OBSERVARE

Universidade Autónoma de Lisboa

e-ISSN: 1647-7251

Vol. 10, Nº. 1 (May-October 2019), pp. 98-111

THE ROLE OF POLITICS AND INSTITUTIONAL ENVIRONMENT ON

ENTREPRENEURSHIP: EMPIRICAL EVIDENCE FROM MOZAMBIQUE

Renato Pereira

rpereira@autonoma.pt

Integrated Researcher, OBSERVARE, Universidade Autónoma de Lisboa (UAL, Portugal).

Associate Professor at UAL. Guest Professor at ISCTE-IUL.

PhD in Management Sciences by Université Paris Dauphine.

Redento Maia

Post-Doctorate researcher, OBSERVARE, Universidade Autónoma de Lisboa. Full Professor at the

Faculty of Economics of Agostinho Neto University (Angola).

Doctor of Economics from Sofia University of Economics.

Abstract

This work investigates the relationship between the political and institutional environment and

the development of entrepreneurship in Mozambique. Taking a literature review approach and

using collected empirical data from interviewing 10 individuals playing different roles with

impact on county’s entrepreneurial landscape, results support existing theory and suggest

that this African country still has a long way to go in what relates governmental action to

entrepreneurial development.

Keywords

State, Policy, Entrepreneurship, Mozambique, Africa

How to cite this article

Pereira, R; Maia, R (2019). "The role of politics and institutional environment on

entrepreneurship: empirical evidence from Mozambique". JANUS.NET e-journal of

International Relations, Vol. 10, N.º 1, May-October 2019. Consulted [online] on the date of

the last visit, https://doi.org/10.26619/1647-7251.10.1.7

Article received on October 17, 2018 and accepted for publication on February 4, 2019

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 10, Nº. 1 (May-October 2019), pp. 98-111

The role of politics and institutional environment on entrepreneurship: empirical evidence from Mozambique

Renato Pereira e Redento Maia

THE ROLE OF POLITICS AND INSTITUTIONAL ENVIRONMENT ON

ENTREPRENEURSHIP: EMPIRICAL EVIDENCE FROM MOZAMBIQUE

Renato Pereira

Redento Maia

Introduction

The role played by the State, local authorities, governments, institutions, and public

policies on entrepreneurship development has long been investigated by scholars of

different fields within social sciences.

In the case of Africa, the importance of understanding this topic is of key importance

because of the tested relationship between entrepreneurship and economic growth in the

continent (e.g. Adusei, 2016) and the low level of economic development in many African

countries.

Some of the key elements that relate the ‘State’ action with entrepreneurship are the

institutional environment provided by governments, where bureaucracy plays a dramatic

role, but also the start-up cost, the (lack of) transparency of public fee schedules, the

(lack of) investment on human capital, the (lack of) coordination between governmental

policy-makers and policy-implementing public servants, and the suspicion /fear

politicians feel about entrepreneurs, among other factors.

The purpose of this work is to empirically explore the key relationships identified in

existing literature in one of the least developed countries in Africa, thus contributing to

increase the knowledge on both entrepreneurship and State role in Mozambique.

1. Entrepreneurship and politics in Africa

1.1. Entrepreneurship, economic development, and public policy

Governments all over the world have been using entrepreneurship development as an

answer to one of the most challenging economic issues of any democratic regime:

unemployment (e.g. Mehari & Belay, 2017). Because of that, economists have been

extensively testing the relationship between entrepreneurship and economic growth

which has created a strong base to inform governments and policy makers about what

they could and should do about it. In a very provocative paper, Shane (2009), points out

two very important elements for reasoning on this subject:

(i) countries with most entrepreneurs as a percentage of the population are poor

countries, not rich countries; and

(ii) (ii) only a tiny percentage of all start-ups, the so called ‘gazelles’, do actually have

a significant impact on job and wealth creation. Let us address these two tested

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hypotheses. A striking economic evidence is that when people get more educated

and their salaries increase, the opportunity cost of leaving the labor market increase

and the motivation to run the risk of starting a new venture decrease. When

unemployment goes up, many people are pushed to start a business either because

they have no other way of making a living or because governments offer them

incentives and benefits to do so. This leads to a significant increase in

entrepreneurial activity in the market based on unfit entrepreneurs with small

potential of generating profitable job-creating businesses and a tremendous

diversion of financial resources that could be used to develop effective

entrepreneurship through appropriate instruments, such as venture capital funds.

