Replicating DreamOval to Reduce Unemployment in Ghana

Posted April 7, 2010 by Dennis Asamoah-Owusu
Categories: Uncategorized

A little more than three years after graduating from Ashesi University, Derry, Claud, Charles and Henry have built a company that employs ten people. Their company, DreamOval, which provides world-class internet and mobile software solutions was started in April 2007; four months after these young men graduated from school.

Considering the fact that Ghana’s most pressing need is providing employment for its many unemployed youth, of which some are graduates from our tertiary institutions, what these four young men have done is not just something that is highly commendable but something we should earnestly seek to replicate.

The building of businesses by young people is not a new or strange phenomenon, especially in a country like the United States. Global companies like Microsoft, Dell, FedEx, Apple, Google and Facebook were all started by very young people. There are many more, relatively less known, companies that were started by young people.

DreamOval is, however, one lucid illustration that the building of businesses by young people is something that is possible in Ghana and in Africa. We must seek to reproduce many DreamOvals. To do that, however, we must understand the challenges of venturing out after school and develop an effective strategy for overcoming these challenges.

Some Challenges of Venturing Out After School

Securing Financial Capital

As Derry, CEO of DreamOval, said, it is highly unlikely for a young Ghanaian graduate who has no track record to secure start-up capital from any financial institution or venture capitalist in Ghana. For DreamOval, they had to rely on their own little accumulated savings as well as money from family and friends.

Financial Pressure

According to Derry, they were able to pay themselves only after running DreamOval for about two and a half years. How did they foot their bills all this time they could not pay themselves, especially considering the fact that, in most cases, one cannot continue to look to his or her parents for livelihood after graduating from the University? For Derry, the support they had from friends and family helped to minimize this pressure. That notwithstanding, it was at times very frustrating for him to realize that two years after school, he was finding it difficult to afford certain things he would have been able to afford had he been working somewhere else.

Getting Customers

Without any track record, how are you going to get people to give their important jobs to you? For DreamOval, they had to do a lot of pro bono work to prove their capabilities to their prospective customers.

One Way to Deal With These Challenges

One approach that would help to counter some of these challenges is what I refer to as the ‘Dream Big, Start Now’ Approach

Adopting The ‘Dream Big, Start Now’ Approach

Students who dream of owning their own business after school have a lot to gain by starting their entrepreneurial pursuit while in school. If they are successful in building a business while in school, they will graduate owning a business. Obviously, they would be relatively better off than if they had to start from scratch after school.

First, it would be relatively easier to access financing since it is easier to persuade prospective investors to put their money into a business that has been running successfully for some time than one that is about to start.

Secondly, their exposure to the financial pressure explained earlier on would be limited. They would be able to start earning income from their business earlier than if they had to start from scratch. Financial pressure is an important issue to consider in discussing venturing out after school because unbearable financial pressure can force an entrepreneur to abandon his or her dream.

Also, if you have to do some pro bono work as a way of breaking into a market, what better time to do this than when you are in school and your parents are taking care of you!

Maintaining the Balance

Using the ‘Dream Big, Start Now’ approach requires the ability to combine one’s academic work with one’s business pursuit. It is not wise, in my opinion, to neglect one’s academic work while pursuing the dream to become an entrepreneur. I am, however, very convinced that there are many students in our tertiary institutions that have the ability to successfully build a business and achieve academic excellence at the same time.

Encouraging and supporting students with the ability to successfully build a business alongside their academic work to utilize this ability provides a most effective way of tapping the entrepreneurial talent of our youth to reduce unemployment in the country.

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Why We Need Local Entrepreneurs

Posted April 6, 2010 by Dennis Asamoah-Owusu
Categories: Uncategorized

Local Entrepreneur is used to refer to a resident of a country who sets up a business in the country. Is it justifiable to say that having local entrepreneurs is not vitally important in our quest to create jobs for the unemployed masses because Foreign Direct Investments could do the job? I think not and here are my reasons. First, when the need to create jobs is as dire as it is in Ghana, any means of successfully creating jobs must be considered vitally important. Secondly, local companies are needed to diversify the portfolio of employers so that when, for any reason, foreign companies are no longer able or willing to employ, the effect on the economy would be minimized. Thirdly, the country stands to benefit more from the local entrepreneur than the foreign one. Finally, even within the context of attracting foreign investments, local entrepreneurs are very important because they serve to attract foreign capital that would otherwise not have come into the country.

Local Entrepreneurs Create Jobs

That local entrepreneurs create jobs is not a matter for dispute. Mr Dominic Oduro-Antwi is a Ghanaian entrepreneur. Beginning with virtually no capital, a few years ago, he has built an admirable business that, today, employs about ten people. His company – Design House Projects – which deals in Publishing, Market Research, Architecture and Interior Design is an example of how local entrepreneurs create jobs in the country.

