Causes of State Failure in Sub-Saharan Africa

Causes of State Failure in Sub-Saharan Africa Abstract This project sets out to examine the causes of the failure of the state in sub-Saharan Africa. Since the introduction of democracy in the sub-continent in the early 1990’s, the process has been a slow and cumbersome, casting doubts on the possibility of instituting genuine democracy on the sub-continent. The political crisis gave room for autocrats who were the fomenters of the problem to eternalize themselves in power in the name of avoiding further conflicts or problems. They have advanced a whole range of different problems as the cause of this crisis where as the problem lies in the absence of a democratic culture or the proper understanding of it. In the words of the great Africanist, the late Professor Ake Claude, the sub-continents problems is but one of leadership crisis. As this dawns on us at a moment when democratic regimes are a necessity in the new global context, how do we solve the problems which have stalled the institution this much cherished democracy? The answer the thesis states lies in the institutionalization of democracy. Introduction The quest for good governments in Africa has been a high priority item on the agenda of African and world politicians for well over half a century. The African continent for several decades now has been replete with ills such as low living standards, a stagnant economy, and high rates of unemployment, poverty, low infrastructural development, a violent political environment, dictatorships, ethnic clashes and above all a general disregard of the fundamental rights of the people. It still grapples with these political uncertainties, economic adversities, and social inequalities today (Chazan, 1999). There is thus a need to device the best means possible by which the state can be organized and empowered so that it deals adequately with these problems. Democracy’s ability to organize society, ensuring the respect of the rights and liberties of the people, pressing for accountable leadership, ensuring effective participation, a transparent economy and a just and equitable social order, in essence ensuring the socio-economic and political prosperity of a nation, which in summary are Africa’s biggest problems, makes it the best possible solution to the problems Africa faces today. As a result, the quest for democracy in Africa has been seen as vital if Africa has to set up a harmonized community that will develop and catch up with the demands of the ever globalizing world. The story of instituting democracy in Sub-Saharan Africa has been a long drawn one, with many highs and lows; several events have made it seem very probable and promising, but also there have been on the other hand other very challenging events which have questioned the possibility of democracy’s survival. As a result, several debates have ensued amongst Africanist, who have focused on a large part on the prospects of democracy on the continent, some arguing that it is doomed to fail and other optimist who believe that a genuine democratic system can and will emerge in sub-Saharan Africa. Their focus therefore have been how democracy can be properly instituted, its challenges and how the inherent problems it faces can be adequately resolved so that Africa will benefit from good governance schemes. There have been several events starting with the legalization of political parties and the return to multiparty elections in the late 1980’s which suggested that democracy was well under way on the continent. But as it was being instituted it faced several challenges which resorted to disorderliness throwing back the move to democracy; new forms of electoral authoritarianism, return to military and in some extreme cases gruesome civil wars broke out on the sub-continent. This has left many critics of African democracy to question the possibility of instituting genuine democracy on the continent, despite it being the choice of the people. Apologist of African democracy have since argued that Africa’s political crisis were as a result of an imposition of a western culture or style of administration which is not compatible with the African society. They consider democracy alien and in violation to the African culture (Ake, 1991). This according to them has been the reason for the failure of democracy. They rather support the one party dictatorial style governance, which they claim is the best means by which the continent can unite to develop (Busia, 1961). Another school of thought which emerged after the transition period, the modernist, advanced reasons for the failure of democracy in Africa, blaming the superficial nature of the state, and its failure to penetrate the African society adequately, calling the state a weak leviathan (Chabal Daloz, 1999). This same school and notably Patrick Chabal note that Africa’s economic crisis does not favor the successful implementation of democracy on the continent. Democracy he argues is underpinned by capitalism, a uniquely dynamic and productive system, in its absence therefore there is doubt that democracy can be successfully instituted on the African sub-continent. This view has also supported the point that democracy is an imposition on Africa and thus will always fail the aspirations of those who seek to implement it on the continent. This thesis therefore sets out to answer some of this cynicism and provide a possible solution for the problems democracy in the African sub-continent faces. If anything democracy has not failed Africa, but Africa as shown by the poor actions of its leader, has failed to grasp the concept of democracy. It sets out trying to systematically bring out how through its political evolution, it is the failure to