Further interesting economic research on entrepreneurship can be found in Mthanti &

Ojah (2017). Entrepreneurial orientation is important for economic growth, not simply

entrepreneurial activity. Governments must choose, in priority, to pull both

entrepreneurial-oriented ventures and entrepreneurial-oriented incumbents. It is

reminded the existence of significant research supporting policy and institutional causes

for Africa’s poverty but few studies address the real impact of entrepreneurship on this

issue.

Naudé (2013) had already made the point that policy must focus on pulling

entrepreneurial ability instead of entrepreneurial activity. ‘Improving the quality of

entrepreneurial ability means not only improving the skills and education of

entrepreneurs, their human capital, but focusing on the innovative abilities of

entrepreneurs. It is innovative entrepreneurship that is most desirable for growth.

Innovation policy ought therefore to be a central focus of entrepreneurship promotion in

developing countries as it is in advanced economies. Entrepreneurs in developing

countries have a much greater propensity for innovation than is often recognized in the

literature or by policy-makers’.

Although it takes some time before innovation policies and capital investment produce

relevant impact on economic growth in Africa, training, skill acquisition, knowledge

sharing, ease of access to capital, infrastructure development particularly in

telecommunication, and others leading to patent increase, all these factors favor

overcoming this challenge (Ojeaga, 2015).

The link between innovative entrepreneurship and access to education, and expenditure

on training was also confirmed by Robson et al (2009). Surprisingly, this research reveals

that older ventures are more innovative than younger ventures and better-established

markets are also more likely to foster innovation than new markets, stressing the

importance of institutional variables for opportunity-driven entrepreneurship.

Schillo et al (2016) also confirms the importance of institutional variables to

entrepreneurship. Among the four dimensions considered, regulation weights less than

normative, cognitive, and conducive dimensions.

Other interesting economic research (Islam, 2015) found out that entrepreneurial activity

and government size are negatively correlated, which seems to be an interesting proxy

about the way many African governments perceive entrepreneurship.

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Juma et al (2017) summarized the role of government (and public agencies) on

entrepreneurship: to facilitate (or block) entrepreneurial development by means of legal

infrastructure, human capital development, and providing funding facilities.

Difficult access to capital, inconsistent governmental regulation, and unavailability of

business locations are referred by Kiss et al (2012) as issues where government could

contribute positively in countries such as Kenya or Ghana. In low developed countries

with significant institutional deficiencies, entrepreneurs don’t count on government to

overcome venture obstacles.

When studying public governance and economic-related effects, Asongu & Nwachukwu

(2016) highlight three broad concepts:

(i) political (voice and accountability, and political stability /no violence),

(ii) economic (government effectiveness and regulation quality), and

(iii) institutional (corruption-control and rule of law).

The conceptual model of fostering serial entrepreneurial development of Amankwah-

Amoah (2018) place government as an exogenous factor, impacting at two levels:

(i) government policy (regulatory constraints); and

(ii) governmental barriers.

Taking the case-study of Ghana, the author mentions that the 30-year period following

the independence attained in 1957 was characterized by active policies to suppress

entrepreneurship because entrepreneurs were often seen as ‘potential political threats’.

Therefore, a foreign investment policy of Western multinationals was fostered. After that,

there was a shift towards a friendly regulatory environment for small businesses and

indigenous entrepreneurs but this was not exactly backed by appropriate governmental

support, financial resources, and real favorable regulatory conditions. This investigation

reports little public support to develop managerial capabilities and entrepreneurial skills

until early this century. As a result, confidence was not built by local firms and capabilities

to attract investor attention were not developed. Institutions treat entrepreneurial

ventures with the suspicion of having ‘foreign owners’, and entrepreneurs of being

‘corrupt’, ‘fraudsters’ and ‘cheaters’. Public sector bureaucracy is an additional issue.

Combined, these factors decrease the odds of reaching a positive entrepreneurial activity.

It is suggested that government designs policies to destigmatize entrepreneurial failure

among indigenous business owners and promote rebounds. Corroboration of public

investments in ‘human capital development’, ‘good governance’, and ‘infrastructural

development for technology and innovation’ is also provided.

