If we look back at history and by convention, the development of nations has been the primary responsibility of the central government.
Governments, in their entirety, are or have been responsible for constructing roads, hospitals, electricity, water supply, and creating jobs.
The role of the central government in national development is or has been even more significant in developing nations, such as those in sub-Saharan Africa.
However, the complexities of our modern societies make this approach to development less viable. Governments of developing nations like Ghana often lack the funding to solely develop the institutions, infrastructure, and human resources necessary for stronger growth and a faster end to poverty.
For instance, 15 of the 45 countries in sub-Saharan Africa have government revenues that are less than 15% of their GDP, though the exact count may vary from year to year.
Additionally, government revenue in resource-rich countries in sub-Saharan Africa is less stable and higher than in resource-poor nations (Izvorski and Karakülah 2019).
Therefore, there is a need for private participation through entrepreneurship.
For clarity, government revenue specifically refers to the money collected by the government, including taxes, duties, levies, royalties, and other fees.
In contrast, Gross Domestic Product (GDP) measures the total value of goods and services produced in the economy over a specific period.
In other words, GDP reflects the overall economic activity within a country, while government revenue represents only the portion of that economic activity (including resource-based inflows) that contributes to the government’s budget.
The Chinese government, for example, recognised this fact in the latter half of the 20th century and strategically shifted away from centralised economic planning.
With a population of more than one billion, the country was able to surpass Japan and claim second place among the world’s economies in 2010, thanks to the covert but genuine permission granted to private entrepreneurs over approximately three decades.
The importance of entrepreneurship in nation-building cannot be overstated.
From a public policy perspective, several authors have emphasised the value of an entrepreneurial environment in fostering economic development through the establishment of new businesses (Malecki, 1994; Reynolds et al., 2001). Indeed, evidence suggests a strong positive correlation between entrepreneurship and national growth (Rocha 2004).
To this end, by way of a working definition, entrepreneurship is the process through which individuals pursue opportunities without regard to the resources they currently control.
An entrepreneur is thus an individual who assembles and integrates all the resources needed to transform an invention or idea into a viable business.
According to Nafukho (1998), an entrepreneur is a bulldozer who can turn a hurdle into a stepping stone. The author further states that an entrepreneur can move any mountain.
He is an aggressive and creative innovator who fosters the connections necessary for launching a new company.
Hayton (2002) also defines entrepreneurship as the process of identifying a need-satisfaction-related opportunity and turning it into something of value.
It can also be considered the procedures and actions taken by business owners to profit from business opportunities. Otaki (2003) then states that entrepreneurship is the process of establishing a new economic entity focused on cutting-edge goods or services.
Entrepreneurs are key players in any nation’s ability to stimulate entrepreneurship, which can be seen as a national asset. It is a dynamic process that goes beyond profit-making to value creation, enhancing well-being alongside wealth growth.
According to Barringer and Ireland (2016), there are three primary reasons why people choose to be entrepreneurs and start their businesses: (1) they want to be their own boss, (2) to pursue their ideas, and (3) to achieve financial rewards. As a result, many individuals view entrepreneurship as a desirable career path.
Think about your acquaintances and friends; there is a good chance you know one or two people who aspire to start their own business, either now or in the future.
Another indication that entrepreneurship is increasingly popular is the growing number of books written about starting a business.
For example, Amazon.com currently lists over 89,900 books on small businesses and more than 36,900 items related to entrepreneurship. In 2013, there were 62,700 books on small businesses.
Today, that number has undoubtedly and significantly increased (Barringer and Ireland 2016). Conversely, national development refers to a nation’s ability to continuously improve the welfare or quality of life of its people in areas such as education, economics, health, recreation, and more.
As mentioned earlier, numerous intellectual advances have been made to prove the connection between entrepreneurship and economic growth.
The Global Economic Monitor (GEM), a research organisation funded by Babson College in Massachusetts, US, and the London Business School, is dedicated to examining how entrepreneurship and economic development are related and how entrepreneurship can be fostered, particularly in developing nations. GEM conducts an annual study that can include up to 42 countries, and the findings are made public for global consumption.
According to Hisrich and Peters (1998), increasing per capita output and income, as well as “initiating and constituting a change in the structure of business and society,” are what cause the relationship between entrepreneurship and economic development to exist.
These authors also state that entrepreneurship programs have revitalised impoverished neighbourhoods in various countries.