properly institute democracy during the second wave democratization process which has brought about the political crisis the sub-continent is facing. Secondly if neo-patrimonialism exists and survives today it is because leaders have twisted democratic tenets to suit their whims and caprices, thus legitimizing such authoritative regimes. The set backs it faced during the mid-1990 did not spell doom for democracy, but rather served as an eye opener for Africa. â€Å"The democratic struggle is a gradual process which will emerge from experience and improvisation as it continues to struggle† states professor Claude Ake, who believes that Africa’s experience will develop the best suited type of democracy that will solve its problems (Ake, 1993). Democracy can survive in Africa, but the players and fomenters must take several factors into consideration, like picking up more democratic ethics and tenets and developing a strong united civil society, showing more good will and respect towards their people and the state as opposed to the selfish and greedy attitude which has been noted to be the norm on the sub-continent. With time as adequate steps like institutionalization and consolidation are taken, democracy will be a success story in Africa. This view is also supported by Larry Diamond, who stated inter alia â€Å"†¦ if progress is to be made towards developing democratic governance, it is likely to be gradual messy, fitful and slow, with many imperfections along the way† (Diamond, 1989, p.24). Thus this piece looks at how these imperfections were created and how certain responses will set the sub-continent on track to democratic governance. This thesis starts off by looking at the development of democracy on the African sub-continent in the 1990’s. Chapter one will therefore start off looking at why the third wave started, how it happened and why it was believed to have been the new way for Africa. The case of post independent African politics was very elusive of the masses. The one party patrimonial state had proven to be disastrous, the military regimes which later emerged, preaching immediate growth and development also failed the aspirations of the people and so there was a general move by the people towards democracy. This was in addition to the external pressures that existed at the moment. Thus there was a general surge towards democratic elections in the sub continent, with several parties legalized and the political life of the sub-continent in different countries. Chapter two looks at the break down in the drive towards democracy. Why the democratic frenzy was short lived, only registering limited success across Sub-Saharan Africa. As the concepts of multiparty elections were applied across the sub continent, there were different outcomes with each case being very unique to the different nations. Generally democracy failed to take root. It was cosmetic and a virtual democracy as described by Richard Joseph. It will consider the reasons why this was the case. Given that almost all the countries in the sub-continent held elections of different kinds, did this imply they were all democracies? We will look at the new classifications of African regimes. Considering that they were all at this point considered transitionary. Chapter three starts off by considering the complex nature of democracy. It brings out a list of factors which qualify a state as a democracy or not. It then looks at the regimes on the sub-continent and categorizes them per the 2006 Freedom House Review. These are democracies (11), Hybrid regimes (23) and autocracies (14). Since our focus is on the failing state we shall look at the commonalities and differences between the hybrid and failed/unreformed regimes. In that light we shall bring out the common or popular concern for democracy in Africa which is the misconception democracy suffers and the need for institutionalization. Chapter four now looks at the problems African democracies have faced since inception. Considering the very broad nature and tone the thesis has taken this far, it will consider a case study on the Republic of Cameroon, a country in the Central African region of Africa, which has failed to properly institute democracy till date. It is considered an electoral autocracy and serves as a perfect example of how Africa, fails democracy. The problems this state faces are in effect what most of the states of the Sub-Saharan region face, certain outcomes may differ, but essentially the issues or problems are the same. This study will provide the perfect opportunity of putting into context all the issues that I have raised this far to buttress the point of the thesis, which is that it is the failure to fully understand and properly grasp the concept of democracy that has caused democracy to fail in this country and the sub-continent as a whole. These areas include the formation of political parties, to the electoral process, the narrow political field, constrained civil society, absence of civility, politicized violence and the international support for dictatorships. These points were adequately discussed by Professor Celestin Monga. Chapter five shall be the conclusion to this project in which we shall be looking at possible solutions to the problems raised above. It shall first suggest solutions to the problems duly raised and also consider effective institutionalization through the strengthening of the three tiers of government namely the executive, legislative and judiciary; so that there is a balance in power amongst these three. By applying these solutions in the Cameroonian context and eventually on the sub-continent, the African sub-continent will be brought closer to the mark of consolidated democracies. The Rebirth of Democracy (1990-1993) The