It is important to accentuate that foreign investment will not produce the desired

outcome in Africa if it does not increase indigenous entrepreneurship (Mota & Moreira,

2017). Hence the importance to combine policies to both attract external and internal

entrepreneurs and business people.

McDade & Spring (2005) provide additional evidence on the distress of African

governments about the development of African ventures, limiting their possibilities of

growth. ‘Government leaders were suspicious that a strong private sector comprised of

their own citizens might threaten their own powers and privileges’. Consequently, after

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all these years, Africans still own less than one third of large industrial companies in the

continent. The new generation of African entrepreneurs demand ‘business-friendly laws

and regulations, government policies, and programs’, look for dialoguing with

policymakers but reject ‘government patronage’.

Still working upon Ghana’s data, Hilson et al (2017), in the framework of artisanal and

small-scale mining entrepreneurship, identified three key areas of public policy concern:

(i) licensing;

(ii) policy apparatus; and

(iii) funding.

On the same stream of thought, Amankwah-Amoah et al (2018a) posit the critical

importance of government for purposes of technology adoption in Africa through

‘promoting national identification’, ‘societal involvement’, and ‘improving educational

infrastructures’. Policy lacuna has been identified as the region’s critical gap in supporting

technology development. Choices must be made about the trajectories of innovation to

be pursued supported by state-driven initiatives. On the other hand, Amankwah-Amoah

et al (2018b) highlight some institutional constraints to technology-driven

entrepreneurship. Although democracy became more widespread in Africa recently,

severe government intervention is banal with excessive public employment and socialism

legacy in many countries. This led to go backwards in terms of entrepreneurial orientation

when compared to late colonial days and even before that. Classic over-bureaucracy and

‘red tape’ problems are remembered. Lack or even absence of intellectual property is

another weakness of most African entrepreneurs. The example of renewable energy

development is provided as an opportunity to entrepreneurial development in Africa given

massive infrastructural deficiencies and current monopoly inefficiencies.

Institutions have a significant impact on firm behavior and consequent competitiveness.

Barasa et al (2017) mention the role on environmental uncertainty and transaction costs

but also on the way businesses coordinate with each other. Another significant hint of

this research is the description of institutional quality, which includes:

(i) the process of governmental appointment, controlling, and change;

(ii) the ability to generate and carry-on strong policies; and

(iii) the way they relate with citizens and firms. When compared to other regions

of the world, Sub-Saharan Africa performs worse in the enforcement of the

rule of law, regulatory quality, level of corruption, and government

effectiveness. Good institutional functioning is mandatory for

entrepreneurship and innovation.

Another stream of thought, developed by Brixiova (2010) and Brixiová et al (2015) and

reflecting the work of the African Development Bank, stress the importance of clearing

the way for firm creation, decreasing taxes and cutting incorporation costs. Based on the

evidence that these countries have significant budgetary limitations, policy selectivity

and sequencing is of utmost importance. Subsidies to start up entrepreneurial ventures,

and support to entrepreneurship training programs are identified as important policies to

stimulate entrepreneurship.

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In what matters innovation, for example, Cunningham (2015) identified that one of the

major shortcomings of African countries is the information transmission between those

who adopt policies, typically top government officers, and those who must implement

those, mainly public servants. Public sector support is reported to be weak based on

individual judgement that those entrepreneurs potentially benefiting from governmental

support are privileged when compared to the general population because they were

eligible for support based on a superior skill-set, including previous access to education.

When it comes to assess the way businesses can be informed about their regulatory

environment, Geginate & Saltane (2016) report that in Africa this is very opaque. In the

Sub-Saharan region, only 4 out of 46 countries provide decent and stable information

about fee schedules in the following four categories:

(i) business incorporation;

(ii) building permits;

(iii) electricity connection; and

(iv) property registration.

One of the reasons for this institutional weakness in Africa relates to one specific

particularity of the historical legacy: before colonialism, there was up to 10,000 different

states and autonomous groups in Africa generating cultural distance, community

dispersion, and lack of common purpose. On the other hand, recent international

integration of many of these states led them to develop budgetary and fiscal controlling

systems in line with every international compliance requirements (George et al, 2016).

