failures were blamed on poor man-
agement, lack of strong internal control measures and poor governance,
all aecting bank stability. However, the government’s eorts to reduce
non-performing loans eventually worked. Since then, the percentages of
non-performing loans dropped from 37.2 % in 2000 to 8.4 % in 2008
and eventually to 4.7 % in 2012, which shows improved performance
and progress (Central Bank of Kenya 2012).
Weak Internal Controls As in the past, the poor performance of the
Kenyan banking industry has been blamed on weak internal controls,
bad governance and poor management practices (Sokpor 2006:5).
According to the Economic Report on Africa (2002:143), poor banking
11 The Kenyan Banking Industry: Challenges andSustainability 205

performance was caused by mismanagement. e report states that
although several measures continued to be implemented which seemed
to yield positive results through visible improved nancial eectiveness,
bank operations remained a signicant risk. e risks were ‘compounded
by economic stagnation. us regulatory authorities needed to maintain
regulatory vigilance’ (Economic Report on Africa 2002:143). It appeared
that the right internal measures were not put in place and the banks suf-
fered the consequences.
Political Interference External forces also played a major role in the
Kenyan banking industry’s problems. For instance, political leaders used
their positions in government to borrow from banks without repaying
the loans, a problem that led to increased non-performing loans (Sokpor
2006). According to Brownbridge (1998:16):
Most of the larger local bank failure in Kenya, such as the Continental Bank,
Trade Bank and Pan Africa Bank involved extensive insider lending, often
politicians. e threat posed by insider lending to the soundness of the banks
was exacerbated because many of the insider loans were invested in specula-
tive projects such as real estate development, breaching large- loan exposure
limits, and were extended to projects which could not generate short-term
returns (such as hotels and shopping centres), with the result that the maturi-
ties of the bank’s assets and liabilities were imprudently mismatched.
It is notable that the political pressure arising from bank ownership and
external inuence led to major bank failures (Brownbridge 1998).
Corruption Widespread corruption has continued to wreck the Kenyan
economy for the last ve decades. is has led to low investor condence
and insucient foreign direct investment and other forms of foreign aid.
Despite several government measures to ght corruption, the eorts have
not had a signicant impact. For instance, in 2006, two major scandals
in government led to the resignations of three ministers. Considering
this insucient, both the World Bank and the IMF delayed their loans
to the country (CIA World Factbook, 2007). e problem of corruption
remains a major hindrance to the country’s economic standing while at
the same time aecting the condence of investors and consumers.
206 S.M. Muriithi and L. Louw

Poor Leadership Numerous studies have indicated that lack of lead-
ership continues to be a major challenge for most banks. Donnelly
(1994:12) further pointed out that those involved in banking manage-
ment lack the skills required for eective banking. e crises in the bank-
ing industry worldwide during the 1980s and 1990s corresponded to
poor leadership of the banking industry in most countries (Donnelly
1994; Brannigan and de Lisser 1993; Meechan 1992). Given that fail-
ures of private banks in Kenya have mostly been associated with poor
management and governance, and thus poor leadership (Sokpor 2006;
Kinyua 2006), the importance of eective leadership in ensuring that
banks attain their goals cannot be neglected, as it is central to eective-
ness and good performance.
After struggling with dismal performance as a result of non-performing
loans, weak internal controls, political interference, corruption and poor
leadership, the Kenyan banking industry made a remarkable turnaround
and reversed its undesirable performance. e next section discusses the
banking industry recovery trend which has put the industry on a positive
sustainable track (UNEP IF 2005).
The Kenyan Banking Industry Recovery
e problem of bank failures that impacted the banking industry in
the 1980s and 1990s most strongly aected the local banks rather than
foreign- owned banks. It is also evident that non-performing loans, weak
internal controls and political interference, all arising from poor man-
agement and leadership, were challenges facing the indigenous banking
industry in Kenya (Waweru and Kalani 2009). However, it is also notable
that the Kenyan banking industry started to show signs of recovery by the
beginning of the 2000s.
In fact, since 2003, many Kenyan banks have reported positive growth
and a turnaround in their operations, although a few banks still per-
formed poorly until 2009. One example of a successful bank was the
Cooperative Bank of Kenya, whose good performance was associated
with good management and good leadership practice (Wahome 2004).
11 The Kenyan Banking Industry: Challenges andSustainability 207

Its success was also attributed to ‘aggressive cost management, focus on
non-funded income, debt recovery and prudent liquidity management’
(Waweru and Kalani 2009:31). e implementation of nancial sus-
tainability measures such as reducing non-performance loan portfolios,
introducing basic corporate governance mechanisms and incorporating
principles of sustainability in the banking system are all associated with
the positive trend (UNEP IF 2005).
To ensure sustainability and sound nancial performance of the
Kenyan banking industry, the Kenyan government introduced additional
measures to the industry. According to the Kenya Gazette Supplement
No. 90 (2008), a Financial Act 2008 which took eect in January 2009
required that all banks and mortgage institutions increase their minimum
core capital to Ksh. 1 billion (US$12 million) by December 2012, up
from Ksh. 250 million (US$4 million) in 2008. e aim of the Financial
Act was also to make small banks become more stable by ensuring that
they had adequate capital. e goal of the Financial Act 2008 was to
consolidate and transform small banks into more stable organisations.
By introducing nancial measures, the government hoped to avert future
nancial crises by making sure that the banks are able to ‘withstand
nancial turbulences and therefore increase banking industry stability’
(Gudmundsson et al. 2013:3). For some banks, nancial restrictions
remain a challenge due to their inability to raise the required capital.
Such banks may be required either to merge with other nancial institu-
tions or to sell out. e banks were also expected to deal with deposits
mobilisation and reduction in trade volumes (Gudmundsson etal. 2013).
e eort of the government was expected and continued to show posi-
tive fruits. With continued recovery of the banking industry, the positive
performance is expected to increase.
The Contemporary Kenyan Banking Industry
e 2007–2009 nancial crisis had major implications for the world
nancial sector, especially the banking industry. However, while the rest
of the world experienced negative to minimal growth, the sub-Saharan
African countries reported average growth of 4.7 % in 2008 and 6.2
208 S.M. Muriithi and L. Louw

% in 2009 (United Nations 2009). Some countries did very well dur-
ing this period, including Congo, Tanzania, Uganda, Ghana, Nigeria,
Cameroon and Côte d’Ivoire, while others like Kenya, Ethiopia, Sudan
and South Africa deteriorated in performance, falling by 5.4 %, 3.0 %,
1.7 % and 1.3 % respectively. Due to eorts by individual countries’
central banks to revive the banking industry through the injection of
monetary supports to the economy, the years 2009 and 2010 experi-
enced slight economic growth (IMF 2009). Consequently, while the rest
of the world continued to experience negative eects from the nancial
impact of 2007–2009, the sub-Saharan Africa region reported an average
of 5–7% growth, which was far above the rest of the world’s economic
performance (European Investment Bank 2013).
e period 2007–2009 was not favourable for Kenya. While the
rest of Africa experienced substantial growth, Kenya experienced its
worst political crisis arising from post-election violence (resulting
from election disputes between the government and the main opposi-
tion party). e result was an economic growth slump from 7.1 %
in 2007 to about 1.7 % in 2008 (Central Bank of Kenya 2008:23).
In 2009, economic growth was 2 % due to the worsening nancial
crisis, as cited by the Kenya Institute for Public Policy Research and
Analysis (KIPPRA) (2009). Likewise, the country’s balance of pay-
ment declined from a surplus of Ksh. 63,250 million in 2007 to a
decit of Ksh. 33,161 million in 2008. At the same time, the capital
and nancial sector recorded a surplus of only Ksh. 81,055 million in
2008 compared to Ksh. 150,090 million recorded in 2007, a decline
associated with deteriorating world economic performance, minimal
inows of foreign direct investment (FDI) and reduced short-term
capital inows (KIPPRA 2009). By 2013, however, Kenya had fully
recovered from the 2007–2008 post-election violence and although
its recovery from the global nancial crisis was slow, the country
remained a leader in the Eastern Africa region in terms of economic
development (Njuguna 2013).
Surprisingly, despite the Kenyan economy performing poorly between
2007 and 2008 as a result of the post-election violence, the country’s
banking industry remained upbeat and recorded relatively positive per-
formance. In the last 10 years, the Kenyan banking industry is said to
11 The Kenyan Banking Industry: Challenges andSustainability 209

