Value Creation Through Active Investment in the Small and Medium Sized Exterprise Segment in Sub-­Saharan Africa : Evidence from Case Study Research

Abstract

In Sub-Saharan Africa, the work of Impact Investors and Business Development Service Providers has been identified as a primary way of accelerating growth in the SME segment. It is believed that mentorship, governance and active ownership all contribute positively towards SME development and growth. This paper studies the effectiveness of Impact Investors and BDSP in this regard. The research question that will be explored is how value creation among SMEs is strengthened through active ownership by an Impact Investor or engagement with a BDSP. My hypothesis is that active ownership, or engagement with BDSP, is more effective than passive investment in value creation among SMEs. I began by using the case study method to observe the contribution of Impact Investors and BDSP on SME development. My focus here is the observation of current established theory in the real world with the hope that inspiration for new areas of research will be uncovered. I then provide a supporting quantitative analysis which reviews the impact of active investment in SMEs compared to passive investment. It is also my hope that these case studies prove helpful to the development of human capital in the region by enabling future business leaders and entrepreneurs to study management using the case method as is common within leading business schools around the world. This thesis dives deep into the operations of a SME in South Africa, documents their plans for success and records their progression towards those goals with the help of an Impact Investor and a BDSP. My hope is that these case studies will provide a valuable contribution to the small business segment throughout SSA and beyond by providing actionable case study examples of successful businesses.