The embedded economy

The term "entrepreneurship" spontaneously evokes ideas of competition, free market, profit, rational calculation and efficient organisation which are generally associated with economics and the discipline of management. In Africa, however, such a conceptual association can be readily misleading. In the African mentality, the economic sector is not divorced from the affairs of daily life, in particular social bonds. Likewise, entrepreneurship cannot escape its cultural context. Both the economic sector and the entrepreneurial spirit are fundamentally embedded, according to the terminology of Karl Polanyi, reassessed by Serge Latouche and Hassan Zaoual, in the ethico-religious values, social behaviour and customs, in short, in the local culture. Hence one can assert that the proverbial saying of "not mixing business with feelings" is clearly not of African origin (P. Muamba). To the contrary, in African cultures, there is hardly any distinction drawn between the organisation of production on one hand, and social, lineage, religions and family-based organisations, on the other.
The West elevated the economic sector into an autonomous sphere beginning in the eighteenth century. Africa, however, approaches neither money nor profit, nor market nor management in a strict mechanical fashion, which would be operating according to objective calculation and obeying the alleged universal rationality of homo-economicus. Everything remains entangled : the economic with the social, the desire for (individual) enrichment and the communal reaction. One can be "reasonable without being rational" (H. Zaoual). The "purely" economic aims are mixed up inside other motivations, particularly that of the group. Economic activity is "rational" for neoclassical economists. It is "relational" for the Africans. Indeed, what differentiates the economic factor in Africa from conventional Western conceptualization is that it is not considered an objective element. In fact, it is a subjective reality.

Along with the economy, management is part of what the great anthropologist Marcel Mauss called "a global social phenomenon."

All economic activities and organizations rest on a symbolic site (H. Zaoual) from which they gain sense and dynamism. The enterprise cannot be reduced to a technical system. Instead, it is a community organized around a certain meaning. The actor in such a community cannot be overlooked.

Entrepreneurship and "Informal Sector".: a questionnable terminology

The term entrepreneurship engenders confusion where an objective reality is evoked as culturally neutral, when the entire issue is fundamentally cultural. The Japanese phenomenon, for its part, has attracted considerable attention from management specialists concerning this (R. Zghal). Admittedly, the recognition of culture in management requires a doubled intellectual effort : in the first instance, intercultural, and in the second, interdisciplinary (H. Zaoual).

A second confusion to be avoided is the introduction of the term "informal" sector as opposed to the supposedly formal sector of African economies. "Although consecrated by conventionali usage, the expressions "informal sector" or "non-structural" and their variants - "transitional sector (Bugnicourt, Lachaud, Africa 1973, 1976), "inferior circuit" (Santos, Brazil 1971), "Bazar economy" (Geertz, Asia 1963) - all have an ambiguous and a reductionist nature. The term "sector" implies the presence of a specific entity, stable and homogenous, that is not found as such in reality. The qualifications of "informal" and "non-structural" apply to activities and enterprises displaying elements of formalization and structure, organization and hierarchy. The ideal reference remains the "normal sector", that is modern commercial enterprises, both public and private, with their representations and dominant paradigms : salary, economism, productivism and Westernism (H Panhuys).

Another reason for which the term "informal sector" is inadequate is that there is no such thing as an informal sector separated from the formal sector. Behaviours and practices, which generally correspond to the "Informal sector", are equally present in the so-called formal sector : illegal practices, tax evasion, low salaries, pregnancy of cultural values and traditional social patterns, poverty (the wages from the formal sector are in many cases lower than the revenues of the informal sector). All kinds of cultural mixtures between Western and African culture, between modernity and tradition are found in the "formal" as much as in the "informal" sector. The distinction based on this terminology is therefore of little use. The key term in Africa today is hybridity ! It is inescapable if one wants to understand and assist the economy as a whole and business enterprises in particular.

