Theory question 103
Business OrganisationsSection B (answer four questions only from this section)
What factors limit the size of indigenous firms in West Africa?
Show the model answer
Model answer
Shortage of capital and difficulty in getting bank loans.
Small market due to low incomes of the people.
Lack of managerial and technical skills.
Poor infrastructure: power, roads, water, communication.
Most firms are sole proprietorships or partnerships, which cannot raise large capital.
Competition from foreign firms and imported goods.
Shortage of local raw materials and high cost of imported inputs.
Inconsistent government policies, multiple taxes and political instability.
Nature of the product (perishables, personal services) and the firms' recent establishment.
Explanation
Explain each factor in one or two sentences.