Working Paper
High-Growth Entrepreneurial Firms in Africa

A Quantile Regression Approach

This paper studies the growth performance of a large set of entrepreneurial firms in ten manufacturing sectors of eleven Sub-Saharan African countries. The focus of the paper is on identifying those entrepreneurs’ attributes and firm characteristics that tend to generate a significant number of high-growth firms in these countries. To this end, we use a quantile regression, which provides a more complete estimation of the growth distribution of firms conditional on different attributes. The results indicate that especially firms that engage in product innovation, have their own transport means and are connected to the internet through their own website are characterized by higher growth rates and display a more skewed distribution to the right, hosting a higher number of high-growth firms. The effect of the last two variables, which relate to distance-bridging modes of infrastructure, points to the self-reinforcing growth effects they generate in creating wider input and output markets. Education raises growth opportunities by affecting the lower quantiles, but does not appear to influence the upper quantiles. The estimated conditional growth distributions for the technology intensive machinery and electronics sectors show more extreme tails and a lower mean in comparison to the traditional industries, suggesting the more risky nature of doing business in these industries.