have fared quite well overall compared to other world markets. Unlike in
previous years, the contemporary Kenyan banking industry is considered
the most mature and the largest nancial service leader in sub-Saharan
Africa. Accordingly, the Kenyan nancial industry is currently one of the
fastest growing in the continent (Njuguna 2013). e banking industry
is governed by the Companies Act, the Banking Act, the Central Bank
of Kenya Act and various prudential guidelines and instructions issued
by Central Banks of Kenya as contained in the Laws of Kenya: Banking
Act, 2010, Chapter 488 incorporating all the Acts from 1985 to 2009
(Central Bank of Kenya 2010).
By 2011, banking industry growth was even more encouraging, with
an impressive increase of 20.4 % in total assets, which amounted to
Ksh. 2.02 trillion, up from Ksh. 1.68 trillion realised in 2010. ere
was also a reduction in gross non-performing loans of 8 %, from Ksh.
57.6 billion in 2010 to Ksh. 53 billion in 2011 (Central Bank of Kenya
2011). In terms of branch network expansion, Kenya’s banking indus-
try registered growth of 20 %, going from 740 branches in 2007 to
887 branches in 2008. e country’s capital, Nairobi, had the high-
est branch network growth, accounting for 41 % of all branches or
60 out of the total 147 branches (Central Bank of Kenya 2008). is
means that in Nairobi, the number of bank branches grew from 293in
2007 to 353in 2008 (Central Bank of Kenya 2008:5–6). By 2012, the
number of bank branches countrywide reached 1,272, an increase of
75 from the 1,197 branches reported in June 2011 (Central Bank of
Kenya 2012).
By the end of September 2012, the Kenyan banking industry had
improved its performance both in assets and customer deposits. Industry
assets stood at Ksh. 2.3 trillion, up from Ksh. 2.02 trillion in 2011, an
increase of 15.3 %. Similarly, customer deposits grew to Ksh.1.49 tril-
lion in 2012 from Ksh. 1.71 trillion in 2011, an increase of 14.8 %.
During the same period, prot before tax rose from Ksh. 89.5 billion
in 2011 to Ksh. 107.9 billion in December 2012, a growth of 20.6 %
(Central Bank of Kenya 2012). By June 2013 the banking industry had
enhanced its performance and increased its assets to Ksh. 2.5 trillion,
loans and advances rose to Ksh. 1.5 trillion, while bank deposits stood
at Ksh. 1.9 trillion. Likewise, prot before tax was Ksh. 61.5 billion,
210 S.M. Muriithi and L . Louw

customer deposits stood at 18.9 million, while loan accounts amounted
to Ksh. 3.8 million (Central Bank of Kenya, June 2013). Similarly, the
Credit Information Sharing (CIS) mechanism has advanced in terms of
usage since its establishment in June 2010. By June 2013, the number
of credit reports requested by institutions increased by 12 % to stand
at 2,907,375, up from 2,596,600 reported in March the same year.
Likewise, agency banking has seen tremendous growth since its introduc-
tion in 2010, as more and more customers are able to access the service
(Central Bank of Kenya, June, 2013). e Deposit Taking Micronance
Institutions (DTM) also grew and by June 2013, DTM had gross loans
amounting to Ksh. 22.5 billion while deposits stood at Ksh. 19.7 billion.
As of 31 December 2014, the Kenyan banking industry comprised 44
banking institutions, namely 43 commercial institutions and one mort-
gage nance company. Of the 44 banking institutions, 30 were locally
owned while 14 were foreign-owned. ere were also eight representative
oces of foreign banks. A further breakdown of the banks shows that of
the locally owned banks, three were co-owned in partnership with the
government while the other 27 banks were privately owned commercial
banks. e 27 privately owned nancial institutions included one pri-
vately owned mortgage company. ere were also 87 private forex bureaus,
eight Deposit-Taking Micronance Financial Banks (DFBs), two Credit
Reference Bureaus (CRBs) and 13 Money Remittance Providers (MRPs)
(Central Bank of Kenya 2014:1), as shown in Fig. 11.1.
In terms of ownership and asset control, local public commercial banks
(those with government shareholding) account for 7 % of total banking
assets, local private commercial banks account for 62.8 %, while foreign
commercial banks account for 30.2 % of total assets, as shown in Table
11.2 (Central Bank of Kenya, Supervision Annual Report 2014:5). It is
believed that the banking industry will continue to be a major player in
steering economic development in Kenya, thereby emphasising its criti-
cal importance to the country (Njuguna 2013).
As Table 11.2 shows, local public commercial banks control only a
small percentage of the ownership and assets of the banking industry,
while local private commercial banks control the majority of total assets.
It is notable that foreign commercial banks control a substantial per-
centage of total assets despite the fact that there are very few of them.
11 The Kenyan Banking Industry: Challenges andSustainability 211

However, overall the Kenyan banking industry and the economy have
greatly improved as a result of restructuring in the industry and improved
governance. Given the present banking industry’s positive performance,
the industry is projected to continue its improved performance.
1.
Consolidated bank of Kenya Ltd
2.
Development bank of Kenya Ltd
3.
National bank of Kenya Ltd
Central Bank of Kenya
Public financial
institutions*
CRBs
(2)
Private FXBs
(112)
Private financial
institutions
DTMs
(8)
Local Foreign (over 50%
ownership)
Commercial banks –26
Mortgage finance company–1 Commercial banks—14
Fig. 11.1 Structure of the banking industry (*GOK shareholding includes
shares held by the state corporation) (Source: Central Bank of Kenya 2014:xiv)
Table 11.2 Ownership and asset base of commercial banks (Ksh. million)
Ownership No. % Total net assets %
Local public commercial banks 3 7 154,896 5
Local private commercial banks 27 62.8 2,061,517 64
Foreign commercial banks 13 30.2 982,983 31
Totala43 100 3,199,396 100
aCharterhouse Bank excluded due to being under statutory management (Central
Bank of Kenya 2014: 5)
212 S.M. Muriithi and L. Louw

Is theCurrent Positive Performance
Sustainable fortheBanking Industry?
e Kenyan banking industry still remains the largest and most devel-
oped in the Eastern Africa region. According to banking industry 2013
update (Central Bank of Kenya 2013), the Kenyan banking industry is
expected to maintain its momentum and robust growth against the back-
drop of a favourable stable macro- and microeconomic environment.
Other factors associated with the positive growth include aggressive
domestic and regional expansion by banks and other nancial institu-
tions, as well as increased economic activity arising from the devolved
system of government as a result of the new constitutional dispensation
focusing on county development (Central Bank of Kenya 2013). Despite
this, the banking and nancial industry still faces some challenges which
may hinder its expected prosperity and strategic leadership in East Africa.
e challenges arise from the threat of rampant corruption which may
undermine the gains made. However, the industry is still faced with the
threat of rampant corruption which may undermine the gains made.
Specically, the barriers include the bank consolidation, inaccessible
banking services, fragmentation, poor leadership, rampant corruption
and overall sustainability.
Bank Consolidation e Kenya Gazette Supplement No. 90 (2008)
requiring all banks and mortgage institutions to increase their mini-
mum core capitalisation and consolidation aims to increase bank e-
ciency and stability in the future. However, the eectiveness of the new
policy is dependent on the types of ownership arising from such merg-
ers, associated competition and client response. Similarly, the banks’
performance will depend on how government-owned banks are man-
aged, quality of services and the level of nancial infrastructure (Beck
etal. 2009).
Banking Services e Kenyan banking industry is credited for its size
and diversication. In relation to private credit to gross domestic product
11 The Kenyan Banking Industry: Challenges andSustainability 213

(GDP) (a standard measure of nancial development), the Kenyan
banking industry stood at 23.7 % compared to a median of 12.3 % for
Sub-Sahara African countries (orsten etal. 2010:2). It is also notable
that the country has well developed nancial systems including banks,
insurance, stock and bond markets. However, according to Beck etal.
(2009:2), Kenya has failed ‘to provide adequate access to banking ser-
vices to the bulk of the population’ and concentrates on large private
and public enterprises in urban areas while neglecting rural communities.
Similarly, nancial services are very expensive as evidenced by high inter-
est rates, making them inaccessible to the majority of the population. In
2006, 23 % of the Kenyan population was still living on less than US$1/
day, while approximately 10 % of the population controlled more than
42 % of the country’s income (Fitzgibbon 2012). It will be essential to
harmonise the economic standards of citizens and nancial access across
the country to ensure a stable and ecient banking industry.
Fragmentation In recent years the banking industry has taken major
steps to ensure stability and eciency through various eorts like writing
o non-performing loans, reducing government inuence and manag-
ing interest rates. However, the industry still continues to face a frag-
mentation challenge. ere are many small banks operating in Kenya
to serve specic niches but having very little impact on the industry in
terms of competition and social inuence (Beck etal. 2009). Although
the government through its consolidation eort is expected to solve the
problem of the fragmentation of small banks, the challenge still remains
as the eort might divert the banks from their intended missions and
objectives.
Leadership A major challenge facing the banking industry worldwide is
lack of eective leadership. Most banking management lacks the leader-
ship skills required to cope with the changing environment (Donnelly
1994:12). In fact, studies by Ambutsi (2005), Kenya Magazines (2011),
Waweru and Kalani (2009) and Kaplan (2012) advocate strong leadership
in the industry. e lack of eective leadership has negatively aected the
Kenyan banking industry for years, as illustrated by non-performance of
the locally incorporated commercial banks rather than the foreign-owned
214 S.M. Muriithi and L. Louw

banks. It is important to ensure that eective leadership is maintained in
the sector to guarantee stability and continued growth.
Rampant Corruption Kenya is ranked among the most corrupt coun-
tries in the world (Transparency International 2014). e government,
through it anti-corruption body, needs to introduce and strictly enforce
laws that impose heavy penalties on oenders. Failure in this area will
undermine all achievements attained so far and in the future (Ambuts
2005; Brownbridge 1998; Kinyua 2006).
Overall Sustainability e nancial crisis has put the nancial sector
worldwide under scrutiny both in terms of monetary performance and
social impact. From international and local regulators to the public
(clients, investors, employees), there is a growing concern and expecta-
tion that banks must not just make money but must play a positive
role in national and international development agendas to promote
green and low carbon economies (PWC 2012:1). is new challenge
means that whether in Kenya or elsewhere, banks must adopt a mul-
tidimensional and comprehensive approach to issues relating to the
environment and climate change and to social responsibility, while
at the same time operating ethical and protable businesses (PWC
2012:1).
The Future oftheKenyan Banking Industry
Despite its positive contributions, the Kenyan banking industry has
undergone several decades of nancial diculty which, in turn, have
generated nancial and social imbalance in the economy (Sokpor 2006;
Kinyua 2006). A major obstacle to the development and stability of
the banking industry during the 1980s and 1990s was the presence of
high non-performing loans, resulting from heavy borrowing without
good mechanisms of repayment or enforcement. As discussed previ-
ously, the industry was also open to non-bankers who established more
banks, leading to an increase in non-professionalism in the industry, as
investors whose interest was prot and self-gratication invested in the
11 The Kenyan Banking Industry: Challenges andSustainability 215

