Entrepreneurial illiquidity preference and the extended family

Abstract

It is postulated that the claims of the extended family on the African entrepreneur take the form of a tax on liquidity. Business practices puzzling to trained observers are explained in terms of the entrepreneur's need to ensure that his liquidity varies within narrow limits. It is argued that the African entrepreneur is a "maximizer" after all--subject to social constraints. Small business advisory agencies are urged to re-examine their standard remedies for frequently recurring problems of the African entrepreneur to ensure that they take into account an understandable reluctance on his part to permit his liquidity to rise and fall to whatever levels may be required for unconstrained profit maximization.