period 1989-1993 was considered to be the break point for Africa. This is the period during which Africa witnessed a wave of regime changes. Hitherto to this period, single party, military regimes and presidents for life was the norm in most African states. Competitive politics was considered a luxury by most African leaders who stated that it was neither necessary nor affordable for Africans (Decalo, 1992). This belief was aptly described in the words of Sierra Leonean president at the time Siaka Stevens when he said of democracy and I quote ‘†¦it is a system of institutionalized tribal ethnic quiquennial warfare euphemistically known as elections which is an open invitation to anarchy and disunity’ (Decalo, 1992) a view which was endorsed by Tanzania’s Julius Nyerere who also stated that democracy was stronger with a one party state rule which unified the country. To back up this system of administration, it was claimed that Africa had its own unique history and tradition thus the introduction of democracy was a violation of the integrity of the African culture (Ake, 1991). The African traditional system in its own right, they further argued, was infused with democracy with standards of accountability considered to be stricter than the west, though invariably patrimonial, thus it possessed signs of a democracy-hence a democracy (Ake, 1991). A second argument put forward was the social composition of African states. Because of its plural nature, the introduction of liberal democracy could possibly inflame ethnic rivalries which will result in political disintegration. Democracy they argued was a distraction to what was important for society. It was a thing for elites and the educated masses and ended on paper, it did not provide or cater for the pressing needs of the rural masses. This one party protagonist’s concluded that a patrimonial system was going to unite and direct all positive energy towards economic development (Ake, 1991). Thus African style democracy as it came to be termed of one party politics was considered the best option for Africa given its complex social context, endorsed by most Western governments as shown by their cooperation with them. This ideology was even backed in cases by the World Bank as noted by their remark that â€Å"†¦with weak states, only a bureaucratic authoritarian regime could contain fissiparous tensions and lead to a free market economy†¦Ã¢â‚¬  (Decalo, 1992). Africans believed so much in this style of administration Samuel Decalo talks of Mugabe during a state visit to the United States of America in the 80’s, who recommended to the American congress, the one party state system as an option they should consider (Decalo, 1992). A point to note here is the hypocrisy of this political ideology. Despite preaching governments of national unity and socio-economic development, the opposite was being practiced and witnessed in most countries. The presidency and administration became the possession of whatever ethnic group held the presidency. Nepotism was rife and groups were rather occupied with gaining a greater share of the existing pie than working for equitable development (Decalo, 1992). This political practice as a result accentuated the tribal and ethnic divide which existed within the many African states and fuelled anti-government sentiments amongst the population as we shall see below. A change to this political scenario though requisite, was least expected to occur by scholars, in a continent which had shown signs of defiance to a more liberal democracy by sticking to its own developed and formulated ideology of ‘Afro-Marxism’ (Decalo, 1992). There were strong calls both from within and without for a change to the system that was failing to provide adequately for their needs. This saw mass demonstrations, rallies and civil disobedience all calling for the return of democracy and for regime change. This was spawned by the stifling political authoritarianism and economic decay, further triggered by the spectacle of the fall of titans in East Europe (Decalo, 1992). The one party state had yielded a form of presidential authoritarianism, through which the state economy was plundered, there was a disdain for civic and human rights, and little or no attention was paid to the plight of the rural population (Decalo, 1992). Economic projects were failing to materialize; there was the absence of infrastructural development needed for this growth and above all a high rate of unemployment. The military regimes which took over power in certain instances to sweep clean the state failed to return power back to civilian rule and fell into the same predicament by falling short of the efficiency mark. These regimes were thus fundamentally unaccountable, personalized and patrimonial (Decalo, 1992). There were the failures of these regimes that could be considered the primary cause of the call to democracy and multipartyism. The growing urbanization and education of Africans made sensitive to the hostile political and economic environment being created by their leaders, thus they desired liberty and the respect of their rights which had been usurped and abused by this dictatorial one party system. They wanted their grievances listened to and solved by a regime that had been removed from the people, blind and deaf to their problems. The only way to do this was by mass protest against such regimes and seeking to over throw them. Economic related reasons, mainly externally influenced, could be said to be the greatest factors which led to this drive in re-democratization. Africa relied for a large part on international aid and loans to fund most of its activities. The administrative sector was the biggest employer in most countries, thus the money aid they received was