industry. ese actions resulted in a banking industry dominated by non-
performing loans, weak internal controls, political interference, corrup-
tion and poor leadership (Ambutsi 2005; Brownbridge 1998; Sokpor
2006; Kinyua 2006).
However, since the year 2000, major changes in the nancial sec-
tor have led to positive performance of the Kenyan banking industry
(Gudmundsson etal. 2013; Wahome 2004; Waweru and Kalani 2009).
e industry is expected to continue its upward trend in the future in
line with the government’s 2030 Vision of ensuring that the nancial
sector attains stability and eciency in service delivery and is accessible
to the majority of the population. However, the achievement of these
goals is still threatened by uncertainty about the proposed bank consoli-
dation, market reactions, poor infrastructure to reach the majority of the
population in rural areas, the presence of many small fragmented banks
serving dierent niches, and nally rampant corruption (Beck et al.
2009; Brownbridge 1998; Fitzgibbon 2012; Waweru and Kalani 2009).
In an eort to address these challenges, the Financial Act 2008 recom-
mended that the small banks should consolidate to form large banks,
thus reducing costs and enhancing their operational eciency. Again,
this is a challenge that can only be met with strong eective leadership, a
clear vision and the ability to propel the banking industry to the desired
end. According to Kaplan (2012), the banking industry must invest in
leadership because the demand for strong leadership is high. is means
that the Kenyan banking industry must refocus its attention on leader-
ship if it is to be assured of eectiveness and a positive role in enabling the
country to achieve its development agenda. To further facilitate its role in
enhancing the future development of the banking industry, the Central
Bank of Kenya has pledged to continue with three main tasks considered
critical for the future survival of the banking industry (Njuguna 2013).
Firstly, the Central Bank of Kenya promises to strengthen the nancial
stability of the country through strict and robust supervision and regula-
tory mechanisms. Secondly, the Central Bank of Kenya aims to enhance
nancial integrity within the banking industry as a way to curb corrup-
tion in the form of money laundering and nancing of terrorism-related
activities in line with international best practices. Finally, the supervi-
sory and regulatory body plans to promote nancial activities aimed at
216 S.M. Muriithi and L . Louw

strengthening banking’s nancial standing and development as outlined
in the country’s Vision 2030.
Besides the internal measures instituted by the Central Bank of Kenya
and the banks themselves to safeguard their future survival, a more
urgent concern relating to sustainability poses a major threat to the bank-
ing industry worldwide (including in Kenya). is is the need for banks
to develop strategies for an integrated and comprehensive approach to
environmental, social and prot motives and other sustainability dynam-
ics. e banking industry is expected to be a major player in ensuring a
green and lower carbon economy. How involved the banks become will
determine their sustainability due to renewed demands by key stakehold-
ers both at international and local levels (UNEP FI 2005, PWC 2012).
According to International Finance Corporation (n.d.), banks can benet
immensely from reassessing their approach to business practice to focus
on sustainability-oriented risk management and develop products geared
toward such ends. us, sustainability is increasingly identied as central
to bank growth and cannot be neglected, a challenge that Kenyan banks
must embrace.
Conclusion
e Kenyan banking industry has a crucial role to play in strengthening
the country’s nancial position as a hub for the Eastern Africa region. In
the last 10 years, the banking industry has experienced very signicant
growth and its prospects for future growth are very encouraging. However,
the banking industry in Kenya has undergone both positive and negative
growth. For over three decades the industry was plagued with weak inter-
nal control, poor management, political interference, poor governance
and corruption. However, following the positive growth seen in the last
ten years, the industry needs to maintain its upward trend by ensuring
that sustainability strategies are put in place. e most appropriate moves
toward sustainability are both internal and external. While maintain-
ing the momentum of growth through the consolidation of small and
fragmented banks into large institutions and the expansion of banking
services to the majority of the population are important, future success
11 The Kenyan Banking Industry: Challenges andSustainability 217

and growth will mostly be determined by the banks’ involvement in sus-
tainability practices. is means that long-term business success will only
be achieved by banks that contribute to healthy economic, social and
environmental activities aimed at a stable society, an increasing trend that
Kenyan banks must embrace.
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222 S.M. Muriithi and L. Louw

223
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI10.1007/978-3-319-41090-6_12
12
Assessment andWay Forward
oftheDouala Stock Exchange
inCameroon
AlainNdedi
Introduction
is chapter discusses the assessment and the way forward of the Douala
Stock Exchange (DSX) in Cameroon based on the results of empirical
research. In the rst part, the historical background of the market is dis-
cussed, with the focus on shareholding. e second part presents the
methodology used to conduct the research, and the last part gives the
results.
Historical Background oftheDouala Stock Exchange
Having launched in 2001 and with trading beginning on 30 June
2006, the Douala Stock Exchange is a nancial market, a public limited
A. Ndedi (*)
School of Business and Public Policy, Saint Monica University, Cameroon, UK

company with a Board of Directors and capital of 1.8 billion francs CFA,
distributed as follows: 63.7 % by banks and nancial institutions, 23 %
by spin-os from the state, and 13.3 % by insurance companies. e
Douala Stock Exchange is the sole agent authorised to carry out stock
exchange transactions and functions within the territory of the Republic
of Cameroon (Douala Stock Exchange Website 2015).
According to Douala Stock Exchange (2015), the principal functions
of the market include to create, organise and manage the stock market; to
monitor and supervise the smooth running of negotiations on the stock
market; and to administer the negotiation of negotiable public stocks and
securities (OTZ). e nal function of the DSX is to establish the rules
which regulate access to the market; admission of listed stocks; the organ-
isation of transactions; the suspension of negotiations of one or several
stocks; the recording and advertising of negotiations; the delivery of share
certicates and settling of accounts; the custody of shares; and the invoic-
ing and collection of commissions.Unfortunately, nearly 14 years after its
creation, the DSX is struggling to full its noble objectives.
Theoretical Framework: TheStock Exchange Purpose
andOperation
According to Ndedi (2009), the major reason for the development
of stock exchanges in recent years has been government privatisation
programmes. In order to sell stock in state-owned enterprises to the
public, there must exist a secondary market for the public to later
trade the shares among themselves. at is the role of an exchange, as
a secondary market. Here, the securities that are bought and sold on
an exchange are bought and sold by shareholders, not by the issuing
company. A company sells its shares in a primary oering directly to
shareholders through the use of underwriters and other intermediaries.
e sale by the company is a direct transaction between the company
and the shareholder and is not done on an exchange. is is true even
for companies that already have shares listed on the exchange and then
decide to sell more shares. Even companies with shares already listed
on an exchange do not sell new, additional shares on the exchange.
224 A. Ndedi

ose shares are also sold in direct transactions o the exchange
(Ndedi 2009).
Because an exchange is a secondary market, it is not absolutely nec-
essary to have an exchange in order for companies to sell their shares.
Companies can sell shares in the primary market and let the investors
gure out on their own how they will later trade and sell those shares.
Obviously this is not a happy prospect for investors, and that is why
exchanges are formed early in the capital market development process.
If there is no exchange, investors will be reluctant to buy shares in pri-
vatisations or other oerings, because the investors will not have a ready
and available forum in which to sell their shares at a later time. However,
an over-the-counter (OTC) market can operate as a forum for trading
shares in the secondary market. e OTC market can exist with or with-
out an exchange. ere are very few countries that have OTC markets
without exchanges. Some countries, such as Zimbabwe and Nigeria, have
exchanges and no OTC market. In most developed countries, exchanges
and OTC markets both operate concurrently.
Some questions generally arise regarding the stock exchange. e rst
of these is ‘Who owns a stock exchange and who makes its rules?’ Most
statutes require that exchanges be non-prot entities, as it is considered
most appropriate from a public policy standpoint that an exchange serves
the public investors and keeps costs of trading as low as possible. In most
countries, the model followed is that an exchange is formed as a not-
for- prot company by licensed broker-dealers. Although an exchange is
usually a not-for-prot corporation, this does not mean that it has no rev-
enues. All not-for-prot organisations are permitted under law to charge
for their services and to pay salaries to employees. e exchange there-
fore charges a small fee for every transaction. e fee is generally a small
amount, no more than is necessary to provide for exchange expenses and
expansion plans. Although a stock exchange begins its existence through
a government-issued license, it is treated as a self-regulatory organisation
(SRO). at means that the exchange selects its own Board of Governors
and ocers and determines its own rules of membership and trading sub-
ject to review and approval by the securities commission. Exchanges have
the authority to discipline, suspend or expel members or oor traders for
violation of exchange rules (Ndedi 2009, 2012).
12 Assessment andWay Forward oftheDouala Stock Exchange... 225