Some good examples of positive governmental impact on African entrepreneurial

development are also reported in the literature. M-Pesa, a case of ‘ex ante investment

with ex post justification’, available in several countries, is a paradigmatic example of

good institutional entrepreneurship (Kshetri, 2016).

1.2. Politics and policymaking in Mozambique

Mozambique is one of the least developed countries in the world (LDCs) and ranks very

poorly in the main international indicators of development, like the Human Development

Index, and in every investment climate /doing business reports.

‘This is related to poor access to finance, perceived prevalence of corruption, inefficient

government bureaucracy, inadequate infrastructures, and the education level of the

workforce’ according to Libombo & Dinis (2015). Like in many African countries,

governmental action on entrepreneurship has been oriented to reduce economic

exclusion rather than to capability building. Probably because of that, entrepreneurs

remain a negatively-perceived professional group in terms of social status.

In such environments, entrepreneurial ventures ‘tend to respond to increased

bureaucracy by fortifying their political engagement with bureaucrats and by

accentuating their political influence over bureaucracy-related policy making’ (Luo &

Junkunc, 2008).

In terms of political regime, Mozambique is, in formal terms, a democracy. It has been

classified as an ‘electoral autocracy’ by Lührmann et al (2018) ever since the end of the

civil war in late 1992. The ruling party since 1975, FRELIMO, is then ‘the party’.

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In what matters entrepreneurship, government has been increasing references to the

importance of that variable to policymaking and to the broad economic agenda. Some of

the current government measures that aimed at impacting entrepreneurial potential are:

The 2

government’s top priority, according to the 2015-2019 five-year plan, is ‘to

develop human and social capital’. Within that priority, the strategic goal #1 is ‘to

promote an inclusive educational system, effective and efficient, which guarantees the

acquisition of required capabilities in terms of abilities, management and attitudes that

answer the needs of human development’. Within that strategic goal, the priority action

l) is ‘to establish programs and synergies with higher, technical, professional, research,

and technological education institutions that contribute to stimulate innovation and

entrepreneurship’.

The 3

government’s top priority, according to the same 2015-2019 five-year plan is ‘to

promote job creation and increase productivity and competitiveness’. Within that priority,

the strategic goal #1 is ‘to increase production and productivity in all sectors of economic

activity, especially in agriculture’. Within that strategic goal, the priority action i) is ‘to

consolidate and expand poles of research and dissemination of technologies and

innovation for communities, and the priority action n) is ‘to promote funding for

innovation and research projects addressing socio-economic development challenges’.

2. Empirical study

2.1. Data samples and research methods

The goal of this study is to investigate the impact of government on entrepreneurship in

Mozambique. Using the perspective of five different actors, selected according to their

theoretical relevance to the subject:

(i) governmental policy-maker – 1 individual;

(ii) public servant policy-implementer – 1 individual;

(iii) funding provider – 1 individual;

(iv) expert – 1 individual;

(v) entrepreneur – 6 individuals; a field study in the country was designed for this

purpose alone.

The research is of qualitative nature. This sample has no statistical relevance on the

population and no inferential conclusions are to be taken.

Actors from categories (i), (ii), (iii) and (iv) are from Maputo-City province, three men,

one woman. Actors from category (v) are from the following provinces: Maputo-City,

Maputo-Province, Sofala, Tete, Niassa, and Nampula, one per location, four men, two

women.

Interviewees were identified through double-checked personal referral and were duly

briefed about the aims, scope, and process of the investigation. They were initially

contacted by e-mail and after confirming availability for the research they were re-

contacted, this time through mobile phone call. Further contacts were established

through WhatsApp or Skype messaging facilities. Anonymity was demanded by all

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participants and was guaranteed through the form of a print-out signed non-disclosure

agreement entitled ‘Statement of Ethical Conduct Under Commitment of Honor’.

All interviews were face-to-face conducted in Portuguese language and were audio-

recorded in the interviewer’s smart phone device. They took place in the capital town of

Maputo, between the 17

and the 23

of May, 2018, at the preferred location of each

interviewee, either the interviewee professional or business office or the interviewer hotel

room.

