Minority entrepreneurs and firm performance in sub-Saharan Africa

This study focuses on the role of entrepreneurs in the private sector in su b-Saharan Africa. Using data from the Regional Program on Enterprise Develo pment (RPED) and controlling for various factors, our analysis compares gro wth rates of indigenously owned African firms with firms owned by entrepren eurs of Asian or European descent, in Kenya, Zambia, Zimbabwe, and Tanzania . We find that after controlling for firm size and age, various entrepreneu rial characteristics, and sector and country differences, minority (or non- indigenous) entrepreneur firms start out larger and grow significantly fast er than indigenously-owned African firms. Our results are consistent with t heories that argue that informational and financial networks created by min ority entrepreneurs provide access to credit, information, and technology f or members of these networks. We also find that within indigenonsly-owned A frican firms, entrepreneurs with secondary and/or university education real ise a higher rate of growth; access to education presumably enables indigen ous African entrepreneurs to develop managerial skills that serve as a subs titute for the informational and financial networks created by minority ent repreneurs.