Methodology
Unlike quantitative research which uses a random sample generalisable
to a larger population, qualitative research uses a purposive sampling
method. Purposive sampling involves the selection of informants based
on an important characteristic under study, such as what they know
about the subject under study, or where they live in order to ease the
task of the researcher (Nayab in Bowen 2009). Triangulation (conr-
mation of the same information by dierent methods or sources) is
used to indicate that two (qualitative and quantitative) methods are
used in the study in order to check the results of the various methods
of data gathering used during the study. e purpose of triangulation
in qualitative research is to increase the credibility and validity of the
results.
According to Nayab (in Bowen 2009), validity shows the soundness of
the research methodology and the results generated, based on the extent
to which the research remains in congruity with universal laws, objectiv-
ity, truth and facts. e validity of statistics-driven quantitative research
depends on the soundness of the instrument adopted. Validity in qualita-
tive research, however, depends on the ability and eort of the researcher,
as the researcher is the instrument.
For the current research, data were derived from both primary and
secondary sources. Secondary data consisted of articles and reports on the
development of the Douala Stock Exchange in Cameroon; these included
government policy documents, consultancy reports, community-based
nancial market reports and other nancial reports, and the historical
background on nancial market development in Africa.
To really understand the issues pertaining to the Douala Stock
Exchange, empirical research was conducted with a sample of 75 business
managers, academics and other nancial analysts acquainted with the
activities of the institution. ese informants, purposively chosen, both
in Cameroon and abroad, constitute the sample under a cross-sectional
study. e data gathering consisted of a questionnaire of seven items aim-
ing at interrogating these informants on their reluctance, and that of the
public in general, to trade at the DSX.e research also used the Likert
Scale Questionnaire for questions 4 and 6.
226 A. Ndedi

Results andDiscussion
is section discusses the data gathered during eld research along with
the results obtained and recommendations that need to be implemented
to achieve desirable goals at this important capital market. Based on the
empirical research, the following information was gathered.
1) e rst question was: ‘Launching the capital market, what Cameroon
as a country wanted to achieve?’ e goals and the motivations when
launching a capital market are multiple. It is very tempting to rush into
the maze of securities laws, stock exchange rules and licensing regula-
tions without asking the basic question, which is ‘why are we doing this?’
is basic question should be the starting point of analysis. In the
case of the Douala Stock Exchange, based on the information gathered,
almost all informants said that the Cameroonian government launched
the DSX after the launching of the Libreville Capital Market. erefore,
the launching of the DSX was not genuine as it was not based on local
and/or regional needs of a stock exchange.
In general, the principal objectives for the DSX were supposed to be
one of the following: privatisation programmes that could not be under-
taken without a capital market infrastructure; the desire to create invest-
ment opportunities for Cameroonians; or, nally, the desire to stimulate
the growth of small and medium-sized businesses in Cameroon.
2) e second question discussed with respondents was: ‘Should govern-
ment regulation precede or adapt to the trading market?’
Some countries have adopted full-scale securities laws, licensing require-
ments, registration provisions and so on, before a single company was
listed on the local stock exchange. is was true of the DSX.In this case,
there is a danger that market forces will be hindered by rules that are not
responsive to local conditions. Market forces include such factors as the
supply of capital, the supply of investment opportunities, the competition
from foreign capital markets, the impact of government scal policies,
and the number and activities of broker-dealers and investment advisers.
12 Assessment andWay Forward oftheDouala Stock Exchange... 227

e point raised through this research question is that capital markets
should not refrain from regulation. But the recommendation made for
this point is that regulation should consider trading practices that have
been developed informally, that conform to the ecient practices that
have developed, and that cover areas where potential problems could arise.
3) e third question asked was: ‘Should regulations be developed for an
over-the-counter (OTC) market?’
An OTC is a secondary trading market that is not on an exchange.
e OTC is usually operated by broker-dealers among themselves. e
broker-dealers are market makers because they put out quotations as to
the price at which they will buy or sell specic OTC securities. Almost all
the respondents (90 %) were keen on such a move.
4) e fourth question was: ‘What does transparency really mean and
require at the DSX?’
e informants, all 100 % of them, said that the Douala Stock Exchange
is not transparent. Figure 12.1 presents the results of the respondents in
the Likert scale from 1 to 5, with 5 agreeing that the DSX is transparent,
while 1 means the nancial market is not transparent. According to the
respondents, to be an eective doctrine at the DSX, transparency must
be dened by notions of materiality, and there must also be an acknowl-
edgement of company interests regarding the timing of disclosure and
condentiality of some matters.
Without doubt, transparency is an indispensable element of an ecient
securities market. Although transparency is clearly accepted as a common
good, when applied to government actions, transparency does not extend
to matters for which public disclosure is contrary to national interests.
What is the goal of the transparency requirement at the DSX? From the
perspective of government regulators, transparency is required so that the
reviewing and supervising agencies can determine whether government-
established investor protection goals are met. For potential investors,
transparency is required so that they can determine the potential risks
and rewards of the investment—something that most respondents
mentioned. Generally, government and investor interests in transparency
228 A. Ndedi

overlap, and transparency standards serve both interests. However, there
might be dierences in emphasis.
What are the standards for transparency at any nancial market? One
might think that transparency is equated with full disclosure. Full dis-
closure of material facts and events is a standard that gets one closer to
the goal of transparency. A fact is material when it is important. In the
securities world, two types of material information exist side by side. One
is called hard information, the other soft information.
5) e fth question discussed with the sample of managers was: What is
your assessment of the corporate governance at the Douala Stock
Exchange.’
In the case of the DSX, and in the light of the recent history of eco-
nomic crimes in Cameroon, almost all respondents (87 %) raised the
issue of lack of corporate governance.
e role of corporate governance in any institution is increasingly
important. Good corporate governance might not assure the success of
a company, but bad corporate governance will often destroy or severely
limit a company. Moreover, good corporate governance engenders public
condence that management is devoting itself as best it can to the best
interests of the company. Public condence translates into a willingness
to invest capital. For many investors, certainly for unit trusts and other
institutional investors, good corporate governance is one of the primary
factors leading to an investment decision. Good corporate governance
includes transparency with regard to board decisions and periodic full
0
0.
5
1
1.
5
2
2.
5
3
3.5
01020304050607080
Respondents 1
Fig. 12.1 Scattered plots from respondents’ responses
12 Assessment andWay Forward oftheDouala Stock Exchange... 229

disclosure to shareholders of corporate results and plans. Without an
eective enforcement procedure, good corporate governance standards
alone are insucient.
6) e sixth question raised with respondents is: ‘e Douala Stock
Exchange manipulation.’
It was appropriate to discuss with our respondents the public con-
dence in the DSX, and in particular in the buying and selling of securities.
Many respondents (76 %) raised the issue of lack of public condence
due to market manipulation, which is the single greatest problem with
regard to the DSX.e scattered plots (Fig. 12.2) represent respondents’
views on the market manipulation with the Likert scales, with 5 being
totally agree, and 1 totally disagree.
Market manipulation probably began the day the rst stock market
opened, and it has continued to this day. In every country in the world the
temptation exists to make money through deceptive and unfair measures.
e recommendation made to deal with this issue is how to prevent the
misuse of information. e DSX and securities commission rules should
provide for some minimum period of time before which a company or
insiders can begin to trade on the basis of publicly released information. Too
few people trust the system enough to put their money into it. Many people
continue to believe that it is safer to put their money under their bed, or
in a bank account, than to give it to a stockbroker to invest in a company
listed in the DSX.Unfortunately, this belief sometimes has historical roots
inlocal corrupt practices such as misleading privatisation oerings that have
not been eectively prevented or sanctioned. ere is probably no greater
challenge to government ocials than to overcome public distrust. is
chapter indicates several issues that should be addressed by government o-
cials who want to create a positive atmosphere for an active public market.
Government ministries have spent much time, money and energy pre-
paring the infrastructure for securities trading, but companies often have
not responded with the enthusiasm that was hoped for. In discussing
this issue with some small and medium enterprise (SME) managers in
Cameroon, the single most important theme that is heard is the lack of
public condence in the fairness of the DSX.Years of corruption in gov-
ernment and nancial sectors have taken their toll.
230 A. Ndedi