used almost entirely on salary payments and carry out government businesses, rather than invest in lucrative businesses which could eventually pay back. Civil servants in the higher echelon were corrupt and embezzled these state funds to fund their luxurious lives. The growth registered within the economy was good but this was not sustainable growth and did not guarantee a future for the economy. Most corporations were state owned and private businesses were not promoted or were largely absent. As a result of all these, donor countries through the IMF and World Bank suggested certain adjustments be made with the governance system if they were to continue offering this aid and loans. This came to be known as the Structural Adjustment Program (SAP) which called for African governments to privatize state owned corporations, cut down on its public sector and above all to democratize as conditions to receive aid. This provided a lee way for the dissenting voices of nationals who wanted change. They were joined by civil servants who suffered huge pay cuts and in extreme cases lost their jobs. This situation was further aggravated by the fall in commodity prices in the international markets meaning that African states were pretty much at the mercy of international donors, who wanted change with the regimes. Finally the demise of communism and the end of the Cold War also had an immense impact on the political life of African states. First of all it diverted the attention of investors to the newly liberalized and potential economies of Eastern Europe, thus reducing the amount of capital investments which flowed to the continent, affecting the African economy adversely. Secondly the West no longer supported the dictatorial regimes in Africa as it did during the Cold War days. They withdrew support from these regimes (example of Angola and Togo where they had supported antagonized sectarian groups) asking them to democratize as a condition for continuous aid and loans (Decalo, 1992). This was especially true of France who had since independence maintained a close link with Francophone African states and signed several military accords with African states offering them (military) support when they needed it; the case of Central Africa and the support they offered Idriss Deby against Bedel Bokassa 1990, one authoritarian regime for another. The Apartheid regime of South Africa also did not receive any more support from the West, who had pursued half hearted sanctions against this repressive regime. As soon as the Cold War came to an end, the Apartheid regime under pressure yielded and released Mandela, introducing reforms, forcing other African states to follow suit, who had used this regime to propagate a repressive rule against their citizens. They were thus forced to change. The first shots of democracy in Africa were noted in Benin, when in early 1990, students, civil servants and the whole community took to the streets denouncing the rule of then president, Mathieu Kerekou and calling for what they termed â€Å"a national sovereign conference of all active forces† (Richard Joseph, 1991). This sovereign national conference was to bring together representatives of the different sectors and works of life in a voice of national unity to address the problems of society. In the case of Benin, it resulted in the removal of President Mathieu Kerekou’s control of public policy and the establishment of a transitional government (Richard Joseph, 1991). The outcome of this was received with much delight in other African states and they later began calling for national conferences in their respective countries. This was the case in Togo, Zaire, Congo, Gabon and Cameroon. The out come was not necessarily the same as in the case of Benin, because not all the presidents yielded to such demands, they resisted these popular calls and tried making substantive concessions to the opposition (Richard Joseph, 1991). All in all it marked the beginning of change on the continent as a result of popular demand (democratic will, the voice of the people). All this pressure resulted in the democratization of Africa as noted by the re-legalization of political parties, restored freedoms of association, assembly and expression and also in the reform of constitutions which led to multiparty elections in most sub-Saharan states (Richard Joseph, 1998). Over the brief period of 1990-1994, 54 competitive elections were held in 29 countries with 30 of the electoral outcomes welcomed by the electorates and the process ruled as free and fair by observers (Bratton, 1998). One party rule was noted to have been replaced with more open and participatory competitive democracy. With the influx of these political parties, they were quick at pointing out the short comings of government, its administrative inefficiency, political corruption, economic mismanagement, and social decay (El-Khawas, 2001). Notably between 1990 and 1993, twenty five countries held elections with eleven opposition parties winning and coming to power. Though very commendable, the legalization of opposition parties did not necessarily mean democracy for African countries (Diamond, 1994). Even those who saw regime change sooner than later faced crisis thus questioning the durability of democracy in Africa, because certain cracks were noted in the firmament of this nascent African democracy. Looking at the above, democracy was not brought about by conditions of the west, but rather it was the desire and commitment of the people for accountability and meaningful development from their respective governments, further fuelled by the economic conditions and effects of the SAP, which only came to show how poorly the state was being managed. On the contrary the west could be