Ahiauzu (2010) has researched the role of entrepreneurship in Ghana’s economic development. He starts by referencing Dejardin (2000), who asserts that “an increase in the number of entrepreneurs leads to an increase in economic growth.” Morrison (2000) contends that “entrepreneurship is important and meaningful in society throughout history at points of transition, such as from traditional to modern, from modern to post-modern, and from state-controlled economies to free-market economies,” which supports this statement.
That said, a nation’s economic expansion results from numerous human endeavours. Economic growth is a dynamic process characterised by changing demand patterns.
For a country to realise revenue from producing goods, new products must first emerge – that’s just logical.
A developing country like Ghana requires knowledgeable private investors who can identify new opportunities and are willing to take the risks of pursuing them.
Ergo, low-income entrepreneurs can help break the cycle of poverty and unemployment in Ghana.
According to the International Labour Organization (ILO, 2009a), private businesses are often central to a country’s economic development efforts.
They integrate human resources, capital, and strategic know-how to create companies that can succeed in local, national, and international markets.
This dynamism not only stimulates economic growth by producing goods and services but also encourages job creation, skill development, and social mobility.
By harnessing their creativity and agility, entrepreneurs play a key role in advancing new industries, diversifying economic output, and promoting sustainable, long-term progress in nearly all regions worldwide.
To put it all into proper context, the role of entrepreneurship in nation-building includes;
1. Entrepreneurship Accelerates Economic Growth: Entrepreneurship generates numerous new opportunities and jobs. A significant number of entry-level positions, which are essential for transforming unskilled workers into skilled ones, are created through entrepreneurship. Additionally, it trains and supplies skilled workers to large industries. The growth of entrepreneurship is largely responsible for the increase in a nation’s overall employment rate. Thus, entrepreneurship plays a vital role in creating new employment opportunities.
In Ghana, 49.2% of workers aged 15 years or older own their businesses (Ghana Statistical Service 2019). MSMEs dominate the business landscape and are crucial to the nation’s economic development. MSMEs are recognised as an essential part of the Ghanaian economy, accounting for roughly 92% of all businesses, employing over 80% of the labour force, and contributing about 70% of GDP (Ghana Ministry of Trade and Industry 2019). They also lead the country’s industrial sector, with the manufacturing industry being where MSMEs are most active, employing 85% of the manufacturing workforce.
2. Entrepreneurship Promotes Innovation: Entrepreneurs drive innovation that opens doors to new ventures, markets, products, and technologies through effective research and development practices. They can help identify solutions to problems that current products and technologies have not addressed. Therefore, entrepreneurship can potentially enhance people’s lives by creating new goods and services or by adding innovation to existing ones.
However, most entrepreneurs in Ghana are ‘necessity-driven,’ operating informally as sole proprietors on the street or from home. The economic conditions in Ghana, as in many other African nations, lead many to view entrepreneurship as the only viable means of earning a living.
Despite this, ‘opportunity-driven’ entrepreneurs positively impact the country’s employment landscape. Research indicates that 71% of ventures founded by ‘opportunity-driven’ entrepreneurs create jobs, employing an average of 8.4 full-time workers.
3. Entrepreneurship Can Promote Social Changes: Entrepreneurs reduce reliance on outdated practices, systems, and technologies while altering or challenging social norms and cultures.
Entrepreneurs are pioneers in introducing new technologies and systems, ultimately leading to societal changes. These adjustments are associated with improved living standards, charitable thinking, higher morale, and enhanced economic decision-making.
Therefore, social changes progressively impact regional, national, and global transformations. It is crucial to recognise the importance of social entrepreneurship.
The ICT industry in Ghana has the highest number of formal start-ups, with 34% of the nation’s start-ups providing services or goods in this sector, followed by agribusiness, manufacturing, and construction.
In contrast, Ghana’s healthcare, water, and sanitation sectors show significantly less start-up interest.
The author, Dr. Maxwell Ampong, serves as the CEO of Maxwell Investments Group. He is also an Honorary Curator at the Ghana National Museum and the Official Business Advisor with Ghana’s largest agricultural trade union under Ghana’s Trade Union Congress (TUC).
Founder of WellMax Inclusive Insurance and WellMax Micro-Credit, Dr. Ampong writes on relevant economic topics and provides general perspective pieces. ‘Entrepreneur In You’ operates under the auspices of the Africa School of Entrepreneurship, an initiative of Maxwell Investments Group.
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