Can the DSX be trusted? Despite every eort to develop a securities
commission staed with knowledgeable and dedicated sta, it is never-
theless a government agency and therefore is subject to potential mistrust.
Furthermore, the DSX has been created through government action and
is managed by a government appointee.
Public condence is an intangible yet essential element in the infra-
structure necessary for a viable DSX.What are the factors that aect pub-
lic condence? ere are several that appear to be the most important,
according to our research.
e rst is market integrity. No one is willing to buy or trade securi-
ties without condence that they are being treated fairly. Fair treatment
means that all investors and potential investors at the DSX are dealing
with the same information, and that the information is accurate. is can
be achieved through two fundamental requirements: timely disclosure
of material information by companies, and prohibition against use of
condential information by insiders. e public must be aware of this
development.
The second issue to look at is broker and investment adviser neutral-
ity. Customers have an implicit faith in their brokers and advisers, a
faith based upon the licensing process and the appearance of good
faith and objectivity. If such advisers do not treat their customers
with absolute fairness, the DSX will be seriously hurt. For neutrality,
strong licensing standards and swift and effective disciplinary sanc-
tions are needed.
0
0.
5
1
1.
5
2
2.
5
3
3.5
050100
Respondents
Fig. 12.2 Scattered plots of respondents
12 Assessment andWay Forward oftheDouala Stock Exchange... 231

e third element required for public condence is transferability and
liquidity. e ability to attract investors at the DSX is linked directly to
potential investors’ perceived risks of liquidity. At the DSX, it is risky
enough to buy a stock not knowing how the company will fare in the
future. It is even more risky to buy a stock not being sure that it will be
readily transferable when the time comes to sell. Experiences show that
in many markets, the amount of public investor activity is so low that at
any given time there are too few buyers and sellers in the market to ensure
immediate liquidity.
e fourth point for public condence is an effective enforcement process
with the Douala Stock Exchange. Investors know that occasionally there
will be companies or persons who try to make money in the market
through illegal means. at is an inevitable but unfortunate part of the
securities market. Temptation often proves too great a force for some
people.
Investors will not lose faith in the DSX because of a few bad apples,
but they will quickly lose faith if there is a lack of eective enforcement.
Eective enforcement means:
1) Criminal prosecution, whenever appropriate;
2) Administrative sanctions by the securities commission;
3) e availability of private remedies for investors who have suf-
fered losses as a result of the misconduct.
Each of these enforcement mechanisms requires input from the
Cameroonian government. ere must be adequate funds provided for
the investigation and prosecution of criminal conduct, there must be a
sucient budget for the securities commission to aord its own investi-
gators and lawyers, and there must be civil procedure statutes that allow
eective private causes of actions. If the public sees that these are in place
and that wrongdoers are promptly apprehended and punished, there will
be a sense that enforcement will have a deterrent eect and thereby create
a fairer marketplace. If the public perceives otherwise, there will be no
interest in taking part in the trading market, as all will perceive that such
trading will be equivalent to playing poker with persons who ‘deal from
the bottom of the deck’. ere are other factors that also impact upon
public condence, including for example the quality of the companies
being oered, and the quality of corporate governance procedures.
232 A. Ndedi

7) e seventh question discussed was around an eective way to educate
and develop an interest of the public on the advantages of investing at
the Douala Stock Exchange?
e DSX cannot thrive without active participation by local compa-
nies. Institutional traders, such as pension plans, bank trust funds and
insurance companies, have neither the commitment nor the capacity to
fund the capital needs of an entire market. e movement of investments
from private savings accounts to publicly traded companies is a vital ele-
ment in capital market growth. One may wonder how it is possible to
have an active DSX in a country that has a low per capita income like
Cameroon.
e problem of educating and attracting potential investors is a global
phenomenon. Even in highly developed markets in Europe, for example,
less than 20 % of the population participates through investments in the
market. erefore, we should not set our sights too high.
In summary, the ndings have shown that unfortunately, despite nan-
cial liberalisation and the emergence of new markets and institutions in
Cameroon, in the absence of adequate oversight and an adaptive regu-
latory structure the DSX can only malfunction. According to Chami,
Fullenkamp and Sunil Sharma (2009), the development of the nancial
market occurs when market players are able to reach mutually acceptable
compromises regarding the terms of nancial transactions. Agents strike
grand compromises, such as those between maturity and collateral, and
between seniority and control, as well as myriad smaller ones. A nancial
market will generally fail to develop because the instrument traded does
not meet the requirements of some of the players; such is the case with
the DSX.
Summary
A number of issues have been discussed in this chapter. In summary,
the role of government in establishing, supervising and facilitating the
growth of the DSX is complex. It involves much more than simply estab-
lishing rules and creating supervising authorities. e content of those
rules must be developed based upon both ‘what is the on the ground’
12 Assessment andWay Forward oftheDouala Stock Exchange... 233

and the goals to be achieved. Rules cannot be static, because the market
is changing all the time.
Flexibility must be written into the rules, and discretion must be
accorded to agencies that support the DSX to act without going back to
Parliament. Government regulators will not know what the market looks
like or how it is changing without continual examination. Finally, no mar-
ket will succeed without public condence. All the factors that aect public
condence must be kept at the top of policymakers’ lists, and each factor
must be continually examined to assure that its requirements are being
achieved. ese are challenging tasks. e responsibility placed upon gov-
ernment regulators is high, but the opportunities are great. An ecient,
viable DSX will result in signicant economic gains, which will in turn
have major benets for the welfare of all of Cameroon and the Central
African Economic and Monetary Community (CEMAC) sub- region. e
Cameroonian regulators therefore stand at the head of a process that oers
enormous promise and opportunity, and their response to these challenges
will very much determine the growth and prosperity of Cameroon.
e chapter has developed an appropriate strategy for sequencing the
development of the DSX.It has argued that instruments that require simpler
and more easily veriable compromises must be launched in the rst place at
the DSX.e chapter also shows that the path of development will depend
on economic, legal, political, institutional and cultural factors—the frame-
work that prompts policymakers to ask the right questions in diagnosing the
deciencies and hurdles. e chapter nally provides guidance for designing
suitable policies for the development and functioning of the Douala Stock
Exchange that will contribute to the emergence of Cameroon by 2035. e
chapter concludes that when they function properly, nancial markets allow
the transfer of resources from savers to investors, and contribute to making
the economy more robust to shocks by enabling risks to be allocated appro-
priately—something that is needed in Cameroon with the DSX.
References
Bowen, G. A. (2009). Supporting a grounded theory with an audit trail: An
illustration. International Journal of Social Research Methodology, 12(4),
305–316. doi: 0.1080/13645570802156196
234 A. Ndedi

Ndedi, A. A. (2009). Financial markets regulations. Pretoria: University of
Pretoria Printing. Pretoria.
Ndedi, A. A. (2012). Financial markets regulations: eory and practice. Lambert
Academic.
Chami, R, Fullenkamp, C., & Sharma, S. (2009). A framework for financial
market development (IMF working paper; WP /09/156).
12 Assessment andWay Forward oftheDouala Stock Exchange... 235

237
© e Author(s) 2017
A. Ahmed (ed.), Managing Knowledge and Innovation for Business
Sustainability in Africa, DOI10.1007/978-3-319-41090-6
A
AAIB. See Arab African International
Bank (AAIB)
Abdallah, R., 52
absorptive capacity, of human
capital, 10, 154, 156–8
Achinivu, O.I., 141
Action Plan, 112–14
Acton, B., 84, 87, 90
Adam, M.A. A., 95–116
ADF. See Augmented Dickey Fuller
(ADF)
Africa Internet Group (AIG), 35
African Agency for Biotechnology
(AAB), 145
African Growth and Opportunity
Act (AGOA), 21
African Information Infrastructure
(AII), 37
African Technological
Outlook, 141
African Union (AU), 5, 113, 115
aggregation bias, 155
agriculture, clusters, 76–7
Ahmed, A., 3–11, 38
Ajayi, S., 34
Akaike Information Criterion (AIC),
161
Alashanek ya Baladi, 50
Algeria, economic design and
engineering capacity
building in
decision-making process
(governance), 147
D&E, training institutions,
relationship of, 145
engineering personnel,
importance of, 144–5
Index

238 Index
Algeria, economic design and
engineering capacity
building in (cont.)
rst development plan, 143–4
integration within organization,
146–7
labour legislation, 144
least developed countries, 138
local rms utilizations of, 145–6
Science Technology and
Innovation, 137, 138
situation in, 143–7
sustainability, 137
workers involvement, 145
Al-Jarf, R., 124
Amabile, T., 86
Amaefule, E., 70, 73
Amanulla, S., 108
ambidextrous, 124
Ambutsi, P.B., 214
American Chamber of Commerce, 50
American University in Cairo
(AUC), 50–8, 60
Amobi, I.C., 72, 73, 75
Anderson, M., 23
Anglin, G.J., 122
Annan, K.A., 34
Anokhin, P.K., 121
Arab African International Bank
(AAIB), 54
Arlove, R., 32, 35, 36
Ashoka, 50
Asian nancial crisis of 1997, 200–1
association arrows, in Mind
Mapping, 123
Augmented Dickey Fuller (ADF),
160–1
autoregressive conditional
heteroscedasticity
(ARCH), 162
B
Badreldin, T., 50
Bang, J., 156
bank consolidation, 213, 216
banking industry. See also Kenyan
banking industry
across Africa, 198
agency services, 199
borrowing and lending, 199
challenges of, 200–2
crisis, 198
facilitating trade, 199–200
global nancial crisis, 201
importance of the, 199–200
important role in economy, 197
main services, 197–8
money supply and control, 200
non-performing loans, 200–1
poor leadership, 201–2
sustainability pressure, 202
Bank of Alexandria, 50
Banque du Caire, 50
Banque Misr, 50
Bashir, M.O., 100
Basic Ordering Ideas (BOIs), 121
Bauer, P.T., 5
Beck, T., 214
Bell, M., 138
BlackBerry version, 85
Blackstone, 34
Board of Governors, 225
Boettke, P., 5
Boja, C., 71, 73
Borras, B., 157
borrowing service, 199, 215
Botswana, foreign direct investment,
10
company law and business
regulation, 185
corruption, 173, 187

