Farming as family businesses and succession pathways

Farming as family businesses and succession pathways

What will transform most African economies is not agriculture but agribusiness. Without business models, agriculture is not profitable. That is why smallholder farmers should be supported to operate as family business. Throughout the world, family-run businesses are the oldest and most prevalent form of business ownership. For most countries, these unsung heroes are the back bone of prosperity and economic growth. For instance, more than 80% of companies in India are said to be family-owned and contribute more at least 80% of national GDP annually.

Bringing a family business lens to African agriculture

In Africa, the majority of smallholder enterprises have been functioning as family businesses for years but a professional business angle has been lacking. That is why farming should not just be considered a business but a family business with particular actors receiving specific benefits in line with their contributions. When young people are not recognized for their contribution in family agribusinesses, they end up quitting and going to cities in search of elusive employment. With the right empowerment, young people can be confident enough to manage family agribusinesses into the future.

As part of building succession pathways, farmers and business owners should be encouraged to wean their children by giving them business branches or outlets to run as part of building self-reliance. For instance, an agro-dealer can give part of his business to his daughter/son.  This inheritance-driven business model can support a shift from dependence to self-reliance and young people who embrace the opportunity can flourish.

Importance of characterizing economic actors

In all agro-based economies, it is critical to characterize economic actors and their different roles in entrepreneurship development as shown below:

Family unit (household) The primary motive of a family unit or household in starting an enterprise is mostly to meet basic requirements or supplement and widen sources of income. For instance, this can be from farming to non-farming income generating projects like retailing.  On its own, farming may not be a business per se but surplus is needed to supplement other needs like school fees, health needs and transport. A majority of micro enterprises in rural are in this category where the thrust is supplementing income and meeting basic needs.

School leavers and the young generation – This group is driven by unemployment as a push factor. The only choice for school leavers and youths is to start a business. It is more to do with self-reliance and not a career path by choice. “I can’t just be idle so let me find something to do.” These entrepreneurs are not driven by passion but by circumstances.  For them, agribusiness is a stop-gap measure while looking for formal employment. There is often no process of building these entrepreneurs since it is basically a forced situation (thrust on them). 

Most of the youths do not have innovations in terms of their own business ideas but tend to copy what others are doing through trial and error with no specific market and entrepreneurial skills.  This group, pushed into business by factors outside individuals’ control, should be carefully targeted with funding and capacity building initiatives. Instead of taking business as a stop-gap measure, they need to understand the entire economy.  Due to inexperience and lack of innovation it is often difficult for this group to get funding from banks. They did not start business by choice and have not taken it as a career path. They are standing with one leg and have not firmed up their business ideas – no vision for the enterprise.

Retrenchees – These are pushed into business by cessation of income sources.  “What else can I do now that I have left formal employment?”  Some do not have relevant skills like farming because they grew up in the city.  However, a positive thing is that some have earned retrenchment packages around which they can be trained to start agribusinesses.  At the same time, they will still be looking for formal employment. Due to the time factor, their entrepreneurial skills are not yet developed. They just have skills related to their former employer and this can drive them to start businesses in line with the former employers.  For instance, a former welder can buy his own welding machine and start doing what he used to do at his former employer. A former employee in a packaged goods retail shop can become a trader of the same goods through a tuck shop. People in this group get into a trade in which they have inherent skills, potential markets and market requirements in terms of standards.

A category driven by availability of resources in the form of (a) pension, and (b) borrowing powers-  This group comprises people with many forms of collateral requirements such as buildings and old boys club networks in the banking circles. They can walk in a bank and easily get a loan.  Unfortunately, most people in this cluster are not driven by entrepreneurial fervor but access to resources.  This group could be lacking requisite entrepreneurial skills and business development capacity.  Some can confuse power in their field or networks with power in executing business. Due to easy access to money, they can borrow from one bank to repay a loan taken from another bank.

External resource-driven category – This cluster is driven by availability of resources from government or development agencies. Such resources could be in the form of women’s bank or youth fund, among others. For instance, NGOs may have resources targeted at vulnerable households so that they do market gardening. The resources could be well-defined through affirmative strategies and targeting specific groups.  Just because a women’s bank has been set up can see more women going to get loans not because they have good business ideas but because the facility is available.  The fact that a youth fund has been availed, might see many youths apply for loans even if potential businesses are already congested. Some NGOs target resources at vulnerable households.  As a result, some community champions do not qualify because support is for orphans, child-head households or are excluded due to certain age ranges.

Passion-driven but lacking resources – These could be youths keen to start businesses as career paths.  Some agricultural graduates can be keen to get into commercial agriculture while engineering graduates may want to set up a motor mechanics workshop.  This group is driven by passion, knowledge and skills but might lack experience, exposure and resources.  They can actually have more commitment.  / /

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