Industrial Structure and Microenterprises in Africa

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Periodical article

Title:	Industrial Structure and Microenterprises in Africa
Author:	Fafchamps, Marcel
Year:	1994
Periodical:	Journal of Developing Areas
Volume:	29
Issue:	1
Pages:	1-30
Language:	English
Geographic terms:	Subsaharan Africa Africa
Subjects:	small-scale industry small enterprises Development and Technology Economics and Trade
External links:	https://www.jstor.org/stable/4192410 http://search.proquest.com/pao/docview/1311635935
Abstract:	Microenterprises (MEs) account for a significant proportion of aggregate employment and output in Third World towns and cities. This is particularly true in sub-Saharan Africa. This paper aims at clarifying the debate around MEs and industrial structure in sub-Saharan Africa by applying insights from the industrial organization literature to the continent. These insights reveal the importance of market niches, transaction costs, and enforcement issues in explaining the existence and survival of MEs. They suggest that the dual industrial structure could be amended by reducing business requirements and red tape, thereby allowing some MEs to become small and medium-sized businesses. They also indicate that many possibilities exist to tap the vitality and cost advantages of MEs through encouragement of subcontracting by traders and consortia of small firms. New empirical research is required on law enforcement, transaction costs, informational issues, returns to size, and network effects among MEs. Notes, ref.