239 Index
country brand and image, 174
demographics, 181
disposable income, 180
employment law, 184–5
exchange rates, 176
factors inuencing, 170–86
Gross Domestic Product Per
Capita, 177
hard infrastructure, 183
human capital, 182, 187
ination, economic factor, 175–6
inows in US$ million, 169
labour costs, 180
natural resources, 184
openness trade and bilateral
agreements, 186
political factors/stability, 171–2,
187–8
population, 169
soft infrastructure, 183
Sub-Saharan Africa country, 167
taxation policy, 174
unemployment, 178–9
voice accountability and rule of
law, 172
Bouoiyour, J., 157
Boyson, G., 125
brain thinking, in Mind Mapping,
123–4
‘Branding Botswana,’ 174
Branscomb, A., 32, 33, 36
Brazilian Shoe Cluster of Sinos
Valley, 72
bribes, 172
broker-dealers, 225, 227, 228
Brouno, P., 155
Brownbridge, M., 206
Bruno, P., 156
Bus Pooling, 60
Buzan, T., 120, 129, 131
C
CAD. See computer-aided design
(CAD)
Cairo Angels, 50
Cameroon, Douala Stock Exchange
(DSX)
active participation by local
companies, 233
broker and investment adviser
neutrality, 231
Central African Economic and
Monetary Community
(CEMAC) sub-region, 234
corporate governance, role of,
229–30
eective enforcement process, 232
exchanges, non-prot entities,
225
historical background of, 223–4
Libreville Capital Market, 227
Likert Scale Questionnaire, 226
major reason for, 224
market forces, 227
market integrity, 231
market manipulation, 230
over-the-counter (OTC) market,
225, 228
primary and secondary sources,
226
principle functions, 224
public condence, 231
purpose and operation, 224–5,
227
purposive sampling method, 226
self-regulatory organisation, 225
transferability and liquidity, 232
transparency in, 228–9
validity of, 226
campus incubators, 45, 47
Canadian banks, 201

240 Index
capacity building and human
capital, 9–10
capital accumulation, 156, 181
capital-intensive industries, 179
capital market, 225, 227, 228, 233
capital stock, 154, 155,
158, 159, 161
Carlyle Group, 34
Cattaneo, N., 183
CBI. See Confederation of
British Industry (CBI)
Center for Entrepreneurship and
Innovation (CEI), 51
Center for Entrepreneurship at
Cairo University, 50
Central African Economic and
Monetary Community
(CEMAC), 234
Central Bank of Kenya, 203, 204,
210, 216, 217
cerebral cortex, 123
Chami, R., 233
Chen, D., 106
cheque clearence, 199
China Investment Corporation, 34
Cincera, M., 156
CIS. See Credit Information
Sharing (CIS)
Clinton, B., 172, 179
clusters, 69–70
agriculture and food value
chain, 76–7
challenges of food industry, 78
conceptualisation of, 71–2
economic benets of, 70
entrepreneurship development
intervention (EDI), 70
packaged food industry, 75–6
rationale for clusters
development, 72–3
recommendations and policy
prescriptions, Nigeria, 79–80
typologies across the globe, 73–5
coaching programme, 59
Cobb-Douglas production
function, 158
Coe, D., 154–7
colour, in Mind Mapping, 122
commodity boom, 138
company law and business
regulation, 185
computer-aided design (CAD), 140
Confederation of British Industry
(CBI), 103
constant prices, 159, 160
consultancy bureaus, 142, 146
Continental Bank, in Kenya, 206
Cooperative Bank, of Kenya, 207
corporate governance, 208,
229–30, 232
corruption, 95, 104, 110–12, 114,
172–3, 184, 187, 188, 202,
203, 206–7, 213, 215–17,
230
cortical skills, 123, 125
Corves, 158
Creative Bits, 60
creative economy (CE), 18
Credit Information Sharing
(CIS), 211
Credit Reference Bureaus
(CRBs), 211
credit transfers, 199
D
Dafa’Alla, A.A., 95–116
Dakar Action Framework, 97
Dalkir, K., 18
D’Antoni, A.V., 126, 130

2 41 Index
D&E. See design and engineering
(D&E)
De Beers Diamond Trading
Company, 185
De Bono, 86
debt transfers, 199
demography, 41, 44, 49, 50, 181
Department of Trade and Industry,
71
Deposit-Taking Micronance
Financial Banks (DFBs), 211
Deposit Taking Micronance
Institutions (DTM), 211
design and engineering (D&E), 9
access to technology and know-
how through imitation, 148
in advanced industrial economies,
137
concepts and tools of, 138–40
consumers and users, role of, 148
de-engineering phase, 142
decit in engineers, 143
DUI (doing, using, interacting)
skills, 140
Dutch disease, 142
ICT revolution, 140
import substitution industrialisation
(ISI) model, 142
issue of training and capacity
building, 147–8
lack of regulation in, 143
multi-stage approach, 149
phases in, 139
policymaking level, 147
relationship with R&D, 148
shortcomings in, 141
situation in Africa, 140–3
in sub-Saharan African countries,
142
technological capabilities, 139
desktop method, 14
DFBs. See Deposit-Taking
Micronance Financial
Banks (DFBs)
digital factory, 38
dividend payment, 199
Djeat, 9
D-Kimia, 60
Donnelly, J.H., 201, 207
Douala Stock Exchange (DSX), in
Cameroon
active participation by local
companies, 233
broker and investment adviser
neutrality, 231
Central African Economic and
Monetary Community
(CEMAC) sub-region, 234
corporate governance, role of,
229–30
eective enforcement process, 232
exchanges, non-prot entities, 225
historical background of, 223–4
Libreville Capital Market, 227
Likert Scale Questionnaire, 226
major reason for, 224
market forces, 227
market integrity, 231
market manipulation, 230
over-the-counter (OTC) market,
225, 228
primary and secondary sources, 226
principle functions, 224
public condence, 231
purpose and operation, 224–5, 227
purposive sampling method, 226
self-regulatory organisation, 225
transferability and liquidity, 232
transparency in, 228–9
validity of, 226

242 Index
Drucker, P.F., 20, 88
DSX. See Douala Stock Exchange
(DSX)
DTM. See Deposit Taking
Micronance Institutions
(DTM)
E
Easterly, W., 5
EasyTaxi, 35
ECM. See error correction
mechanism (ECM)
eco-ecient energy consumption,
139
Ecole des Mines, 144
Economic Report on Africa
(2002:143), 205–6
EDI. See entrepreneurship
development intervention
(EDI)
education drives intellectual capacity-
building, 108
education–knowledge–experience
infrastructure, 42–3
education quality, 95–6
Action Plan, 112–14
Africa and Asia, correlation,
108–11
African Union (AU), 5, 113, 115
CBI, 103
corruption, 104
corruption and bad governance,
111–12
Dakar Action Framework, 97
distinct political phases, 101
engineering methodology
approach, 98
Finland, 102
generic education system model,
99–100
Global Education Action Plan, 97
gross domestic product (GDP),
106, 107
Human Development Report, 98
human resources development,
108
initial post-independence phase,
102
international community, 111
Islamist military coup, 104
KPIs, 98, 99
MICS, 107
modern education, 101
NDP, 98, 99, 101, 103–5,
112–15
Pakistan, 108
private sector, 106
SATS test, 102–3
self-learning philosophy, 102
Singapore, 108
Socialist Pro-Arab Nationalism
military coup, 103–4
South Korea, 108
UNESCO, 97
UNICEF, 106
vocational eciency, 100
eective enforcement, 230, 232
eciency-seeking, FDI category, 169
Egypt
AUC Venture Lab, 51,
52, 54–6
civil servants, 44
entrepreneurial ecosystem, 48–50
Free-Internet model, 38
population, 41
PPP programmes, 40
V-Lab, 58

243 Index
Egyptian Junior Business
Association, 50
Egypt, international R&D spillover
transmission
absorptive capacity, 156
Akaike Information Criterion,
161
annual average labour
productivity rate, 157
Augmented Dickey Fuller, 160–1
captial stock, measurement of,
160
Cobb-Douglas production
function model, 158–9
coecient model in, 155
cointegration analysis, 161
direct and indirect knowledge,
intersectoral of, 157
dynamic growth model, 157
error correction mechanism,
161–2
rst-order residual
autocorrelation, 162
human capital, important catalyst,
156, 157
industrial countries to developing
countries, 154
information technology,
signicant role in, 156
institutional determinants, 156
Jarque-Beta test, for normality,
162
labour productivity growth, 159
macroeconomic data, 154
modern panel cointegration
method, 155
OLS, FM and DOLS estimators,
155
Perpetual Inventory Method, 160
STAN dataset, 159
technology gap, 157–8
total factor productivity, 154,
155, 157
weighting scheme, 155
EIP. See Entrepreneurship and
Innovation
Program (EIP)
EIS. See emerging innovation
systems (EIS)
El Dahshan, 50
Elemelu, T., 23
El Houssamy, N., 15
Elish, E., 9–10
Ellison, G., 70, 72
Elshamy, H., 9–10
Eltayeb, E.I., 108
EMBASE, library database, 128
emerging innovation systems
(EIS), 140
emphasising (chunking), in Mind
Mapping, 123
employment law, 184–5
Endeavor, 50
engineering methodology approach,
98
entrepreneurial culture, 43
entrepreneurial ecosystem, 48–50
entrepreneurial universities, 46
Entrepreneurs Business Forum, 50
entrepreneurship, 13–14, 16–17
concepts, 15
innovation, 19–20
knowledge economy (KE)/creative
economy (CE), 15, 18
knowledge management (KM),
18–19
methodology, 14–15
rationalising, 20–2