Cultural hybridization in Africa

Economic activities and entrepreneurship sit astride two contradictory/complementary axes of logic. On the one hand, the socio-cultural inherited from tradition yet transformed by contemporary pressures and, on the other, economic, financial and technical influences brought about by the penetration of market forces. The end product is a hybrid economy whose contemporary logic is an articulation of the capitalise mode with the non-capitalist, a blend of modernity with traditional means of operations (H. Panhuys, G. de Villers, A. Henry).

The hybridization not only allows for the survival and occasional progress of millions of Africans, but also corrupts the "formal" character of official life, of "the great society" (S. Latouche). Effectively, one observes the formalisation of the formal.

It is clear that in Africa the socio-cultural situation has often been neglected by the experts. Only the techniques, the financial and legal apparatus valued by Western models of management have been recognized and tought. According to Mamadou Dia, a senior civil servant at the World Bank, project-models to encourage and support businesses in Africa are fraught with Eurocentrism. In large part, their failure stems from a linear (evolutionist) and mechanistic views of history and development which are limited to technological approaches. Belief in Taylorism's "one best way" has encouraged mimicry. In Japan, on the contrary, managers, some educated in the West, have openly reconciled foreign influences and the Japanese principles of verticality (hierarchy), of affective dependence, of fused membership inherited from their ancestors (E. Mutabazi).

Business managers in Africa have, conversely, seldom explored a reconciliation of local cultural specificities with models imported from abroad (id.).

The Popular Economy.: impasse or remedy ?

Does this informality constitute an alternative to the formal sector economy, and thus, a viable model worthy of promotion ? Opinions diverge on these points.

For some, who warn against idealizing poverty, Africa will not be able to over come the challenge of effective development without recourse to universal values. There exist some universal constraints - notably, those engendered in Africa by the imbalance between production (and the consumption process) and demography (G. de Villers). It is claimed that through their underdevelopment, western domination has imposed on African countries the need to radically change and get rid of Africa's tradition. Africa is compelled to rationalise (in a Weberian sense) the economic activities and commercial enterprises, to embrace efficiency, calculability, the objective norms.

Others point to the fact that the formal business sector, created and administered along a Western mode, becomes generally inefficient, and lacks authenticity. The need for urgent change can- not be fully met by the imposition of alien and external models. The failure during forty years of the politics of development has taught prudence with regard to the universalism of economic science and sociology and of development, which often has camouflaged crude Eurocentrism. In the economic sector as in the entrepreneurial sphere, one cannot lose sight of the cultural substratum (R. Zghal). "Modernity has never been stronger than when it pulled its forces from a high tradition" (A. Henry). Formal enterprises often rest like a strange body, a western packet dropped in another "symbolic site".
Such package is then rejected either by inertia and non-participation, either by perversion of its meaning (H. Zaoual). The formal business sector, extroverted by neo-colonial economic logic, is too "rational" and "cold". Failing to attract royalty and adhesion, it becomes a place of corruption and spoils (patronage). One author calls this the "immoral culture of the nouveaux riches" where "inequality, oppression, clan interests and the perversion of African cultural values" run rampant (E. Bahigiki). "This is because inventiveness and social creativity have abandoned an official sphere where mimicry reigns with regards to the West". The "informal" sphere can therefore appear as the carrier of hope (G. de Villers).

The economy of the poor is, for its defenders, a useful corrective of Western economy (said formal) since it meets the needs which this economy has not been able to fill. More than mere economic shelter, it has become the second provider of employment after the agricultural sector, it constitutes an important part (about a quarter) of the total active population and from 35% to 85% of the urban employees. Estimates range from 60 to 80 million for those employed in the informal sector who contribute anywhere from 15% to 30% of GDP (Bahigiki, Panhuys). This economy is analyzed as being competitive and dynamic in terms of quality, prices, as much as on the employment level (I. Sidibe).