accused of complacency. As earlier mentioned they had supported these authoritative regimes and cooperated with them. Even after conditions were placed on leverage, they never followed them up or pressed this dictatorial regimes to democratize as in the case of Kenya, Cameroon and Togo just to name a few, to which the international community still offered loans and did not question the actions of these governments like human rights abuse, which drew a lot of criticism from the press and public (Ake, 1991). Therefore the call for democracy was only emboldened by economic factors which brought change at the time to some countries (Benin ousting of Kerekou, Liberia, fall of Samuel Doe) but failed to change regimes in others (Cameroon, Nigeria, Kenya) and can not be said to be the main factor but a mix of both (Ake, 1991). Chapter Three: The Democratic Dark Days Following this run of political liberalization was a period of political violence, wars and crisis in a number of African countries that sent ripples down the nascent democracy in Africa. A critical look at the outcome of the first set of elections organized in the sub-continent drew a lot of criticism from pundits who considered the process as cosmetic and as failing in its objectives. What seemed to have been created on the African sub-continent was a virtual democracy as noted by Richard Joseph (Richard Joseph, 1993). This could be explained by the fact that in a number of African states, the incumbents managed to hang on to power after elections in their states, despite the mass demonstrations against their administrations and rule. It is necessary to remind ourselves here of the popular support democracy enjoyed in the different African states; it was not an orchestration or ploy of an elitist few, but a genuine request by all for change, thus a lot was expected in the form of regime changes across the continent. Despite this, a few countries (11 of the 25 countries that held competitive elections during the period of 1992-1993) and notably Zambia and South Africa managed to see a democratic change in leadership (El-Khawas, 2001). Thus the much anticipated democracy in sub-Saharan Africa was failing to take root. Regimes failed to be changed in Cameroon, Gabon, Congo, Kenya and Ghana just to name a few, despite mass protest and popular support the opposition in these countries enjoyed. Elections were noted to be carried out in a politically tensed atmosphere, characterized by intimidation (house arrest and states of emergency), massive vote rigging and general violence. The experienced leaders with all the powers they wielded violated the rules of the country with impunity and after enjoying the booty they had siphoned from the economy, had every intention of staying in power and as a result did all to ensure their stay in power. ). As a matter of fact, the biblical adage of old wine in new wine skins held true here since there seemed to be nothing new to the political order in a number of states that witnessed elections. The story of ousted leaders on the continent during the military coup days of the 1960’s had not been an envious one; as such they would do anything to preserve power in the event where they had been very reckless with power (Young, 1996; De Walle, 2001). This is what Professor Ake Claude termed the leadership crisis of the continent; according to the professor the African political crisis resulted from the absence of true statesmen, but rather the prominence of those with every intention of ensuring their stay in power or having their own share of the national cake (Ake, 1996). This assertion has been supported by Richard Joseph, who holds that a prebendal system is set up, with entrenched corruption, and the leaders work only for the benefit of themselves and their clients, leaving the locals to their own devices for survival (Joseph, 2003). As such, these leaders organized charades in the name of elections, given that they controlled the judiciary and legislative and with this centralization of power they were able to corner the multitude of opposition parties they had legalized as a disorganizing technique of the opposition (Young, 1996). As such despite their inefficiencies, the leaders found themselves in power with very vindictive policies against opposition strongholds. This was the case in Kenya, Cameroon, Gabon and Ivory Coast, where particular regions and tribes were subject to marginalization and vengeance of the leader. In Kenya, Arap Moi and his cohorts fomented tribal conflicts that led to the death of about 1500 and displaced a further 350,000 in the rift valley area, in Cameroon the Anglophone West Cameroon was massively under represented in the government that was formed following the presidential elections of 1992. Millions of dollars which were funds for other projects were misappropriated to ensure such electoral successes and thus their stay in power (Diamond, 2008; Young, 1996). These leaders were also noted by the international community as having been endorsed by the people, and as a result the West continued its support of these corrupt regimes with poor human right records, and with incumbents who had every intention to continue pillaging the economy as before. The situation generally speaking looked bleak for the African Sub-continent which had received the third wave with such enthusiasm. The democratic quest was dealt further blows when civil wars and genocides broke out in some of the sub-Saharan countries; there was a return of the military to power in others. This period is considered to be the dark moments of African political development. The Congo Basin has been noted as one of the main trouble spots on the continent owing to the manner in which the wars which emanated from this