244 Index
Entrepreneurship and Innovation
Program (EIP), 51–3
entrepreneurship development
intervention (EDI), 70
error correction mechanism (ECM),
161–2
Ethiopia, penetration rate, 40
exchange rate, 175, 176
executorships, 199
export trade payments, 199
Ezeoha, A.E., 183
F
factor endowment clusters, 74
Farrand, P., 125, 130
FDI. See foreign direct investment
(FDI)
Figueres, J.M., 31, 32
Fik, T.J., 13, 23
Financial Act 2008, of Kenya, 208
nancial crisis, 35, 175, 198, 201,
204, 208, 209, 215
nancial market, 11, 223, 226, 228,
229, 233, 234
Finland, education quality, 102
FinTech, 36
rm internationalisation strategy,
168
Florida, R., 18
food industry clusters, 75–6, 78
food insecurity, 75–6
food value chain, 76–7
Forbes, 84
foreign direct investment (FDI), 10.
See also Botswana, foreign
direct investment;
Zimbabwe, foreign direct
investment
categories and objectives, 168–9
denition of, 168
economic factors, 175–80
infrastructure, 182–3
legal and regulatory framework,
184–5
natural resources, 184
openness to trade and bilateral
agreements, 185–6
political factors, 170–4
socio-cultural, 180–2
trade and bilateral agreements,
185–6
foreign exchange transactions, 199
forex bureaus, 211
forward integration cluster, 76–7
Foster, T., 19
fragmentation, of small banks, 214
Frank, L., 157
Free-Internet model, 38
French elite, 144
Frey, C., 121, 123
Front Range Community College, 128
Fullenkamp, C., 233
G
Galatsidas, A., 23
Garber, A.R., 120
Garito, M., 35
G7 countries, 159
General Statute of Workers (SGT),
144
generic education system model,
99–100
Gera, S., 157, 158
Glaeser, E.L., 70, 72
Global Education Action Plan, 97
global nancial crisis, 175, 201, 209

245 Index
global value chain (GVC), 141
Goldman Sachs, 34, 111
grades distribution, 126–7
Groom, B., 103
gross domestic product (GDP), 42,
75, 106–8, 175, 177, 180,
182–4, 187, 213, 214
gross national income (GNI), 180
H
Haber, R.N., 122
Habib, B.O., 105
Hanekom, D., 20, 24
Harindranath, G., 33
Harvard, 111
Hattab, H., 49
Haussmann, R., 139
Hellofood, 35
Helpman, E., 154, 155, 157
high-tech clusters, 74
historic know-how-based clusters, 74
Hodgetts, R.M., 87
Holland, B., 127
horizontal clusters, 74
Howe, M.J. A., 122, 130
Howkins, J., 18
human capital, 40–5, 156, 157, 161,
181–2
Hussein, E.S., 95–116
I
ICT. See information and
communication technology
(ICT)
IDRC. See International
Development Research
Centre (IDRC)
images and icons, in Mind Mapping,
122–3
IMF. See International Monetary
Fund (IMF)
import substitution industrialisation
(ISI), 142
improving public access, 40
incubators. See university-based
incubator (UBI)
indexation bias, 155
Indigenisation Act 2007, 170
indigenous continental demand, 38
industrial development clusters, 70
ination rate, 175–6
information and communication
technology (ICT), 7
Cameroon, 38
information infrastructure, 35
information society, 34–6
Information Technology Industry
Development Agency
(ITIDA), 50
infrastructure
good and poor, 182–3
hard, 183
soft, 183
Injaz (Junior Achievement), 38
innovation and entrepreneurship,
7–8
innovative ICT, 31–2, 61–2
Africa, 35, 37–40
AIG, 35
AUC, 50–8
businesses, 33–4
civil society, 38
digital platforms, 35
EIP ecosystem, 51–3
entrepreneurial culture, 43
entrepreneurial ecosystem, 48–50

246 Index
innovative ICT (cont.)
human capital, 40–5
improving public access, 40
information society, 34–6
Internet, 36–7, 40
Kenya, 36
NGOs, 38
1990s, 33
population, 2015, 32
socio-economic change,
36–7
start-up Africa matrix,
62–4
UBI/accelerators, 45–8
Universal access, 40
Venture Lab (V-Lab), 51–60
World Bank, 34
International Development Research
Centre (IDRC), 141
International Finance Corporation,
217
International Monetary Fund (IMF),
202
International Telecommunications
Union, 40
Internet
ICT, 36–7, 40
innovative ICT, 36–7, 40
investment, 10
advisers, 227
management, 199
services, 199
Ishraq, N., 156
ISI. See import substitution
industrialisation (ISI)
Islamist military coup, 104
Ismail, A., 51, 52, 54
Iwuagwu, O., 70
J
Jarque-Beta test, 162
job lay-os, 178
Johannesburg, 18
Jozour, 60
Juma, C., 140
K
Kalani, M.V., 205, 214
Kamel, S.H., 31–64
Kao, C., 155
Kaplan, A.J., 214, 216
KarmSolar, 60
Kashef Labs, 60
Kaunda, K., 111
Kenya
ICT for socio-economic
development, 39
information society, 36
innovative ICT, 36
Kenya Gazette Supplement No. 90
(2008), 208, 213
Kenya Institute for Public Policy
Research and Analysis
(KIPPRA), 209
Kenya Magazines, 214
Kenyan banking industry, 11
assets and customer deposits,
210–11
bank consolidation, 213
Banking Act, 2010, 210
branch network expansion, 210
corruption, 206, 215
Eastern Africa region, 217
2007–2009 nancial crisis, 208–9
nancial institutions, 211
foreign direct investment, 209

247 Index
fragmentation, 214
future of, 215–17
growth in, 210
history of, 202–3
Kenya Institute for Public Policy
Research and Analysis, 209
leadership, 214–15
Nairobi, country’s capital, 210
non-performing loans, 203–5
overall sustainability, 215
ownership and asset control,
211–12
political interference, 206
poor banking performance, causes
of, 203–7
poor leadership, 206–7
post-election violence, 209
recovery, 207–8
services, 213–14
structure of, 211–12
weak internal controls, 205–6
Kenyan information society, 39
key performance indicators (KPIs),
56, 61, 98, 99
Khalifa, N.A., 9
Kingsley, K.M., 8, 83–90
KIPPRA. See Kenya Institute for
Public Policy Research and
Analysis (KIPPRA)
Kitagawa, F., 46–8
knowledge economy (KE), 4, 15, 18
knowledge management (KM),
18–19
knowledge services clusters, 75
Kolo, J., 13–24
Koum, J., 84, 85, 87, 89, 90
KPIs. See key performance indicators
(KPIs)
Kroszner, P., 201
Kuah, A.T., 70–3
Kuratko, D.F., 87
L
labour costs, 175, 179–80
labour force, 32, 156, 178, 179
labour-intensive industries, 179
labour productivity growth, 158,
159, 161
Land Acquisition Act 1992, 170
Laymu, 35
leading service, 199
least developed countries (LDC),
138
Leke, A., 32
Lewis, G., 103
liberalisation, 36, 142, 186, 233
Libreville Capital Market, 227
licensing standards, 231
Likert Scale Questionnaire, 226, 230
liqueed natural gas (LNG), 145
Litchtenberg, F., 155
literacy rate, 108, 182
loan access, 199
Louw, L., 11
low-cost manufacturing clusters, 75
low-income earners, 180
M
Mackinnon P values, 161
Manimala, M.J., 47, 48
market integrity, 231
market manipulation, 230
market-seeking, FDI category, 169
Marshall, A., 71

248 Index
Martin, R., 71
Mbarika, V.W. A., 36
McArdle, G.E. H., 122
McNeil, 156
MDGs. See Millennium
Development Goals
(MDGs)
medical education
creativity, 124–5
educators, 129–30
empowered learning process,
125–6
literature review, 128
memory augmentation, 125
PowerPoint presentation, 119–20
presentation eectiveness,
126–7
project preparation, 127
research studies on MM, 124–8
students, 119
teaching condence, 125
thoughts organisation, 128
writing improvement, 127
MEDLINE PsychINFO, library
database, 128
Mento, A.J., 126
Mian, S.A., 47, 48
Michaela, N., 155
MICS. See Ministry of Cabinet
Central Bureau of Statistics
(MICS)
Middle East and North Africa
(MENA), 43
Middle East Council for Small
Business and
Entrepreneurship, 50
Middle East countries, 157
middle-income earners, 177, 180
Millennium Development Goals
(MDGs), 3
mind mapping (MM), 9
arrows relationship, 123
articles selection and review
resources, 129
augment memory, 125
Basic Ordering Ideas, 121
colour, 122
creativity promotion, 124–5
denition and tools of, 120–1
emphasising (chunking), 123
in higher education, 120
image and icons, inuence of,
122–3
key elements and evidence
support, 121–4
learning process empowerment,
125–6
literature review, 128
literature search, 128–9
methodology in, 128–9
presentation eectiveness, 126–7
project preparation, 127
radiant structure, 121
research studies in education,
124–8
search strategy, 129
single keywords, 122
Software Blog, 121
targeted search, 128
teaching condence, 125
thoughts organisation, 128
whole brain thinking, 123–4
writing improvement, 127
mining sector, 177, 178, 180, 184
Ministry of Cabinet Central Bureau
of Statistics (MICS), 107

