The Role of Business Networks in Market Development in Sub‐Saharan Africa

Forthcoming in "Community and Market in Economic Development", edited by Masahiko Aoki and Yujiro Hayami. role of business networks in market development. The focus is principally on Sub-Saharan Africa; other regions of the world are discussed in other contributions to this volume. Business networks in Africa are shown to play a variety of functions and to take many shapes. We argue that pre-existing network affiliation such as lineage or co-residence seldom form the basis for market exchange, but can serve for non-market exchange. Sharing a common religion or ethnicity often facilitates trust building and exchange but it cannot be considered as entirely exogenous to the market formation process. We discuss the conditions under which 'clubs' with restricted entry can facilitate or restrict market expansion. We conclude with a discussion of alternative institutions that perform functions similar to those of business networks and we identify conditions under which they can substitute to networks.

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