An open-question approach was employed although a basic script of 12 topics was used

to conduct the discussion. Accuracy and memory-related notes were taken from each

interview. The longest interview took 03h17m and the shortest 00h48m. The average

interviewing time was 02h04m. it was agreed that, if in doubt, interviewees would be

later re-contacted for punctual clarifications.

Data was then treated using interview content analysis. Each interview was subject to

repeated hearings during the 24

of May, 2018, the first day after concluding the data

collection, to make sure the right meaning of each discussion was captured and key

sections were subject to written transcription. Two interviewees were re-contacted on

the 25

of May, 2018 through FaceTime live call, for miscellaneous clarification.

2.2. Data exploration and findings

All interviews observed the following chaining: first topic discussed was the policymaking

process itself, and how it takes place in the country; second, the discussion about

institutional constraints in the process of designing policies, such as bureaucracy, and

ease to capital access; third topic, the type of judgment about and perceived threats

arising from the entrepreneurs.

(i) Interview with the governmental policy-maker – 1 individual

The person in question had held a top position in the government of Mozambique in the

past.

Policymaking was described as a sense-making exercise subject to somebody’s initiative.

There are different agendas guiding this process, not necessarily contradictory between

them. In most subjects, different bodies have a convergent opinion and the discussion is

more about who is the process owner rather than who is the idea owner.

The only exception are initiatives channeled through international institutions or the

‘international community’. In this case, an official position or orientation needs first to be

issued by the President with formal support from the party.

Entrepreneurship or entrepreneurial development is one of the topics that has been

subject to constant recommendations from international institutions such as the World

Bank and the African Development Bank.

The phenomenon seems not to be seen as a critical tool to foster development. The

problem is that most politicians clearly separate ‘entrepreneur’ from ‘businessman’, the

former being the undifferentiated ‘poor citizen’ and the second being ‘the middle to upper

class educated person’ with real possibilities to thrive his way up to success. Many if not

most of these individuals have low to middle (local) political influence.

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About bureaucracy and the general doing business concerns, there is a strong influence

of the party to not dismantle the administrative structure of corporate-related issues.

When asked about the reasons behind that, our interviewee replied that ‘given the public

wages range, one may speculate that many low-level public-servants make a living out

of bureaucracy’. The same does not apply to official fee schedules. ‘In Mozambique, you

may lose your job if you cheat on that. Everybody knows the fees and tariffs for every

public service’.

Access to capital is a major problem to entrepreneurship in the country. Interest rates

have been too high for too long but the Central Bank is doing a good job about it. Financial

system is efficient and credible.

Are entrepreneurs perceived as a threat to political power? ‘No, but nobody is interested

in making your life easier in this country. If you succeed, you will be controlled and you

will share your gains…’

(ii) Interview with the public servant policy-implementer – 1 individual

This interviewee is a board member or equivalent in a public institution with direct

responsibilities on small businesses / entrepreneurship.

The process of policy-implementation was reviewed. It was mentioned that in most cases

there is no formal transmission of information or goals. Information is received through

published legislation. If significant inquires arise from below hierarchical people, formal

explanations are sent to the relevant minister’s cabinet. If misinterpretations occur,

usually it is because of ignorance or inability. There is no tradition or room for

disobedience or boycott. Even less for sabotage. ‘In some public departments of this

country one can sometimes observe passivity or indifference. Have you heard the saying?

The State pretends to pay us wages and we pretend to work hard…’

Entrepreneurship is a fashion concept, a buzzword. Nobody really believes in it but

everybody keeps on mentioning its virtues. Government is willing to display some

measures to animate the poor. Many are just looking for opening their ‘barraquinha’ (a

very small shop) and get rid of a very bad payed job. But with no significant expectations

or ambition. Why is that? Because people are conscious of their ‘despreparo’ (lack of

skills), nothing else.

About bureaucracy, the idea is that there is nothing anybody can do about it. At the same

time, for most people, it is not a real barrier. It is just a time-consuming challenge, some

kind of natural selection test. The exception? Foreigners. In that case, bureaucracy could

be used to discourage some unwanted strangers to make money in Mozambique or to

keep them in an illegal / informal situation. In extreme cases, filed applications simply

disappear, as many times as they are done, and there is never closure for certain

demands.

