A Labor of Love, Necessity, or Greed? The Role of Institutional Advantages in the Misallocation of Entrepreneurial Talent

Each year in Africa, 12 million candidates compete for just 4 million formal jobs (African Development Bank, n.d.). Yet, in Gabon, where 70% of formal employment is concentrated in the public sector (World Bank, 2020), firm creation has surged, with over 30,000 businesses formalizing since 2020 (Guichet Numérique de l’Investissement, 2024). Despite this boom, youth unemployment remains at 36% (World Bank, 2023), raising questions about the lack of employment opportunities generated by these firms. Interviews from 2023-2024 suggest that institutional advantages in government contracts and credit access may be crowding out high-impact entrepreneurs who could otherwise drive job creation.

This research informs a future RCT on soft skills training for high-impact entrepreneurs facing institutional barriers. While soft skills training can improve firm outcomes, its role in addressing institutional distortions remains understudied. Researchers will collect data from Gabon’s digital formalization platform (GNI), firm surveys, and public tenders to classify entrepreneurs as opportunistic (rent-seeking via networks and credit access), aspiring (seeking growth but facing barriers), or reluctant (pursuing necessity self-employment due to limited formal jobs).

Using these classifications, we will assess whether opportunistic entrepreneurs hold a comparative advantage in key soft skills pre-identified by the partner—strategic networking, negotiation, self-efficacy, and leadership—that aspiring entrepreneurs lack, and whether targeted training can bridge gaps in skills and mitigate institutional distortions.

This study, conducted in collaboration with ClikAfrik (GNI manager) and SING Gabon (a soft skills training hub for entrepreneurs), will start in Summer 2025, with plans for a full RCT in Summer 2026.