Unit 7 GB502 Peer Responses

Directions

1. Response posts 

1. Select two peers to respond to. 

2. Take on the role of a consultant. Read their recommendations thoroughly then provide some rationale as to why you think their recommendations are persuasive (or not).

Carl Stuerke

In the United States, more than 40% of GDP is generated by small businesses, those with less than 100 employees (Hendrix, 2017). There is an amount of ambiguity required to create effective regulation, the difference between rules and standards, and the goal of regulation pose a problem for regulatory bodies (Muchmore, 2016). For businesses, complexity can add cost and potentially make a business insolvent, which are the unintended consequences of regulatory bodies. Regulators often provide protections that favor employees, especially when dealing with large enterprise businesses which can add even more cost (Zwane, 2009).

Reducing the burden of regulations is a must for any nation that wants to improve the economic situation, reduce unemployment, and inspire entrepreneurship. In the past, Africa's leaders created systems of one-party rule, weak institutions, and a domestic focus on cities while a majority of GDP comes from rural agriculture (O'Connell, 1999). Reforms should be designed to ease business operations in a country. Business creation, easier (online) tax filing, and contract enforceability are reforms that have improved the business climate in several SSA nations (The World Bank, 2018). In this capacity, nations can improve FDI inflows and increase investment, which improves business by providing capital that has been a scare resource in SSA. Nigeria has made a number of reforms that are designed to improve the business climate, these include reducing the time required to obtain a business permit, reducing building permit charges, reducing barriers to connect to the electrical grid, an improved workflow for registering property, reducing barriers to import and export goods, and improved rules related to contract enforceability (World Bank Group, 2020). This has created an environment that projects the economy "to grow by 1.5% in 2021 and 2.9% in 2022". 

From a consulting perspective, SSA governments should continue to overhaul regulations that burden businesses without any benefit. Removing waiting requirements for business permits and providing automation for imports and exports are really solid examples of how Nigeria is improving the business climate. Also, creating a system that protects business from bad actors, in contract disputes or copyright infringement, is another way that governments can help draw businesses in. All of this assumes that the institutions behind governments work effectively and without corruption. 

References

African Development Bank Group. (2021). Nigeria Economic Outlook. Retrieved from https://www.afdb.org/en/countries-west-africa-nigeria/nigeria-economic-outlook (Links to an external site.)  

Hendrix, M. (2017, March 14). Regulations Impact Small Business and the Heart of America's Economy. US Chamber of Commerce Foundation. Retrieved from https://www.uschamberfoundation.org/blog/post/regulations-impact-small-business-and-heart-americas-economy (Links to an external site.)  

Muchmore, A. (2016, May 22). Uncertainty, Complexity, and Regulatory Design. HOUSTON LAW REVIEW. Retrieved from https://elibrary.law.psu.edu/cgi/viewcontent.cgi?article=1346&context=fac_works (Links to an external site.)  

Zwane, T. (2009, January). The Impact of Regulation On Small Businesses in the Republic of South Africa. Retrieve from https://ujcontent.uj.ac.za/vital/access/services/Download/uj:7161/CONTENT1 (Links to an external site.)  

O'Connell, S. (1999). Governance and Growth in Sub-Saharan Africa. Journal of Economic Perspectives, Volume 13, Number 3. Retrieved from https://works.swarthmore.edu/cgi/viewcontent.cgi?article=1050&context=fac-economics (Links to an external site.)  

The World Bank. (2018, October 31). Doing Business Report: Sub Saharan African Economies Set Third Consecutive Record of Reforms to Improve Business Climate. Retrieved from https://www.worldbank.org/en/news/press-release/2018/10/31/doing-business-report-sub-saharan-african-economies-set-third-consecutive-record-of-reforms-to-improve-business-climate (Links to an external site.)  

World Bank Group. (2020). Doing Business 2020. Comparing Business Regulation in 190 Economies. Retrieved from https://openknowledge.worldbank.org/bitstream/handle/10986/32436/9781464814402.pdf?sequence=24&isAllowed=y (Links to an external site.)  

