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The private (informal) sector of industry, recognised as the driving force
behind the economy in developing countries, needs radical revitalisation
if there is to be any hope of succeeding in regional integration
In Burkina Faso, as in many West African countries, the private sector plays an important role and provides the workforce, especially in the informal sector of industry and business, where more than 80% of the population is employed. But these days, many African countries are experiencing hard times — contrary to the State-controlled public sector. Business has many difficulties — financial, stifled by red-tape, lack of commercial outlets —and many firms are closing down. Indeed, in Burkina Faso, more than two-thirds of private businesses have shut up shop. This is a disastrous situation because the private sector is always a driving force in the economy of any developing country. Many of Africa’s younger leaders are calling for regional integration, and without a healthy private sector, there’s no hope of achieving this aim.
Dreams of integration
Regional integration has long been the dream and wish of many forward-thinking people in West Africa. Varied ideas and suggestions have been offered to bring the dream to reality, and the private sector has made a contribution in different ways and degrees to this process of integration. Unfortunately, a closer study of this contribution throughout the course of history shows it to be somewhat modest, to say the least.
In pre-colonial society, despite a rather rudimentary economic organisation, there were already pointers towards integration in some far-off future. It was more a question of economic relations between kingdoms and empires based on co-operation and solidarity among peoples, and relations between merchants and other private dealers who paid taxes to the rulers of the time, depending on the amount and type of business carried out.
During the colonial period, a different kind of indicator came into existence. Without completely upsetting the internal economic organisation of local society as they found it, colonialists fostered the idea of a private sector in a two-fold manner. First of all, there was the already existing traditional private sector englobing such commercial activities as agriculture, cattle rearing, fishing, handicrafts. Then came a modern private sector run mainly by Europeans and to a lesser degree, by Syro-Lebanese. It was more organised and better structured than its traditional counterpart, and as such, was overtly supported by the colonial authorities. Special attention was given to developing import-export commerce, and this resulted in the establishment of trading posts and banks in neighbouring countries, with a consequential intense movement of people, goods and capital across the whole of the region. This also fostered contact among local business people.
The main aim was to bolster a centralised colonial administration in a given area (in this case, the vast territory of French West Africa). Economy was not first on the list. Indeed, locally produced products were sent north to Paris rather than to other areas of French West Africa. Major economic regroupings, such as the Economic Union of West African States (UDEAO) only came into existence fairly recently, following Independence, when African heads of State began to make the question of economic integration a priority concern.
After independence, the private sector didn’t have much chance or opportunity to develop, for the European administrators were replaced by African governments which controlled the economy in every area, and on an international level, chose to become bedfellows with European and Syro-Lebanese business people. On a national level, these newly-established governments controlled every aspect of a country’s economy by nationalising numerous public enterprises. Thus, the private sector, run by local people, didn’t have much to say vis à vis a country’s economic performance. Consequently, it’s influence and economic performance has been somewhat minimal.
The absence of the private sector has done nothing to advance the cause of regional integration. This is a real pity because Africa will only be able to truly develop and face up to major Western «big business», if both the public and private sectors are there to strengthen individual countries’ economies. And in the long-term, with the backing of the private and public sectors of the economy, once regional integration becomes a reality, Africa could become an economic force to be reckoned with. But as things are, a radical «re-think» regarding regional integration is necessary.
and the private (informal) sector
The fact is, ever since Independence came to West African countries, the importance of the private sector has been ignored, and this has lead to its slow decline. Apart from a few (very few!) countries in the region, the private sector is subjected to government constraints. Generally speaking, there’s not much by way of organisation regarding the economy, and even less by way of cooperation between public and private sectors.
In most West African countries, governments firmly control the economy through a never-ending list of declarations and principles, frequently copied from abroad and often completely unsuited to the African context. Business people in both the public and private sectors have their hands tied, so all they can do is to lift their eyes heavenwards, and say: «Here we go again».
In spite of excessive government control, the private sector is firmly convinced of the importance of regional integration and the role of the private informal sector in achieving this aim.
Ghanaians and Ibos from Nigeria living and working in Burkina Faso, offer a good illustration of the above fact. The former by their small service businesses (e.g. hairdressing, sewing, polishing shoes); the latter by trading in spare parts for bicycles, motorcycles, cars, second-hand clothes, etc. Burkina’s locals are especially active in the trading industry — e.g. in foodstuffs from landlocked countries in the region.
These private sector activities play a major role in the process of achieving regional integration. On the financial level, we note major movements of capital from one country to another, through what is known as «the parallel economy». This flow of money helps improve people’s purchasing power and when reinvested, contributes to strengthening the traditional economy. On the socio-cultural level, because money is able to be moved from one country to another, peoples’ standards of living are improved in other countries, and citizens feel better able to share their ideas and cultures with others. The fact is, unless people experience a «pre-sharing» at this level with others, there’s no hope of ever achieving regional integration at a political and economic level.
The State doesn’t always agree with what’s happening and the private sector finds itself inundated with rules and regulations «from on high». It finds itself groaning under an unreasonable tax burden. How sincere or responsible are those who legislate and impose taxes?
Towards true regional integration
The existence of the private informal sector is proof that the more people aspire to true regional integration, the more they want to shrug off imposed limits and structures. A well-respected Senegalese economist summarises the present situation: «On the one hand you have individual government’s efforts to encourage investors and entrepreneurs into their public sectors of industry. On the other, you have the West African private sector which has to show courage and commitment to increase its investments and its volume of activity in an economic arena which has become much more attractive and enticing. Success can be achieved by making use of available new financial mechanisms and resources, and by working together».
It’s clear that for regional integration to be realised, each country must provide its economy with a dynamic high-performance environment. To reach that goal, importance must be given to the traditional private sector as well as promoting it. How?
On the national level: A regional decision must be taken so that «the free circulation of people, goods and capital» within West Africa is not just an ideal but becomes a fact. There must be less state intervention vis à vis the private sector, which must have the possibility of operating outside unprofitable areas (areas which are presently ignored by the public sector).
On the fiscal level, greater flexibility ought to correct unsuitable rigidity which was the mark of the old fiscal order. To succeed in this plan, it is to be hoped that legislation controlling economic activities in the different countries, does not appear as unilateral constraints imposed on the private sector, but rather as a compromise emerging from a consultation among all the parties concerned. In any case, member-states of a modern West African economic community should be progressively working towards suppressing customs’ duties.
With regard to the social aspect, particular attention must be paid to employment, a problem in all the countries concerned. If state-run companies or parastatals are abolished, then the private sector will become the sole provider of employment in the region. This will go a long way towards limiting the huge migrations of a country’s workforce which results in the sad spectacle of forced repatriations we are witnessing today. Obviously governments will then have to encourage private enterprise in its efforts.
In a word, improve everything concerned with the private sector and you go a long way towards achieving regional integration in West Africa. Surely a challenge for individual governments!
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