The Nigerian Economy: The Height Of Crony Capitalism
The Cases With Barriers To Entry
Most of the time, when you ask a person the biggest challenge they've had to face to owning or starting up a business, the first thing they'll say is money. But then it's even bigger than this. In Nigeria, the most common reason why people fail to build businesses of their own which might create a direct competition with big firms is barrier to entry. Barrier to entry are the hurdles faced by new business owners when trying to start up a business.
In Nigeria, it comes in the form of registering with the right agencies and getting approval, the high cost of patency required to run a business or even the symbiotic relationship that exists between monopolist firms and the government. When government have a close relationship with monopolists, the government's aim is to control the economy indirectly, while these organizations will get the exclusive rights to actually produce and sell at whatever prices they want without the government checkmating their excesses and this is what is currently happening with Dangote cement, Nigeria's most recognized supplier of cement, with a conglomerate of other business which it's direct competition over the years have liquidated or gone out of business.
Brand Over Quality
In Nigeria, the choice of brand over quality inadvertently creates a crony capitalist economy. Not giving baby firms in the market the chance to compete is also a barrier to entry. While the government helps monopolists to create bureaucratic and official barriers to entry, people, on their own, create artificial barrier to entry by allowing their choices of brand to determine who makes more money in the free market.
Most people fail to understand that the right to monopoly is erected firstly by the government, then the right can be further sold to multiple billion dollar organizations. While monopoly is terrible on the surface, crony capitalism is even worse, and I'll tell you why. In pure monopoly, there are restrictions, the government checks the excesses of monopolists to make sure they're not over exploiting people and creating a sort of vacuum, where they'll become indispensable to an extent.
The Inept Political Framework
In most developing African countries, there are no proper structural framework to actually fight against the evil of Crony Capitalism. Let's take a look at the system of government they have in place. Nigeria for example is practicing a federal system of government, but all the parastatals that supposes to act as a form of check and balance are corrupt, most sectors that make economic recommendations have a direct contact with the president who has a hand in electing them.
The ministers are appointed by the president, the senate or lower houses have an affiliation with the president, making it difficult to have a ruling that negates the economic decrees and decisions made by the president. So on the surface, it is a federal structure, but it is more of a constitutional monarchy with presidential tendencies. Crony Capitalism is not Inevitable, what makes it so, is having a system without checks and balances put in place. Firms creating a relationship with the government is fine-tuned with their need to make more Money, while the government is power crazed to control everything.
The Quest To Influence The Free Market
It's difficult to control a free market, but due to the fact that the government likes to control everything, they do this by using monopolists, some systems of the world no longer uses socialism, but they still indirectly use these big organizations to control their economy. In Nigeria, there are business people who are faced with terrible business condition, they're always hit with regulations, and they have to pay huge charges to the government to stay in business. However, big organizations do not, they maintain their privileges simply because they're in a direct liaison with the government.
The network providers in Nigeria are oligopolies in nature, this is because they're large firms providing very low-quality product and services. They're however enjoying the privilege of providing these services and still earning large without any drop in sale no matter how bad their services are because they're in a crony capitalist state. They have a direct contact with the government, through them, the government can choose to economically restrict or censor people while they enjoy being in business without facing any form of competition.
Fighting Crony Capitalism
The best ways to fight crony capitalism in Nigeria, is being economically aware firstly. Competition in the market is only rampant in small businesses, but at the height or the apex of the economy, there are no competitions at all. However, people should help create an even freer market by constituting financial actions. One of the main causes of continuous inflation is not having a sophisticated free market controlled by the forces of demand and supply.
In an economically inept state, people grow their business with connections and create brand privileges rather than organically producing quality and Influencing sales with creative marketing innovations. This is one of the reasons why government are fighting crypto, it's not part of the system, they don't get to control exchanges. Another way to fight crony capitalism is to create a sophisticated system where the rule of law would supersede the power of those in governance. A system where each and each of the economic decisions will go through due process before it is enacted and not solely made by the president as a commander-in-chief whatsoever.
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My name is @Josediccus, a young Nigerian entrepreneur who is a Vlogger, A Psychologist, Poet, Sports Writer/Analyst & Personal Finance Coach. I'm using my contents as a process to create shared meaning as well as create expressions through which people on/off hive can relate. I believe content is a process to be enjoyed and relished and I'm up for any collaborations in my field stated above. Cheers
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The false belief that you are playing a fair game makes the inevitable loss far worse
It's definitely not a fair game, far from it, even when it might appear so on the surface
Is getting imports (buying things online from other countries) hard in Nigeria? I would think that might be a possible way to get better goods or is it costly?
