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.
7.7 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.