The role of institutions in entrepreneurship development in Sub-Saharan Africa

In the last twenty-five years, economists have significantly contributed to the development of institutional approach in entrepreneurship research by identifying institutional factors that strengthen entrepreneurship development, which in turn spur economic growth (Urbano, et al., 2018). Despite increasing interest in research on the role of entrepreneurship institutions in developed countries, not much is known about similar approach in developing countries, especially Sub-Saharan Africa (SSA). Africa is currently the region with the fastest population growth. Every year, the continent adds an extra 20 million people to its population, as it is projected to reach the number of 2.5 billion citizens by the end of 2050, double to the its amount today (United Nations, 2017). Given the demographic change, the study of entrepreneurship institutions in SSA is important because it is key to address the issue of job provision for young generations in SSA. A strong institutional framework for entrepreneurship development would stimulus economic growth by tackling unemployment (Le, 1999), as jobless youth is the root cause of many developmental issues such as poverty, violence and illegal immigration. In terms of job creation, it is important to seek for policies that enhance both the quantity and quality of Small and Medium Enterprises (SMEs), translated to more entrepreneurial activity and better performance of entrepreneurs at the same time. The framework of institutional economics give insights to inclusive institutions (Acemoglu & Robinson, 2013) that ensure sustainability and survivability of SMEs, as both formal institutions consist of rules, laws and constitutions, and informal institutions consist of social norms, conventions and cultures (North, 1990) are crucial in studying entrepreneurs’ activities (Baumol, 1990; Henrekson, 2007; Freytag & Thurik, 2007; Freytag & Noseleit, 2009; Wyrwich, 2013). The study involves a research stay in Ghana and Kenya in 2016 for data collection. Two hundred and sixty-six local entrepreneurs in Accra and Nairobi were interviewed for the analysis of entrepreneurs´ background influence on the performance of their businesses. The questionnaire consists of forty quantitative questions and is divided into three main sections: the first section contains questions on demographics, personal information of the entrepreneurs and businesses, e.g. the size of the business and performance in recent years; the second section is about education and training background of the entrepreneurs; and the third section is about the role of clan, family and friend relations of the entrepreneurs.