ABSTRACT
An increasing number of studies are paying particular attention to the role played by ethnic enclaves in economic performance. This chapter seeks to situate this body of work within the sub-Saharan African context. It examines the role of collaborative business networks, where there is arguably self-interested and strategic behaviour, and how this impacts on the performance and growth of firms. We use data from the Regional Programme on Enterprise Development (RPED) to compare growth rates of minority entrepreneurs with African-owned firms in Kenya, Zambia, Zimbabwe, Ghana, South Africa and Tanzania. Empirical results show that the former, with their concrete set of social ties, may gain some advantages over the latter. These informational and financial networks foster social trust, which goes some way to addressing uncertainty and economic performance. Some studies found that firms were more than likely to procure credit from suppliers from within rather than outside their own ethnic communities. However, ethnic networks were not as significant (as often claimed) in explaining access to preferential credit. The (potential) relative success of African-owned firms may, in some circumstances, also be explicable from the so-called ‘diploma disease’ which accounts for the development of managerial skills. However, there are also counter-arguments that point to the situation being more fluid and dynamic over time and space. Moreover, explaining complex scenarios requires discussion of class and gender relations.
