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Understanding the role of Africa’s immigrant entrepreneurs

Generations of Africans have debated the merits of foreign-controlled enterprise: do these businesses and the people who run them strengthen or undermine local economic opportunity? Do they benefit or exploit local workers and consumers?

Such debates often overlook that a large portion of these foreign-owned firms are small or medium enterprises, and that their owners are not European, North American or even Chinese. The commercial success of certain “middleman minority” groups, such as Indians in east Africa or Lebanese in West Africa, is widely known. Far more foreign business owners on the continent, however, originate in other African countries.

Their ranks include Somalis in South Africa, Nigerian Hausas in Ghana and Mauritanian Arabs in Senegal. They run a broad spectrum of businesses, from factories to dry goods stores to tailor shops. These African immigrant entrepreneurs’ vital role in host country economies has too often been misunderstood by observers and maligned by overzealous nationalists and cynical politicians.

Even after having established themselves, started businesses and learned local languages, immigrants often remain socially and culturally distinct from the host population. Their linguistic or religious traditions may set them apart.

These groups frequently maintain and cultivate enduring ties with their country of origin. Many send their children born in the host country to be raised by relatives back home, the better to instil in them the culture, language and values of their community of origin. When these offspring come of age, they rejoin their parents abroad and eventually take over their businesses and properties, perpetuating their families’ presence in the host country.

So although integrated into the host society in fundamental ways, such immigrants do not fully assimilate into it, even after generations. They are like a highly visible thread woven into, yet discrete from, the social fabric of the host country. The distinct status of these populations – “strangers” as some call them – is at once their greatest strength and their greatest vulnerability. (The use of the term “strangers” to refer to immigrant traders in West Africa has a long history in scholarship on the subject.)

Immigrants and their descendants can draw important economic benefits from their foreigner status. At home, the imperatives of successful entrepreneurship, such as making a profit and accumulating capital, frequently conflict with the imperatives of dutiful kinship, such as supporting the needy, offering credit, or providing discounts. Abroad, as nominal outsiders, immigrants are not bound by the same webs of reciprocal obligation: they can afford to scale back their social obligations and invest more in their enterprises than if they had never left home.

Although they still rely heavily on their own kin and co-ethnics abroad, immigrants stand apart from their clientele. Hence they enjoy more freedom to run their businesses as they see fit.

The tightly knit, kin-based nature of foreigner communities also fosters a degree of internal cohesion that the wider host society usually lacks. These migrants’ status as “strangers in a strange land” heightens their sense of shared identity and mutual responsibility.

This cohesion gives rise to “enforceable trust”, a mechanism for punishing malfeasance and rewarding good behaviour. Immigrants can ill afford alienation from their own community, and thus must abide by the group’s internal norms. Enforceable trust fills the void left by a dysfunctional formal legal system in settings where state institutions are weak, courts corrupt and contract enforcement uncertain – as is often the case in some African countries.

Immigrants also stand to benefit from their transnational connections. This writer studied traders from 2005 to 2006 in Brazzaville, capital of the Republic of Congo. They belonged to networks linking them not only with their villages of origin in the western Sahel – especially Mali, Guinea and Senegal – but with kin and co-ethnics based in Angola, Côte d’Ivoire, Nigeria, South Africa and as far afield as Thailand, the United Arab Emirates and China. Many had previously lived in some of these other cities and countries in their migrant network before coming to Congo. Travel between these nodes was a regular feature of doing business for the more successful entrepreneurs.

Even family-owned businesses can manage risk by diversifying operations across multiple countries. A Malian entrepreneur I interviewed operates a metal sheeting plant in the Republic of Congo, has one relative in charge of his Congolese sawmill, another running his plastics factory in Mali and a third managing his export office in south-eastern China. Such transnational networks lower business costs by making it easier to share information and technologies across borders.

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