As for the fee schedules, if they are not clear is because they were not defined and/or

approved. The ordinary public servant would not play games with this type of thing. It is

just too dangerous and people have already lost their jobs because of that.

In terms of funding facilities, they are very expensive and difficult to access given the

requirements and the low credibility of most companies’ accounts. Government could do

more about it by reducing interest rates to entrepreneurial programs.

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Entrepreneurship is not something politicians want to avoid. It is simply something that

is deemed to be neutral to their agendas. Therefore, they do not really commit to that,

unless some type of real interest is perceived.

(iii) Interview with the funding provider – 1 individual

The person interviewed in this group was a senior executive of a leading financial

institution responsible for funding decisions to entrepreneurial ventures.

The discussion begun with the way policymaking occurs in the country, especially in what

relates to entrepreneurship. From this person’s perspective, policymaking in Mozambique

‘is no better or worse than in any other African country I have worked before’. From a

pure formal perspective, the bill-passing process seems to be comparable to European

countries’. It is difficult to understand though how some issues reach the top of the

political agenda and others do not. International institutions play a significant role in this

country, especially in subjects like poverty alleviation, HIV combat, etc. Entrepreneurship

is identified as part of fighting poverty targets.

Public servants are very low educated and skilled. They do not seem to be capable of

simply understanding the laws and regulations. Consequently, they are basically unable

to put things in motion. In most cases, programs will only go live after the Minister

himself/herself mediatizes it or engages into in loco visitation.

Bureaucracy is about defending the ‘pequenos poderes’ (power of the small). Eventually,

there is always a way of resolving these constraints. For example, for financial institutions

bureaucracy is ‘a necessary evil’ because information integrity and paper records are

simply not reliable in this country.

Governments in Africa do not like entrepreneurship no more than any other thing that

they do not fully control. Opportunity-driven entrepreneurship is nearly inexistent in

Mozambique because there is no innovation /knowledge base in the country. Even

incubation has no real meaning. It is a shame the absence of real science and technology

programs from either international or national initiative. The last domestic call in this

field was actually to finance public universities, not to foster innovation…

About the financing conditions to entrepreneurship, they are very challenging and most

entrepreneurs can not grab any relevant chunk of capital. Most companies have no

controlling systems in place and their accounts are ‘a complete fiction’. The inexistence

of venture capital funds reveal a void of investment opportunities.

Finally, fee schedules is a non-issue.

(iv) Interview with the expert – 1 individual

The expert identified is a very experienced and highly educated individual who works

both as a business and government consultant and as a private university lecturer.

Policymaking is a complicated process. It deals with far too many people: the party, the

council of ministers, different governmental cabinets, the president, tons of consultants

and advisors, parliamentary reps, just to mention the most relevant. Bottom-line? It is

not an effective process and important decisions are taken last minute usually under

significant international pressure.

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The chain of command works also very poorly. First, because ministers themselves do

not always know exactly the details about ‘their’ bills and, second, because many of the

public servants reporting to them, highly ranked, are insufficiently skilled and educated

to implement tough programs. Additionally, many of them are not fully empowered vis-

à-vis their subordinates who were appointed by a higher officer.

Bureaucracy is impossible to detonate in this country. For many people, their salary is a

tiny percentage of what they make with bureaucracy-related bribery. Some of them do

not actually do any of the tasks outlined in their job description. They use it as a way of

making illegal money.

Government has no real strategy for entrepreneurship. It is not such a relevant matter.

Not even incubation, one of the easiest things to do, has expression. Maybe the moment

some real entrepreneurial ventures start to succeed, not just the ‘barraquinhas’,

government will start considering entrepreneurship as a real thing. Another important

thought on this topic is the role played by the party’s youth. They disregard

entrepreneurship and look only for political opportunities. If only they would change their

mindset towards business venturing…

Access to capital is a tremendous concern. Ventures are too small and have no bargaining

power over banks. Business angels are not significant because of trust issues. Microcredit

works well for micro-entrepreneurs.

On the fee schedules, apart from very limited exceptions, there are no reasons for

concern. Nevertheless, in local /regional public departments one can expect to be played

on that issue. On the other hand, public services with significant money transaction have

been subject to innovative measures: fee bank-deposit prior to the conclusion of the

transaction, and, more recently, the use of automatic paying machines.