region spread across, affecting all the countries sharing borders. Zaire for starters was under the tight grip of the dictator Mobuto Sese Seko, who did not give into the pressures for democratization. He refused convening a national conference, blaming it on technicalities of representation owing to the ethnic diversity and broadness of Zaire (now the Democratic Republic of Congo-DRC). Thus democracy did not effectively take root there, despite calls for the democratization by the masses. Armed conflicts broke out first in Burundi following the overthrow of the newly elected president Melchior Ndadaye, by Tutsi officers, trying to reinstate Tutsi control over the Tutsi dominated state. In neighboring Rwanda, the Hutu rule came to a halt when following elections in 1994 the Hutu president Juvenal Habyarimana had to form a coalition regime with the Tutsi minority, but was assassinated during the process, giving room to extremist Hutu’s to launch a genocidal raid against the Tutsi’s. These two wars led to the death and displacement of millions further enshrining the problems rocking this continent. The National Resistant Movement (NRM) initiated by Yoweri Museveni of Uganda, an arm movement against dictators in the Central-East of Africa and enjoying the support of western powers and international donors promoted more of the armed conflicts faced by this part of Africa. It supported rebels against the Kabila regime who had earlier ejected Mobuto from power in 1997 (following the wars in Rwanda which gave the rebels led by Kabila the impetus to fight Mobuto) following a fall out between the rebels and Kabila, leading to the Congo war lasting from 1998-2003 Young, 1996; Richard Joseph, 1998). The story of armed conflicts in the wake of an era of democratic elections is numerous on the African continent. One very interesting case to site here is that of Congo-Brazzaville, where democratic tides were considerably reversed following the forceful return to power by Denis Sassou-Nguesso who had earlier been defeated in elections in 1993 (Young, 1996). This was accomplished with the support of France and Angola in front of a dumb struck international community that only muttered on the events that were ravaging the continent. The Liberian and Sierra Leonean cases could also be sited, but given these it is good enough to make our analysis of the democratic struggle in Sub-Saharan continent. These crises resulted in the deaths of millions, refugee problems, food shortages and famines, poverty, a poor economy and low rate of development not only in countries involved, but affected the economy of other states in general as it stalled possible investments in this part of the world. International investors feared investing in a place which did not guarantee the safety of their businesses; they rather invested in the newly democratized states of West Europe. African investors themselves were fleeing with whatever capital they had; leading to massive capital flights and brain drain as whole families sought new places and beginnings. This far Africa was not providing a perfect home for Africans. If anything these moments looked to be supporting the claims of some African democratic skeptics and proponents of African socialism (and thus one party style democracy) that democracy let alone libe

Motivational types Essay

The hypothesis for this study was â€Å"Do certain types of personality traits determine individual motivational types? † The importance of this type of study has been recognized by many researchers. For example Tett and Burnett (2003) determined that recognizing different personality types could determine how an individual might be influenced by various motivational factors which in turn reflect how productive and viable an individual might be under different work environments. The impact of finding a direct correlation between personality traits, and motivational types, could be significant in many industry fields. This paper considered the following motivational factors: money, energy from other people, the work environment, professional growth and power. In general the findings were unsurprising. For example many people mentioned that money was a motivational factor in their workplace, yet those on a higher pay were more reluctant to say so. What was interesting in this study was the apparent lack of significance of power on an individual’s motivation to work. This would suggest that there are some personality types that firstly distinguish between power in the workplace and decision making, and secondly that some individuals prefer a position where they are not called on to make decisions. In relation to whether or not an individual classified himself as a ‘private person’ and how this impacted motivation, only one scenario was considered; that of being a private person and project planning. Although the results were not definitive there was a strong suggestion that those respondents who considered themselves private people, also liked a structured work environment. This is supported by other results in the study such as the significant number of people that enjoyed working in a team environment, and those who found the energy of people around them a motivational factor. The limitations of this study included a necessary restriction on the variables studied and the small number of participants in the sample group. However many of the results found in the variables studied were quite conclusive and further study with larger respondent groups and more variables associated with different personality types could prove useful in this area. References Tett, R. P. ,&Burnett, D. D. (2003). A personality trait–based interactionist model of job performance. Journal of Applied Psychology, 88, 500-517.