When looked at in light of the fact that some Multi-National Companies have been in the country for just about the same time but employ many more, one might be tempted to gloss over the contributions of such industrious local entrepreneurs in reducing unemployment. That would however be a gross mistake. In a country with so many unemployed youth, any effort to create jobs, no matter how relatively small it seems, is highly important. Job creation in a country like Ghana depends greatly on local entrepreneurs. A World Bank press release in 2006 indicated that 70 percent of the Ghanaian labour force was employed by Micro, Small and Medium Enterprises. (allafrica.com)

Local Entrepreneurs Diversify ‘Employership’

There is an advantage in having an economy that consists mainly of a multiplicity of Micro, Small and Medium Enterprises as opposed to one that is dominated by a few large Multi-National Companies (MNCs). In the event that these large companies fail or withdraw from the country, the aggregate effect on the economy would be greatly lowered if the economy is dominated by many small local companies. MNCs can and do fail. They also can and do withdraw from countries when they stand to gain greater profits from moving their operations to another country. This happened in Singapore in 1986 and again in 1998 when the collapse of the economies of Singapore’s neighbours offered MNCs cheaper labour in those countries. (Yew, 622) I doubt that Mr Dominic Odoru-Antwi would relocate Design House Projects in the Gambia because labour there is suddenly cheaper. An economy that rests mainly on the shoulders of many local MSMEs, and hence local entrepreneurs, should be our aspiration.

Local Entrepreneurs are of More Benefit to Us

Local companies and foreign companies are both of immense benefit to us since they create jobs for our unemployed. Local entrepreneurs, however, are of additional benefit. It is generally accepted, I think, that allowing foreign companies to repatriate profits is an important incentive for foreign companies to invest in a country. If this is true, then it is safe to say that a significant amount of the earnings of foreign companies are repatriated. Local companies cannot repatriate profits. Thus, profits from local companies are more likely to stay in the country than those generate d by foreign companies. These profits would likely be re-invested in the business or some other local business or spent on goods and services. No matter which of these ways it ends up being spent, our economy benefits. The same cannot be said of repatriated profits.

Local Entrepreneurs Enhance Foreign Direct Investments

Capital, globally, seeks to minimize risk and maximize returns. Starting a new company is a highly risky venture. Thus, a lot of times, capital is more willing to invest in an already successful venture than one that is to be started from scratch. For some capitalists, being able to show from a hypothetical Profit and Loss Statement (as in a business plan) that a venture would be successful is enough. Some other, perhaps most, capitalists prefer demonstrating profitability from real Profit and Loss Statements. To attract such capital, someone must first bear the risk of starting the venture and making it successful. That someone is the local entrepreneur and this is how local entrepreneurs enhance foreign investments. They start and build successful companies that attract global capital to grow further. Sometimes, the foreign investors merge and, at other times, they acquire.

Local entrepreneurs are vitally important in creating jobs and, thereby, in our economic development. Therefore, no efforts should be spared in encouraging entrepreneurship in Ghana and in Africa.

References

  1. http://allafrica.com/stories/200601060096.html
  2. Yew, Lee K. From Third World to First: The Singapore Story: 1965-2000. US: HarperCollins, 2000.

Entrepreneurship is Vital to Africa’s Prosperity

Posted April 3, 2010 by Dennis Asamoah-Owusu
Categories: Uncategorized

“The US was built by entrepreneurs. I know Africa can be built in the same way.” I happened upon these statements while surfing the net one day and they excited me. This was because they said in a simple way a conviction I have: that a multiplicity of successful entrepreneurs across the African continent is fundamentally necessary for lifting it out of its poverty.

The material prosperity or wealth of any society depends on its economic growth. Economic growth may not take care of how the wealth is distributed but it goes without saying that it must underlie the quest for wealth creation or prosperity in any society.

One of the most outstanding works ever done into why and how nations become wealthy is Adam Smith’s ‘An Enquiry into the Nature and Causes of the Wealth of Nations’, a title usually shortened to ‘The Wealth of Nations’. In it he argued ingeniously that the true wealth of a nation was to be found in the produce of the labour of its people. The increase of this produce is what is referred to as economic growth. Robert Reich in his introduction to the book summed up Adam’s Smith’s view thus: “To him, the ‘wealth’ of a nation wasn’t determined by the size of its monarch’s treasure or the amount of gold and silver in its vaults … A nation’s wealth was to be judged by the total value of all the goods its people produced for all its people to consume.”

Entrepreneurs are at the core of economic growth. This is because they are the ones who organize production in a society. They put together the society’s resources of land, capital and labour to produce goods and services. The more entrepreneurs therefore, the more goods and services are produced. The more goods and services are produced, the more a society becomes materially prosperous. This is, however, just one aspect.

True entrepreneurs innovate. A special report on Entrepreneurship in the Economist (March 14,2009) carried this definition of an entrepreneur: someone “who offers an innovative solution to a (frequently) unrecognised) problem. The defining characteristic of entrepreneurship, then, is not the size of the company but the act of innovation.” Through the acts of innovation more value is created and by implication more prosperity. Paul Romer, a Stanford University economist put it beautifully: “Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable… [It] springs from better recipes, not just more cooking.”

To alleviate poverty in Africa, we must create wealth. To create wealth, we must put our people to work. To put our people to work, we need entrepreneurs. Entrepreneurs are vital to Africa’s prosperity.