(v) Interviews with the entrepreneurs – six individuals

As mentioned earlier, actors from this category are from the following provinces: Maputo-

City, Maputo-Province, Sofala, Tete, Niassa, and Nampula, one per location, four men,

two women, medium qualified, operating in the following economic activities: agriculture,

food trading, hospitality, restauration, business services, and bakery. The goal was

obviously to have a national representation of entrepreneurial experiences to assess also

context sensitivity.

About policymaking, none of the entrepreneurs expressed strong feelings on that. The

two from Maputo-City and Maputo-Province seemed to follow politics closer than the

others. The four entrepreneurs from central and northern regions mentioned that

policymaking had no significant relevance for their business activities although they all

acknowledge that government is a key actor for the economic development of the

country.

About the public agencies in charge of supporting entrepreneurship, all six entrepreneurs

had no hesitation in classifying them as ‘nearly useless’ or simply ‘bureaucratic desks’.

Because they do not identify a clear entrepreneurial policy, they struggle to evaluate its

direction. None of them had done any research about any existing program. The word-

of-mouth seems to be the most effective tool to make awareness of public support. Public

servants working in those agencies are also seen as ‘functionaries’ not adding any specific

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value. One quoted example was the application to a public incubator in the region of

Maputo. The application could not be completed due to missing documents. But no follow-

up or any kind of help were made available. For the four entrepreneurs in the Center and

North, no public incubation facilities were available at the start up stage.

Bureaucracy is the key issue for all six entrepreneurs, especially for the four in central

and norther side of the country. It starts with the incorporation and goes on and on with

every single administrative interaction. ‘It is slow and expensive and adds no value.

Servants are always fishing for bribery and even though things do not get done in due

time’.

Capital limitations are a concern to all six entrepreneurs. Interest rates make money

inaccessible for borrowing. Microcredit is the only viable option but amounts are too small

to develop the business in a reasonable time-frame. Private equity, venture capital, and

business angels seem to be strange concepts to these interviewees.

Government does not fear entrepreneurship. It simply does not care about it.

Entrepreneurship in Mozambique means informal economy, ‘barraquinhas’, and poverty

alleviation. Anything other than that is pure business, not entrepreneurship.

Conclusion

This research supports the basic theoretical assumptions outlined in the literature review.

For example, Juma et al (2017) hypothesis that the positive role of government on

entrepreneurship takes place by facilitating legal infrastructure and providing funding

facilities was mentioned by all interviewees.

The ideas behind Shane (2009) and Mthanti & Ojah (2017) about the importance of

entrepreneurial meaningfulness and entrepreneurial orientation are also confirmed by

these interviews, both explicitly and implicitly.

Naudé (2013) conclusions about policy focusing on pulling entrepreneurial ability instead

of entrepreneurial activity receive also confirmation from this investigation.

Schillo et al (2016) importance of institutional variables to entrepreneurship is referred

by all respondents but, curiously, by absence of clear policy, entrepreneurs cannot see

it.

Kiss et al (2012) references on difficult access to capital, inconsistent governmental

regulation, and unavailability of business locations are also explicitly referred by all

interviewees.

Amankwah-Amoah (2018) evidence that entrepreneurs are ‘potential political threats’ in

Ghana is not confirmed in Mozambique. One may speculate that the low level of

entrepreneurial sophistication may account for that perception.

Mota & Moreira (2017) proposition about the importance of governments attracting both

external and internal entrepreneurs receives negative support from this study. In

Mozambique, according to one of the interviews, foreigners are not especially welcomed.

Of course, this may be an issue for entrepreneurial development but more evidence is

required to support thorough conclusions.

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e-ISSN: 1647-7251

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The role of politics and institutional environment on entrepreneurship: empirical evidence from Mozambique

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McDade & Spring (2005) conclusions about the new generation of African entrepreneurs

demanding ‘business-friendly laws and regulations, government policies, and programs’,

and dialoguing governments is not supported either in this study. Again, the lack of a

real opportunity-driven entrepreneurial base may explain this type of response.

Finally, we must stress the limited character of this research based on ten interviews.

Future directions for this research include enlarging the scope of the literature review

and increasing the number of interviewees and their territorial representation, including

rural versus urban and male versus female entrepreneurship.

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