Literacy And Its Effects On Education - 1985 Words

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Small Business in Sub-Saharan Africa Major Constraints in [Nigeria] - Free Essay Example

Sample details Pages: 6 Words: 1854 Downloads: 10 Date added: 2017/09/11 Category Advertising Essay Tags: Africa Essay Did you like this example? Small Business in Sub-Saharan Africa: Major Constraints in [Nigeria] Introduction The Federal Republic of Nigeria has an area of 923,768. 00 sq kilometres and completely within the tropical zone (About. com 2005). Don’t waste time! Our writers will create an original "Small Business in Sub-Saharan Africa: Major Constraints in [Nigeria]" essay for you Create order Nigeria has a population which is estimated over 154 million. It is a 12th largest petroleum product producer in the world. Due to the surge in international oil prices during 2007-08, Nigeria administrated an annual GDP of US$352. 3 billion and has the largest GDP compare to all countries in West Africa. The GDP per capita is US $2,400 (Economy Watch n. . ). In Nigeria, the petroleum industry is central to the country economic profile. They are overly dependent on the petroleum sector. Besides the petroleum sector, Nigeria economy is highly amorphous and lacks basic infrastructure. Small businesses are important in sustained a country economic growth. However, there are still lots of constraints such as poor management, corruption, weak infrastructure, paucity of second generation, lack of capital and so on need to be tackled. This report will deeply analyse the small business environment of Nigeria. Firstly, this report will state the measures of Nigeria’s government in promoting small business development. Secondly, the essay will look into the limitations that blocking the way of Nigeria small business growth. Finally, this report will state some recommendations about how to grow Nigeria small business. 1. The environment of small business in Nigeria The need for small business growth in Nigeria is beyond question, small business play an important role in a country economic growth. They provide job opportunities, enhance regional economic balance through industrial ispersal and generally promote effective resource utilization considered critical to engineering economic development and growth. However, a lot of obstacles are testing the survival of small business in Nigeria. 1. 1 Nigeria’s government measures and Funds After year 1970s, Nigeria’s government has introduced measures which included monetary, fiscal and export incentive to pushing the growth of small business. Centre Bank of Nigeria demanded merchant and commercial bank distribute a part of their loanable funds to small businesses. Nigeria’s government and international financial institutions have create subsidized credit programmes and given loan guarantees such as Nigerian Bank for Commerce and Industry (NBCI), National Economic Reconstruction Fund (NERFUND), the Nigerian Industrial Development Bank (NIBD), and the World Bank SME I and SME II initiatives to provide either long term credit or specialized services to the small business entrepreneur (Abereijo and Fayomi 2005). At the first six years of business operation, small business owner was given a tax holiday in term of fiscal incentives from Nigeria’s government. The Nigerian Export-Import Bank (NEXIM) has also provides export incentives for small businesses to motivate their export activity. For instance, Nigeria Export Promotion Council (NEPC) has managed export duty exemptions for small businesses (Okpara and Wynn 2007). Local and state government have established small business assistance programs which including extension services and entrepreneurs training. Nigeria has the agreement with the International Monetary Fund (IMF) to support more economic growth in Nigeria by helping to finance infrastructure improvements (International Monetary Fund 2007). In these incentive programs, small businesses are expected to grow thrive in Nigeria. Although several efforts have been made to develop small business sectors but failed. At the end those funds mostly allocated to other projects. Those funds are given according to nepotism or favouritism (Okpara and Wynn 2007). Therefore, the constraints of small business survive and growth in Nigeria will be mention further in this report. 1. 2 Limitation of Nigeria’s small business growth There are too many limitations for Nigeria small business to growth. One of the related aspects is the paucity of second or third-generation firms. For an example, the bread market in Port Harcourt, Nigeria was dominated by The Anirolf Bakery in the early 1970s. â€Å"Anirolf bread† soon disappeared from the dining table of Port Harcourt residents when the founder-owner of Anirolf Bakery dead suddenly in 1977 (Monibo A Sam 2003). Unlike large company, small businesses ownership and control are all together. The owner of the small business is the one who embodies the â€Å"structural blue print† of the enterprise. According to the resources, most of the small businesses fail to make the transition from one generation to another (Sund 2002, 123-133). One of the major problems in managing and sustaining a small business in Nigeria is financial support. Some of the owner of small business claimed that it is hard to borrow capital from commercial banks or financial institutions because they are lacking of collateral. Commercial banks