ENTREPRENEURSHIP ASSIGNMENT BCOM 401

EGERTON UNIVERSITY NAKURU TOWN CAMPUS FACULTY OF COMMERCE DEPARTMENT OF ACCOUNTING, FINANCE & MANAGEMENT SCIENCE

BCOM 401 ENTREPRENEURSHIP ASSIGNMENT TOPIC: HISTORICAL EVOLUTION OF ENTREPRENEURSHIP IN KENYA NAME OCHIENG JARED OPONDO REG. NUMBER C12/60275/09 SIGNATURE

PRESENTED TO: PRESENTED ON:

MR AYUO AMOS

In this research work, we have first discussed the general evolution of entrepreneurship, which is precursor to the evolution of entrepreneurship in Kenya, after which we have looked at the development of entrepreneurship concept in Kenya THE GENERAL DEVELOPMENT OF ENTREPRENEURHIP Entrepreneur comes from the French word entrprendre, which means an undertaker, a gobetween, and between-taker. EARLIEST PERIOD One of the undertakers during this time was Marco Polo, who was the first European to establish trade routes to the Middle East. Marco polo would sign a contract with a capitalist to sell his goods. Marco polo bore all the physical and emotional risks, while the venture capitalist was a passive risk taker. After the sale of the goods the proceeds were shared between Marco Polo and the venture capitalist in a ratio of 25% and 75% respectively.

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MIDDLE AGES In the Middle Ages, the term entrepreneur was used to describe both an organizer of musical performances and a manager of large building projects. In such projects, this person did not take any risks, but merely managed the project using the resources provided. A typical entrepreneur in the Middle Ages was the cleric the person in charge of great architectural works, such as castles and fortifications, public buildings, abbeys, and cathedrals. 17TH CENTURY The connection of risk with entrepreneurship developed in the 17th century where Richard Cantillon, a well-known English economist at the beginning of the 17th century, developed one of the first entrepreneur definition. He viewed the entrepreneur as a risk taker because merchants, farmers, craftsmen, and other sole proprietors buy at a certain price and sell at an uncertain price, therefore operating at a risk. 18TH CENTURY Finally, in the 18th century, the person with capital was differentiated from the one who needed capital. In other words, the entrepreneur was distinguished from the capital provider (the present-day venture capitalist). The venture capitalist provided the capital, which was used by the entrepreneur. 19TH AND 20TH CENTURY In the late 19th and early 20th centuries, entrepreneurs were viewed from an economic perspective. the entrepreneur organizes and manages an enterprise for personal gain, acquiring all the factors of production, i.e. capital, land and labour, assuming all the risks attaching thereto, in pursuit of profit. In the middle of the 20th century, the notion of an entrepreneur as an innovator was established: The function of the entrepreneurs is to recreate or revolutionize the pattern of production by introducing an invention or, more generally, by using new technological possibilities for producing a new commodity or producing an old one in a new way, EVOLUTION OF ENTREPRENEURSHIP IN KENYA Entrepreneurship in Kenya began in the early period, dominated by the early traders participating in the long distance trade. Entrepreneurship got a further boost with the arrival of the Europeans and Asians. When the Europeans came they saw the need to construct a railway line to link up towns for business purpose and hence invited the Asians to facilitate the construction. Consequently, many towns came up along the Railway line, which saw the establishment of small enterprises by the Asians. Interest in the development of entrepreneurship in Kenya gained momentum as a possible remedy to the stagnation of economic development and escalating unemployment problem since the late 1960s and early 1970s. Although there were attempt by the government to

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develop entrepreneurship soon after independence, (the first National Development Plan), the main impetus came from International Labour Organisation (ILO) mission to Kenya in the early 1970s (Report on Employment mission to Kenya 1972). This report which centred on the potential of the informal sector, suggested that the bulk of Kenyas urban workers were self-employed in small enterprises. The mission therefore proposed that the development of this sector could promote employment, development and equity. Based on this report, Kenya Government responded with a sessional paper in1973 (Sessional Paper on Employment) which recognised the role of entrepreneurship in employment creation, not just in the informal sector, but also in the formal sector. Subsequent development Plans have devoted time to the development of strategies and plans to promote small-scale enterprises and entrepreneurs. This has seen the development of industrial estatesthe Industrial Estates Programme set up in 1967; establishment of development agents such as ICDC, KIE; and more recently, policy and institutional frameworks to promote entrepreneurship and small scale enterprises. All these measures were aimed at the promotion of indigenous Kenyan enterprises. The 1974-79 development Plan laid down proposals for implementation of Small Scale Industries Policy, mainly to review Central and Local Government regulations that were inimical to the small scale enterprises; provision of direct assistance to small businesses all over Kenya; and to establish an organisation that would give extension services to the small enterprises. The 1979-83 Development Plan built on this plan by creating and strengthening institution and schemes for assistance of the small enterprise sector. This saw the establishment of Credit Guarantee Schemes for loans given by Commercial banks to small scale enterprises; procedure to improve small scale training (the establishment of the Ministry of Technical Training and Applied Technology); and the overhaul of the education system based on the report of the presidential working Party on the second University in 1981, which culminated in the 8-4-4 system of education. The 1984-88 Development Plan envisaged a fully fledged Small Industries division in the Ministry of Commerce and Industry This Plan also saw the rural focus as the fulcrum development (District Focus for Rural Development StrategyDDC). This strategy had the effect of transferring a lot of activity into the rural areas as the DDC gave priority to small scale industries in district development plans. In addition, the report of the Presidential Working Party on Education and Manpower Training for the next decade and beyond (sp1/88) recommended the introduction of entrepreneurship education in all levels of training programmes to promote selfemployment in the small scale enterprise and Jua Kali sectors. To augment the 1984-88 Plan, the sessional Paper No. 1 of 1986 on Economic Management for Renewed Growth was developed as blueprint for renewal of economic growth. A wide range of policy statements were made, with the aim of revitalising the economy and creating

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employment by strengthening the small scale enterprise sector. To facilitate the formulation of strategies to achieve these aims, a task force was set up under the auspices of the GK, ILO, and UNDP (Centre Project) to assess the situation of the Small Scale Enterprise (SSE) sector and to develop strategy. This task force documented various findings and made proposal in their report, (A strategy for small Enterprise Development in Kenya up to the year 2000). Among the most prominent findings of this mission was that the growth of the SSE sector was hampered by lack of credit facilities and inhibiting environment, and thus needed a more enabling environment to make enterprises economically viable. Currently, the concept of social entrepreneurship has picked up in Kenya. This entails designing new technologies and adopting existing ones, to suit specific requirement of the poor people, to engage themselves in economic activities. The state of entrepreneurship in Kenya is characterised by, women coming out strongly to be entrepreneurs, youths venturing into entrepreneurship, a move that has been facilitated by the government through initiatives like the establishment of women and youth funds. Entrepreneurship is also characterised by globalisation, ecommerce, business processing outsourcing, trade fairs, all that have contributed to rapid expansion of entrepreneurship in Kenya. Bibliography 1. Introduction to Business A Kenyan Perspective by Francis N Kibera, University of Nairobi. 2. Entrepreneurship 5th edition by Robert D Hisrich, Michael Peters. 3. The fundamentals of entrepreneurship by Vladimir Pavlov, The Moscow Institute of Business Administration 4. Jennings Daniel F (1994). Multiple Perspectives of entrepreneurship