problems and factors limiting indigenous firms in Africa

problems or factors limiting indigenous firms in Africa are so deep and numerous. here is a careful understanding of the various problems business owners and major companies face in Africa


The factors which limit the size of indigenous firms in West Africa are: these problems that constantly bring down factories and firms in Africa as listed as follows

Inadequate capital:

There is inadequate capital for planned expansion due to low savings.

Technical know-how:

There is inadequate technical know-how and this militates against attempts to expand.

Limited managerial ability:

There is limited entrepreneurial or managerial ability and this does not encourage the growth of firms.

Market limitation:

There is the problem of market limitation due to low income, which leads to low demand, and external competition as a result of the people preferring foreign goods to locally manufactured ones.

Lack of co-operative spirit among entrepreneurs:

It is usually difficult for entrepreneurs to combine their resources for expansion due to mistrust.

Inadequate government support: There is usually inadequate government support, e.g. extension services, technology consultancy.

Poor infrastructural facilities: The firms also face the problem of poor infrastructural facilities like electricity, good roads and communications.

how to tackle problems facing firms in Africa

Unfavourable government policies: Certain government policies on taxation and subsidies are unfavourable and the also affect the size of the firms.

Inadequate raw materials: The firm are also faced with the problem of lack of raw materials.

Inadequate skilled labour: Skilled labour required to handle the operations of firms are grossly inadequate

Political instability: Many African countries are politically unstable either due to military intervention or at wars, which discourage investment. this is the main reason foreign investors are not willing to invest in Africa because these conditions will limit their profits and growth

High level of illiteracy: The existence of high level of illiteracy among invest in many West African countries militates against the establishment of large business units thereby limit the growth of indigenous firms in Africa

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