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Its not hard, its Only complicated and expensive. The Nigerian government at one time even prohibited people from buying foreign goods simply because of the local goods owners that are bankrolling them. Also not everyone can afford the expense of buying outside or ordering from outside.
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First of all, thank you for introducing me to a new concept that actually sums up the Dangote business style which I do not subscribe to.
It is a mutually beneficial relationship that consequently stifles growth and kills competition which is good for quality and pricing control in the market.
This is surely going to be a big fight more like a war because unfortunately there are certain corrupt elements in the system who are seemingly above the rule of law and they would oppose this with their sweat and blood.
Yet another insightful post @josediccus
The dangote business style actually hurts the system big time, it hurts aspiring entrepreneurs and actually makes it really difficult to give the free market a chance to decide what's value and what isn't. However this doesn't seem like it'll change anytime soon and this is because the system isn't dynamic, it's prone to manipulation and it's actually cycled, godfatherism as well makes it rigid. The constitution is changing but the system isn't aligning with that change. It's obvious, even the newer personnels are following a pattern thats similar to the past leaders. Im one of the people who feel that we shouldn't celebrate people like Dangote.
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I'm in the same boat.
When I hear people say he is their mentor due to his status as 'Africa's richest man', I look at them sideways because they clearly place more importance on money over true values as reflected in their choice.
First, the president is the Grand Commander-in-chief of the Federal Republic of Nigeria(GCFR).... Note that.... Give honor to whom honor is due
Secondly, just because you are against a monopolize system of economy doesn't mean it is going to change.... Na.... Scrap it off your head
I for one want to run a monopolize business economy in the near future.... Squash the competition out, or they will squash you
If it mean we have to team up with the government to do it, so be it. Never outshine the masters, make them share in the spotlight, and you have all the powers that you want. End of story.
The mere fact that the Nigerian economy is so fucked up in such a way that, even the most prize Dangote is struggling to be counted among the top when it comes to wealth is enough medicine for him to chew.
Please, stop making life difficult for the young man or maybe old man.
It's not an easy feat to be able to stand against all odds, and still strive in the economy such as the one in my country
So I give accolades to him for being able to run the engine of his business even with all the disadvantages.
Right now, the only system we cannot allow our government to control is the decentralized economy that we are trying to build, promote, and sustain. This is ours, and we are willing to protect it at all cost.
So, let the government control what they can control, while we protect the system we are so much in love with from them
First of, we are in an enlightened era and it's saddening that we're stuck in where we are, i've had the previlege to see how a civilized state is run and believe me, this is adanced slavery. The truth is, in democracy, criticism is a tool use to forestal check and balance so its proper, inasmuch as it wouldn't change a thing, wait till you're probably arrested and beaten by the police for having crypto in your phone, thats when you'll realise how far gone the country is and you need to be free to seek for that decentralisation in particular. People are dead because of how Nigeria is lawless, im shocked to see how you're defending it. If not for how the media is enlightening the world, Nigeria would have gone back to military rule where women are hardly allowed to wear what they want. For one, I have nothing against your president. Sone hopefully, I can stare at his government from the comfort of another place safer, where the system works.
Oh my! I have seen worst case scenario than being beaten for having crypto in my phone.
Also, the safe haven you want to run to, the people there are also fighting their government for freedom
Wait, are you here? Haven't you seem the post made by those folks from other countries and continents?
Everyone is fighting for the said freedom from their government. There is no safe haven.
Experience is the best teacher though, i've been a victim, so erhm the criticism is justifiable.
Of course, I completely agree with you, everywhere has got issues, but the system here is grade A" melancholic.
The world isn't fair, just find your definition of comfort and live it.
I was just looking for this, I didn't know how to put it, thanks for knowing this, that's all we gotta do. Cheers.
Great mind @josediccus.
I love your analysis
This is so accurate. Money is everybody's problem in Nigeria that's why they so many small businesses is Nigeria and alot of competition.
You have said it all.
This is so accurate. Money is everybody's problem in Nigeria that's why they so many small businesses is Nigeria and alot of competition.
You have said it all.
This is a nearly accurate analysis, I love your work!