in Nigeria are generally biased toward large corporate borrowers, because they have more reliable financial information, credit ratings, provide better business plans and better chances of success and higher profitability for the banks compare to small business. At the same time, the loans provided by micro-finance institution are less, with high interest rates plus short repayment periods (Okpara and Wynn 2007). In Nigeria, equity has distinct advantages over debt for the development of small business entrepreneur as a financing tool. There are some venture capital funds establish in Nigeria to acquire an equity share in small business. For instance, the European Investment Bank (EIB) had made 215 million Euros in risk capital to the developing countries like Africa in 2000. However, it presently comes with significant difficulty by the oot-dragging of the bank for investing in small business and the low response from the small business entrepreneur to apply for the fund (Abereijo and Fayomi 2005). Owing to low capitalization and insufficient assets, high mortality and vulnerability to market fluctuations, small business has been regarded as high risk borrowers by investors and creditors. This made traditional commercial banks and investors are foot-dragging of service small business. As a result of lacking small business accounting records, investors and creditors are having difficult to evaluate the creditworthiness of potential small business proposals. At the same time, high administrative costs of investing or lending small amount do not make small business financing a profitable business. Even if banks and investors do lend to small business, they will charge the borrower higher interest for assuming risk and apply tougher screening measures, which drives up costs on all sides (Silver and Vegholm). Another major constraint cause small business failed is administrative problem which includes accounting, finance, personnel and management issues. Entrepreneurs lack of management experiences and poor record keeping are the main killer of small business survival. For instance, entrepreneurs are tends to manage the business themselves and hires inexperienced staff in term of cut down operating cost, this may endangering professional image of business and customer loyalty. At the same time, most of the entrepreneur can’t account their business’ profit at the end of the month as a result of poor record keeping. Besides that, problems such as poor planning, lack of technical knowledge, weak in market research is also led to the failure of many small businesses (Mambula 2002). African country including Nigeria has its own version of corruption, it is a negative factor which the survival of small business. According to the World Bank reports, only 1% of Nigeria’s population benefited by 80% of oil revenues as a result of serious corruption in Nigeria. This may also bring harmful impacts in small business growth in Nigeria, because a country health is reflected by its’ wealth (Journal of Perinatology 2005). Conclusions Obviously, the vital role of small business in the economy growth is doubtless. As discussed above, several reasons which included lack of financial support, lack of management skill, corruption, poor planning, paucity of second generation and bad record keeping have caused the failure of small business in Nigeria. Except these, political activities also play an important role in small business failure in Nigeria. Without a proper implementation of the measures, small business in Nigeria would not growth in good health. Not only government, banks and small business entrepreneur are also important in pushing the survival and growth of small business. If the small businesses are unable to flourish, the economic of Nigeria will also be restricted, and this will cause the future of Nigeria to be uncertain. Recommendations As mentioned above, a number of elements were responsible for the small business flunk in Nigeria. Among all, the main factor of small business failure is financial support. It is recommended that the owner of small business adopt the Grameen Bank model which removing the need for collateral (Grameen Bank 2010). They provide credits to the poor without any collateral. The small business owner also can seek for the assist from venture capitalists by selling business stake as they do not require collateral from borrowers. The large gains from the stock market are attracting venture capitalists to accept high risks. With regard to the management problems, seminars for educate small business entrepreneur about record keeping, basic accounting knowledge, basic management skills can be conduct by nongovernment organisations, non-profit organisations and universities. Experienced workers should be employed and given reimbursement based on their skill, education, and experience. In term of government at local, state and federal level, it is recommended that to adopt the legitimacy action to enhance and build Nigeria’s infrastructure. For the success of small business in Nigeria, a corruption free society is a must. It is recommended that government should establish anti-corruption organisation to prevent bribery activities. Any action and approval of government project should be transparent and supported by every citizen of Nigeria. (1,548 words) References Abereijo, I. O, A. O. Fayomi. 2005. 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