The popular economy is considered by some as the base of a new culture. Some authors observe in between a lost tradition and an inaccessible modernity, the emergence of an authentic post-modern culture wherein the African would be ingenious without being an engineer, industrious without being an industrialise, or enterprising without being an entrepreneur. The "informal sector" is not the kind of fix-it-yourself sector which constantly awaits legitimation or which finds itself in an indefinite period of transition (F. Houtart). We are perhaps facing a new but lasting logic of production. The recognition of this phenomenon should lead researchers and decision makers to give to the actors of the informal sector a positive status and full legitimacy (S. Latouche). The informal institutions are capable of functioning and, therefore, offer some hope (M. Nyssens, S. Larraechea, E. Ndione). Certainly, one should not, however, advance a single alternative, but instead should consider a plurality of alternatives. The importance is the multi-faceted onward progression. 'There are genuine popular experts, just as there is an authentic post-modern culture of the "shipwrecked of development" (Latouche).

This society of shipwrecked which is developing at the margins of the world economy and of the nation-state and its political system is, in large measure, a society against the state, as it is one in opposition to the global economy" (idem) since "the absolute logic of the market leads to despair" (P. Van Durme).

The "poor" are actors

This reference to the poor as actors underpins a number of analyses and, in particular, characterizes the interesting observations offered by Luis Razeto on the popular economy of Chile. Contrary to what is the case in industrial capitalist enterprises, the organizing subject is not necessarily he who brings capital, for instance, a manager who hires workers. Instead, these popular enterprises are organized by the subject who bring the labor factor, a boss who hires workers from the local community or a family or neo-lineage. The cooperation plays a central role. Indeed, social cohesion and solidarity seem to be the key factor in the stability and the economic efficiency of this type of business enterprise, the poor being the majority of participants. The poor in the popular economy sector described by Razeto are no longer the potential beneficiaries of industrial or commercial capitalism promoted by capital or by the state, but appear as the genuine protagonists. They are not an object to be modernized. They are actors.

For Luis Razeto, one should not take only capital and labor into account as economic factors. There also exist a "C factor" for cooperation, community, collaboration, a group of persons, a community. Taking a collective initiative, working together constitutes an economic factor by itself. Factor "C" generates productivity and enjoys a self-generating existence and logic. Within each enterprise a founder/organizer sets the objective, gives the organization its structure, organizes the factor of production according to these objectives and decides about the destinations of the surplus. In the classical enterprise the aim is to accumulate capital. In this respect, technological and human capital serve as means toward this end. In an enterprise organized according to factor "C", it is necessary not only to develop factor "C" by generating income, but it is also essential to widen and intensify social relations. These economic organisations respond to a multiplicity of objectives which are at the same time economic, social and cultural. They appear to be the embryo of a sector different from the private or public (statist) sector, namely, a sector of labor and solidarity. This sector rooted in a social fabric which itself is influenced by popular culture, constitutes an epistemological challenge to economic science and business management. It is the contribution of the voiceless to the search of another social formation (society). This view point from Latin America may be useful to understand Africa's popular economy.

Towards self-transformation of Society ?

The development of this economy of the "people below" may lead to social, cultural and political change in Africa. Popular economy, some observers claim, develops a culture of autonomy and independent labor. It can even lead to a spirit of initiative and responsibility, train conscious and enterprising people, and constitute a catalyst of cultural revolution in the behaviour and mentalities facilitating the self-transformation of society (Panhuys). Its communitarian organization renders pride and sense to the African continent where cultural disarray and social commotion are rife. The practices of popular economy develop an entire gambit of ideas about solidarity which is not limited to business. This solidarity constitutes new forms of organization which may inspire a reorganization of society on a new basis as distinguished from ill-assimilated modernity and disruptive social urbanisation without any organization (E. Bahigiki).

As opposed to formal local capitalism which remains fragile, and contrary to a stale which is domineering and exploitative, popular economy may be the breeding ground of a new African culture consisting of cultural cross-fertilization.