Combating Crony Capitalism in Africa
By Abdulsamod Balogun
22 August 2017
Growing up in Nigeria without a silver spoon, I was taught that success depends on hard work and immersed effort, hence, I was poised to start young, excelling academically amidst stiff but healthy competition from classmates and friends in all settings. “Work hard and be successful, make me proud” were the words of my adorable mother. Later did I wake up to the reality that the most industrious individuals are not always the most successful; this is not because they don’t work hard enough but because some people choose to manipulate the order of things to suite their irrational selfish interest. The basis for preference for one person over the other then balls down to who you know and not what you can do or how much you can deliver.
Cronyism according to Wikipedia, is simply described as an economic system in which success in business depends on having close relationships with government officials. It is usually exhibited as favouritism in the distribution of legal permits, government grants, contracts, special tax breaks et al. It is a situation where a corrupt government favours one set of business owners who have close ties with the government over others. This is often done with racial, religious and/or ethnic sentiments.
In this system, intentionally ambiguous laws and regulations are common. When taken strictly, such laws would greatly impede practically all business. Eventually, businesses with the good graces of political officials easily annihilate rivals by erratically enforcing these laws against them, leading to hefty fines or even jail time.
Through my research of the concept of cronyism, I realized that favouritism, nepotism and corruption has eaten deep into the fabrics of societies so much that the spirit of healthy competition has to a large extent been put aside. Almost everything has been politicized and crony individuals take advantage of this reality. Unfortunately, many confuse crony capitalism for free-market capitalism.
Contrary to cronyism, free-market capitalism encourages open competition between businesses allowing for entrepreneurs to strive smartly and eventually thrive at what they do based on the effort, creativity, innovation and energy they put into their activities.
Some might argue that “in capitalism, businesses can amass wealth that can incite power, which might be used to influence government”, but I’d rather beg to differ on the premise that, if the boundary between politics and business is well spelt out and a thick line is drawn between the two sectors, entrepreneurs will thrive at the benefit of the entire economy, enlarging its coast of exchange and the government will focus on a more limited role. This will also liberate the economy from the claws of those Burton W. Folsom Jr. tagged “political entrepreneurs” and from the powerful grip of plutocracy and kleptocracy.
It is also worthy of note that “Natural monopolies” are rare when competition and free market exist, when capitalism is practiced, there are no avenues for unwarranted government regulations which generally abet wealth for some certain individuals
Africa hasn’t only wallowed in the jiggery-pokery of cronyism but also has been swimming in its detrimental effects. Government overregulation and impositions on markets and businesses often times create unpleasant outcomes in the long run. There is need for active measures to reduce government controls at the same time, curb cronyism to ensure sanity in our markets. In Nigeria, a representative example of Africa, traces of cronyism are seen across the business and political spectrum and I am only left bewildered as to what Africa will result to if this continues unabated.
We need to carefully detoxify the system that is contaminated by the toxic combination of corporations and government officials by raising strong awareness for free-market capitalism, demystifying its concepts to the layman, and clearing all associated misconceptions.
It is hereby obvious that cronyism is a scourge in Africa and is never an option to be considered against the free-market. The freedom for people, individuals, businesses to establish enterprises that will thrive under zilch influence of government or its corrupt officials is not negotiable. I am convinced that embracing free market capitalism is currently the way to tackle crony capitalism in Africa.