

Small companies in poor countries - frrp
http://www.economist.com/node/21564265

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azundo
I'm currently working with a couple of colleagues to start a business
investing at the $10k - $60k level in agribusiness in a few countries in
Africa. There's a huge lack of viable finance in this area, and lots of
opportunity if you take the time to get to know business owners and the risks
involved.

Seeing the potential that exists when you latch on to an enthusiastic
entrepreneur who is then able to provide jobs for people who would otherwise
be 'reluctant entrepreneurs' is extremely motivating.

There's another comment here about people being entitled, comparing that to
Chinese or Indians who set up shop in Africa and do well, but there's an
extreme amount of selection bias in those results. People who get up and leave
their own countries in order to travel somewhere else are in no way
representative of the population, and also escape societal and social
pressures that might otherwise stifle their entrepreneurship. Comparing locals
to migrants and then generalizing across the population is not an accurate
viewpoint. Yes there is often a culture of dependency brought on by years and
years of being exposed to aid programs, but there are many, many entrepreneurs
who are doing great things.

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pelle
We don't need the next Apple or Google to come out of the developing world. We
need legions of successful small businesses. Eventually an Apple or Google may
come out of it, but thats more a vanity goal than anything else.

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eternauta3k
Here in Argentina the government put a major halt on imports, bringing serious
problems to all kinds of local industries. They are not concerned that those
improvised measures can bring down a growing company.

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zgembo
you will found a lot of those small Web companies from poor countries on
<http://pivoted.co/>

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Toshio
> Can the spirit of enterprise be taught?

That's the wrong question to ask.

The correct question to ask would be: "Does the government of that country let
entrepreneurs breathe?"

Having witnessed first-hand how taxation systems work in real-life in the U.S.
and in a few poor countries, I can say this: when the IRS has suspicions about
your accounting treatments, they begin sending you letters politely asking for
photocopies of individual legal documents. There are a few rounds of this
back-and-forth, after which the IRS figures out whether you committed fiscal
fraud or not. This is pretty much a hands-off approach.

In poor countries, where governments are usually corrupt, things happen
differently. Tax inspectors show up (unexpectedly and carrying guns) at the
door of your small business. They are incentivized by the policies of the
fiscal enforcement agency not to leave until they found even the tiniest
mistake in your accounting treatments. And then they slap a hefty fine on you
- legislations in poor countries do not provide for any sort of sense of
proportion. Also, legislations are contradictory and skewed such that you
can't really be an honest entrepreneur, even if you try really hard. There is
always more than one accounting treatment for anything more complex than
revenue=5, expenses=4 => profit=1. And the tax inspectors slap you with fines
for not going with _the other_ accounting treatment.

All of this has a chilling effect on entrepreneurship, unfortunately.

~~~
witoldc
This is both true and false. While corruption is rampant and often expected,
the environment can be easier particularly for lower capital businesses.

If you want to open a restaurant here in DC, it will take you quite a long
time to get all the permits, permissions and inspections done. If you have to
remedy anything, it probably won't be cheap. Once you have all the permits,
you have to apply for special exemptions to stay open later, to serve alcohol,
etc.

When a Latino immigrant woman tried to sell her food on some neighborhood
street in DC, she didn't even last a day. She tried (at least) twice, and she
was promptly ticketed and got in some trouble for selling simple treats on the
street.

In contrast, in the developing countries the business comes first. You worry
about making money. If it's actually working, then you can start worrying
about bribes and taxes and regulations. So it can be cheaper and quicker to
startup as many of these expenses are on the back end instead of being front
loaded.

The Romanian quote is right on.

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witoldc
It's not the government and it's not the business environment. The problem is
with the people.

Look at some of the "worst" African countries. Chinese and Indians are coming
in there and opening up shops. They are starting restaurants and barber shops
and all kinds of low startup cost businesses. They are doing well, and they
are putting the old school 'local' businesses out of business. In fact, in
some African countries they are considering making residency much more
difficult for the Chinese because they are so successful there.

Too many people in African and Latin American countries have a sense of
entitlement. When they think a community needs something, they think the
government should provide it or subsidize it.

It is hard to shift this mindset, but it is happening in some urban pockets.
There are small circles of entrepreneurship in most bigger African/LA cities.
(I'm talking about guys starting from ground up, not rich privileged people
starting more capital intensive enterprises.) But it's going to take a while.

Ironically, the biggest sense of entrepreneurial spirit I was was actually in
Zimbabwe. As bad is it is there right now, I have a feeling this will be a big
positive turnaround sooner or later.

~~~
w1ntermute
> In fact, in some African countries they are considering making residency
> much more difficult for the Chinese because they are so successful there.

Things have turned out a lot worse than that in the past:
[http://en.wikipedia.org/wiki/Expulsion_of_Indians_in_Uganda_...](http://en.wikipedia.org/wiki/Expulsion_of_Indians_in_Uganda_in_1972)

