Imagine being a runner who always raced alone. On the plus side, there would never be disputes about the winner. You would win gold, silver and bronze and always feel good about yourself. On the downside, with no-one to race against, you wouldn’t have much incentive to improve your performance. You could turn up late, walk when you felt tired, and still be sure of never being beaten.
But before very long, the spectators would find the experience of watching you unrewarding. They’d trail away, along with the merchandising and the ice cream and hot dog vendors. There wouldn’t be much likelihood that you’d inspire a future generation to follow in your footsteps. There may even come a point where you would miss the thrill of the chase and stop bothering to turn up.
There’s a purpose to competition. It makes you better at what you do. It builds audiences, hones skills, develops markets. It demands initiative. It inspires innovation.
In business, competition is generally regarded as good for the consumer and the economy as a whole. The business owners who query how market competition benefits their firms are, I suspect the last dinosaurs of the private sector.
Most businesses have largely woken up to the advantages; and clustering, or to be technical – agglomeration economies, where firms from the same industry gather together in close proximity, would seem to exemplify this.
When Insight canvassed opinions about clusters in Freetown, we came up with the following: Malama Thomas St – where fabric sellers congregate, Goderich St for auto spares, Ecowas St for building materials, supermarkets on Wilkinson Rd and Siaka Stevens St for electrical goods. Informal industries form clusters too – the photographers just round the corner from Access Bank, and of course the dollar boys.
A similar configuration can be seen in London’s Edgware Rd which is a hub for Lebanese Restaurants, Shepherd Market for jewellers, Brick Lane for Indian Food, New Convent Garden for flowers. In the States where bigger is better – Las Vegas does Casinos, Hollywood – films and Silicon Valley – tech.
Clustering withstands even the rise and rise of ecommerce. Business guru and cluster champion, Michael Porter wrote in the Harvard Business Review: “Clusters are a striking feature of virtually every national, regional, state, and even metropolitan economy, especially in more economically advanced nations …. Clusters are not unique, however; they are highly typical—and therein lies a paradox: the enduring competitive advantages in a global economy lie increasingly in local things—knowledge, relationships, motivation—that distant rivals cannot match.”
There are downsides – Lunsar after London Mining, Detroit after the automotive industry.
Admittedly too, Freetown’s clusters lack lustre. As one observer commented: “A dozen women next to each other selling the same types of fruits and vegetables on the same type of trays or tables, with no competitive or comparative advantage between them is, to my mind, not particularly good business strategy.”
Nevertheless, when they work effectively, they have considerable value. They have the potential to enhance competitiveness, create sustainable employment, contribute to skills development and stimulate innovation.
Businesses can share resources, reduce business transaction costs, increase productivity, exploit economies of scale, build professional networks and facilitate the sharing of information.
For the consumer they can deliver improved prices, better customer service, ease of comparison, and as one person noted: “Customers know where to shop making it much easier for vendors to build lasting relationships.”
So what could this mean to Sierra Leone, our cities; and Freetown, our economic centre, in particular?
Firstly, we should recognise the value of clustering – to business development, to skills and employment, to local economies and to wider economic development and incorporate into long term urban planning.
The location or even the type of Freetown’s clusters may or may no longer be appropriate, but that should be an informed decision. Instead, as one person pointed out, they are threatened by unrestricted street trading which prevents customer access and parking, for example the building materials stores on Ecowas Street.
Special economic zones (SEZ) may be the answer but Sierra Leone’s one and only is to all intents and purposes – dormant, and the ‘Special Economic Zone Policy in Sierra Leone’ which was doubtless written by an expensive consultant, is gathering dust on a shelf in someone’s office.
Porter’s reference to the enduring competitive advantage of local ‘knowledge, relationships, motivation’ suggests we should attach more value to our nationally generated intellectual capital than we presently do. We don’t know enough about our local ‘knowledge, relationships and motivation’ and research on how/if/when clusters work in Sierra Leone would be helpful.
We’re not the only country missing a trick in this regard. A Brookings Institute piece which looks at industrial clusters in developing countries states: “Despite the importance of agglomeration for industrial development there is little evidence of the extent to which agglomerative forces are at work in developing country contexts.”
Freetown’s business clusters are in many cases outdated. They are imperfectly formed, but they remain an important economic feature of our urban economy; an indication that it probably once functioned better than it does now; and proof that collaborative competition can be beneficial to individual businesses as well as the wider economy. As such they merit a closer look.