Patricia Cruz

The youth population in sub-Saharan Africa is increasing rapidly. Nearly one in three people living in the region, or about 297 million, is between the ages of 10 and 24. By 2050, that age group is projected to nearly double to about 561 million, according to PRB’s The World’s Youth 2013 Data Sheet (Devlin, 2013). The youth of the region are also becoming better educated. Estimates show that the proportion of 20-to-24-year-olds who complete secondary education will increase from 42% to 59% by 2035 (Devlin, 2013). With this comes great potential for economic growth and SSA should take the opportunity to cultivate the capacity of their youth, a valuable resource for their prosperity. Unemployment rates are as high as 51% young men and 43% young women are unemployed (Devlin, 2013). This contributed to the poverty cycle found in most African countries.

In many sub-Saharan African countries, at least half of young people ages 15 to 19 lack foundation skills, often because they had never attended school, or they dropped out of school before gaining basic literacy or numeracy. In eastern Africa, 375 of girls and 32% of boys of lower secondary-school age are not attending school (Devlin, 2013). In some countries, however, the situation is much more dire, in Niger, 83% of girls and 74% of boys are not in school (Devlin, 2013). Some leave school to work in low-skill jobs where the possibility of advancement is limited, and national education systems provide little opportunity to gain these critical skills in the future. With that being said, Niger is gaining economic traction. Niger, the world’s fourth largest uranium producer, was ranked 131st among 190 countries in the World Bank’s Doing Business Report, an increase of 11 places compared to the previous year when the country was ranked 143rd (Niger, 2020). Niger’s economic growth is estimated at 5.1% in 2019 thanks to agriculture, which has benefited from favorable weather conditions and investments to improve agricultural production, despite security challenges and the drop in uranium prices (Niger, 2020).

In 2017, the Nigerien government put in place, the Economic and Social Development Plan (PDES) covering the period 2017-2021. The main objective of this plan is to increase living standards through strong, sustainable, resilient, and inclusive economic growth. Thus, the PDES is structured around five points, cultural renaissance, social development and demographic transition, acceleration of economic growth, improvement of governance, peace and security and sustainable management of the environment (Niger, 2021). All of this with the aim of diversifying the economy, strengthening the private sector and finally, controlling the high population growth and gender inequality. The inauguration of the 100-megawatt Goroubanda power plant, which aims to address power outages and encourage business production, was the flagship project under the PDES (Niger, 2021). This will catapult Niger into the global business world.  

Today, economies in sub-Saharan Africa are experiencing rapid growth, averaging 5.3% in GDP growth in 2012—well above the world average of 3.3 percent per year (Devlin, 2013). At the same time, approximately 2 million people will enter the labor market in the next three years (Devlin, 2013). With a greater appreciation of the size and economic potential of young people and more comprehensive education-to-employment strategies, sub-Saharan Africa will be able to make the most of this opportunity for development. Digitalization and AI are crucial to African business as well. While labor might seem cheap and plentiful, the reality on the ground is that of skill shortages hampering growth, which would lead to investing in automation even faster than European or American companies (Magdin, 2021). SSA holds a great amount of untapped potential and I believe investors are noticing.

 

References

Devlin, K. (2013, April 1). Reducing youth unemployment in Sub-Saharan Africa. PRB. Retrieved November 30, 2021, from https://www.prb.org/resources/reducing-youth-unemployment-in-sub-saharan-africa/ (Links to an external site.) .

Magdin, R. (2021, November 10). Council post: A road map for African businesses. Forbes. Retrieved November 30, 2021, from https://www.forbes.com/sites/forbesbusinesscouncil/2021/11/10/a-road-map-for-african-businesses/?sh=45e4829c508c.

Niger: Economic growth driven by the primary sector — UMOA ... Niger: economic growth driven by the primary sector. (2020, September). Retrieved November 30, 2021, from https://www.umoatitres.org/en/niger-economic-growth-driven-by-the-primary-sector/.