249 Index
Ministry of Science and Technology
(MS&T), 70, 79, 80
MNEs. See multinational enterprises
(MNEs)
mobile payments, 36
Mogae, Festus, 174
Mohamed, D.S., 96, 100
Money Remittance Providers
(MRPs), 211
money supply and regulation, 200
money transfers, 10, 197
Moyo, D., 111
M-Pesa, 39
MRPs. See Money Remittance
Providers (MRPs)
Mubser, 55, 60
Mueller, A., 128
Mugabe, J., 21
Muller, W., 155
multi-currency regime, 175, 176
multinational enterprises (MNEs),
169, 170
Muriithi, S.M., 11
Musa, P.F., 31
N
Nahdet El Mahrousa, 50
National Bank of Egypt, 50
national development plan (NDP),
education quality, 98, 99,
101, 103–5, 112–15
National Information and
Communication
Infrastructure (NICI) plan,
38
National Information Infrastructure
(NII), 33
National Investment Promotion
Council (NIPC), 76
Nayab, 226
Ndedi, A., 8, 83–90
Ndedi, A.A., 224
NEPAD. See New Partnership for
Africa’s Development
(NEPAD)
New Partnership for Africa’s
Development (NEPAD), 39
NGOs. See non-governmental
organisations (NGOs)
Ngubane, B., 18
Nguyen, N., 90
NIFST. See Nigerian Institute of
Food Science and
Technology (NIFST)
Nigeria
food industry, 8
food insecurity, 75–6
population, 32
sustainable development (see
clusters)
Nigeria, clusters, 69–70
agriculture and food value chain,
76–7
challenges of food industry, 78
conceptualisation, 71–2
economic benets, 70
packaged food industry, 75–6
rationale for clusters development,
72–3
recommendations and policy
prescriptions, 79–80
typologies across the globe, 73–5
Nigerian Institute of Food Science
and Technology (NIFST),
78, 79

250 Index
NII. See National Information
Infrastructure (NII)
NIPC. See National Investment
Promotion Council (NIPC)
Nnewi Automotive Parts Industrial
Cluster, 72
non-governmental organisations
(NGOs)
clusters, 70
ICT, 38
innovative ICT, 38
non-performing loans, 200–1,
203–7, 210, 214–16
note-making keyword, 122
note-taking keyword, 122
not-for-prot organisations, 225
Nwankwo, S., 3
O
Odedra-Straub, M., 37
OECD countries, 154, 156, 157
Okpaku, J., 38, 39
Olson, P., 89, 90
Oswego, S., 47, 48
Othman, M.K., 101, 102
overdraft facilities, 199
over-the-counter (OTC) market,
225, 228
Oxford, 111
P
packaged food industry, clusters,
75–6
Pakistan, education quality, 108
Pan Africa Bank, in Kenya, 206
Peier, C., 85
Peluola, S.B., 69–80
Perpetual Inventory Method (PIM),
160
Petrazzini, B., 33
Petrobras, in Brazil, 149
Pinto Zipp, G., 126
Piotrowski, J., 15
policy reversal, 69
political stability, Botswana and
Zimbabwe, 170–2
pollution reduction, 139
Polytechnic of Paris, 143
poor leadership, in banking industry,
201–2
population
Egypt, 41
innovative ICT, 2015, 32
Porter, M.E., 70–3
poverty, 4, 111
PowerPoint slides, in information
distribution platform, 119–20
private–public partnership (PPP), 79
process improvement, 140
product design, 140
project preparation, in Mind
Mapping, 127
property rights, 171
PsychINFO, library database, 128
public condence, 229–32, 234
public investors, 225
public–private partnerships (PPP),
40
PubMed, library database, 128
Pudelko, B., 120
purchasing power parity (PPP), 177
purposive sampling method, 226
Q
Qureshi, S., 38

251 Index
R
radiant structure, in Mind Mapping,
121
‘Radiant inking and the Use of the
Mind Map in Nurse
Practitioner Education,’ 126
Raimi, L., 69–80
rationale for clusters development,
72–3
resource-seeking, FDI category, 169
reverse engineering, 9, 141, 148
Rizk, N., 49
Robertson, S.L., 46–8
Rowan, D., 89
Royal Academy of Engineering, in
UK, 140
Rwanda, Vision 2020 programme,
38
S
SACs. See skills acquisition centres
(SACs)
SAPs. See structural adjustment
programmes (SAPs)
Sarfo, A., 23
Satariano, A., 90
Satell, G., 19
Satsangi, P.S., 98
SATS test, 102–3
Sayegh, F., 35
Scaramuzzi, E., 46, 48, 55
Schirtzinger, A., 19
Schumpeter, J.A., 20
science, technology and innovation
(STI), 4, 5, 137
secondary market, 224, 225
sectoral clusters, 74
securities, 20, 78, 224, 225, 227–32
self-learning philosophy, 102
self-regulatory organisation (SRO),
225
Serrano Domingo, G., 157
SGT. See General Statute of Workers
(SGT)
Shabana, S., 54
Shapiro, C., 33, 34
share certicates, 224
shareholders, 224, 230
Sharma, M., 111
Sharma, S., 233
Shaughnessy, H., 19
Shokunbi, M.O., 69–80
short-term memory, 123
Simarro Parreno, R., 157
Sinare, S., 37
Singapore, education quality, 108
Sinha, A.K., 98
skills acquisition centres (SACs), 79
SLFS. See Sudan Labour Force
Survey (SLFS)
small and medium-sized enterprises
(SMEs), 34, 48, 50, 230
clusters development, 79
proliferation of, 44
Social Fund for Development and
the Industrial
Modernization Center, 50
Socialist Pro-Arab Nationalism
military coup, 103–4
socio-economic change, 36–7
Sorensen, M., 35
South Korea, education
quality, 108
Spencer, J.R., 126
Sperry, 123, 130
Srinivasan, M., 126
SSA. See sub-Saharan Africa (SSA)

252 Index
stakeholders, 8, 14, 24, 38, 39, 41,
45, 47, 48, 51, 52, 56, 57,
61, 62, 79, 98, 114, 115,
174, 202, 217
STAN dataset, 159
standing orders, 199
start-up Africa matrix, 62–4
Stefano, I., 157
STI. See science, technology and
innovation (STI)
stock blocking, 199
strategic-asset-seeking, FDI category,
169
structural adjustment programmes
(SAPs), 141
sub-Saharan Africa (SSA), 10, 167,
208–9
Sudan, education system
CBI, 103
corruption, 104
distinct political phases, 101
Finland, 102
gross domestic product (GDP),
106, 107
initial post-independence phase,
102
Islamist military coup, 104
MICS, 107
modern education, 101
private sector, 106
SATS test, 102–3
Socialist Pro-Arab Nationalism
military coup, 103–4
UNICEF, 106
vocational eciency, 100
Sudanese medical educators, 120,
128
Sudan Labour Force Survey (SLFS),
105
Sunley, P., 71
sustainability pressure, 200, 202
Swedish organisation, 56
T
tax advice, 199
taxation policy, 173–4
teaching condence, 125
telecommunications infrastructure,
36
Telecom Paris, 144
inkBuzan.Com website, 129
Tinsley, R., 23
Toi, H., 125
Tolba, 50
total factor productivity, 75, 154–8,
180
Trade Agreement Group, 186
Trade Bank, in Kenya, 206
transparency, 228–9
Transparency International, 173
triangulation, 226
trust services, 199
U
unemployment, 33, 40, 105, 149,
175, 177–9, 184, 187
United Nations Conference on Trade
and Development
(UNCTAD), 141
United Nations Development
Programme (UNDP), 38, 95
United Nations Economic
Commission for Africa
(UNECA), 38, 39, 95
United Nations Educational,
Scientic and Cultural

253 Index
Organization (UNESCO),
97
United States, UBIs, 47
universal access, 38, 40, 97
university-based incubator (UBI)/
accelerators, 45–8, 50–1,
55–6
unstructured conversational
interviews, 14
V
Varian, H., 33, 34
Venture Lab (V-Lab), 61
Egypt, 58
innovative ICT, 51–60
vertical clusters, 74
Vijay, D., 47, 48
Vision 2020 programme, 38
visual symbols, 122–3
voice accountability, 171, 172
W
Wadongo, E., 23
Waweru, N.M., 205, 214
Webster, F.A., 85, 86
Weheba, N., 15
WhatsApp, 83–5
creative process, 87–8
failure in creative process, 85–6
initial capital, 85
innovation, 88–90
white collar jobs, 182
Wickramisinghe, A., 125
Willingham, D.T., 126
Wolf, E., 156
World Bank, 10, 15, 23, 34, 206
innovative ICT, 34
World Bank global education
promotion programme, 182
World Economic Forum, 95
writing improvement, in Mind
Mapping, 127
Wulong, G., 157
Z
Zambia, trap of poverty, 111
Zando, 35
Zhu, L., 156
Zimbabwe, foreign direct investment
company law and business
regulation, 185
corruption, 172–3
country brand and image, 174
demographics, 181
disposable income, 180
employment law, 184
exchange rates, 176
Gross Domestic Product Per
Capita, 177
hard infrastructure, 183
human capitial, 182
ination, 175
inows in US$ million, 168
labour costs, 179
natural resources, 184
openness to trade and bilateral
agreements, 186
political factors/stability, 170–1,
187–8
soft infrastructure, 183
Sub-Saharan Africa country, 167
taxation policy, 174
unemployment, 178, 179
voice accountability and rule of
law, 172