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The Nigerian Economy: The Height Of Crony Capitalism

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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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