Private enterprises are enterprises owned and managed by private individuals. This type of business organization is usually classified as a private sector enterprises and examples of such private enterpriser sole proprietorship, partnership, private public limited liability companies and co-operative societies. The major aim or objective of the private enterprises is to maximize profits.
Characteristics or features of private enterprises
Private individuals provide the capital: Private individuals that owned the enterprises are the people to raise capital for the establishment of the enterprise
Ownership belongs to private individuals: Private individuals, e.g. sole proprietorship or partnership are the ones that own the business enterprise
Objective of business is to make profits: The purpose of setting up the business enterprise is to make profits for the owners of the enterprise
Accountability is to the owners: The ions of the business enterprises are usually accounted for and submitted to the owners of the enterprise
Owners borne the risk of the less: In the event of business failure t ’liquidation, the owners will have to bear entire risks associated with such failures.
Owners manage the business themselves: The daily operations of a business enterprise is controlled and -managed by the owners of the enterprise.
REASONS FOR THE ESTABLISHMENT OF MANY PRIVATE ENTERPRISES IN WEST AFRICA
(1) Type of economic system: The type of economic system adopted by the government determines the nature of economic activities that will take place in that country. For example, Nigeria has a free economy in which private individuals are allowed to participate in economic activities.
Low capital requirement: The capital required to set up private enterprises is usually very small, hence many private enterprises are in existence
Favourable market: The availability of favourable market for finished goods makes the proliferation of small scale enterprises to flourish in many West African countries.
High level of efficiency: The private enterprises are known to be more efficient and management than the public enterprises and these account for their large number in the economy.
Favourable legal environment: The enabling laws which govern the setting up F Private enterprises are quite favourable. This makes is easy and interesting for many entrepreneurs to go into private business.
Availability of credit facilities: The availability 0f credit facilities to private individuals enable them to set up private enterprises.
Establishment of individual estates: The establishment of individual estates by government also encourages the proliferation of private enterprises in many West African countries.
Existence of official corruption in public enterprises: The existence of official corruption in public enterprises discourages government from further investment in public enterprises, thereby giving way for the proliferation of private enterprises in many West African countries.
PROBLEMS OF PRIVATE ENTERPRISES IN WEST AFRICA
Many private enterprises are faced with the following problems. These are:
Inadequate capital: The private enterprises do not have the adequate capital required to set up and run a large business outfit.
Insufficient raw materials: Many private enterprises suffer from inadequate supply of raw materials necessary for maximum production.
Inefficient management: Private enterprises generally do suffer from poor management because their owners who run the business may and may not have a good knowledge of the kind of production they are engaged in.
Poor power supply: Many private enterprises do not have regular power supply to their companies hence they have to generate their own power through generating sets, which increase cost of production.
Lack of specialisation: Lack of specialisation by owners of private enterprises leads to business failure as most of them are illiterates, who may not have any idea of what they are doing.
Poor patronage: Private enterprise suffer from patronage partly because of low quality products and the high taste which consumers have for imported foreign goods.