Ugbabe Adagboyi Damian: The Non-Perpetuity Of Business Enterprises – Lessons From Benue State

One of the aims of entrepreneurship development is the creation of efficiency through increased competitiveness, as well as increasing access of businesses to continually widening markets. This is an achievement that is however, becoming increasingly difficult to accomplish as state and the federal government facilitated entrepreneurial ventures continue to face constraints that present themselves in various forms. Apart from the traditional profit-making objective, business enterprises, irrespective of nature of operation or size, strive hard to sustain operations for as long as possible. However, illiquidity and insolvency remain the biggest threats.

A tour around Benue State would reveal that due to constraints hindering growth and development, some business enterprises become moribund or shut down within a few years of operation, and those that survive barely breakeven. It is important to state here that these constraints vary. While most literature attribute this phenomenon to macroeconomic instability, bad political atmosphere, excessive deregulation policies, high interest rates, deteriorated financial discipline, recession, squeezed profit, dubious practices, and heavy debt burden among others, this article would like to focus on economic and political changes, corruption, poor financial management strategies, and poor or no understanding of business ethics.

It is dis-interesting to note that current economic changes have produced major shifts in the profitability of most business enterprises around the world. However, the current political environment in Nigerian is perhaps among the least predictable elements in the business environment – the woes of the election loss to the opposition party is still with us. The fates of many businesses were tied into an election win that didn’t go the expected way. Losing their stake in a post-election scenario highlighted the inability to maintain a favourable status quo, resulting in an erosion in confidence of a risk-adverse public and the reluctance in engaging in long-term economic activities, thereby dwarfing the economic development of the state.

Corruption is a barrier to business growth and economic development anywhere in the world.  It is not surprising to discover that the successes and growth of some business enterprises in the state are not based on the value and quality of services they offer to their customers. Being a political office holder most times can be very rewarding. The legal (and non-legal) pay runs into millions of Naira every year. Some proceeds of such pay being used to secure some choice properties and even used to build business enterprises in and around the state. For instance, as an elected or a political appointee in the state, you may through your body language, ‘indirectly’ direct all workshops and seminars, perhaps all government functions under your purview to your newly built hotel or purchase products from your newly built factory. Even when you do not ask, a tit-for-tat strategy would suggest that to anyone who might require a signature from the government through your office.

A poor management strategy is another major cause of this continued cycle as the perceived inability of management to employ competent personnel may lead to unproductively. There are instances where management employ incompetent family members or cronies (as a compensation for organizing thugs for them to win election) to manage their business enterprises. Even so, too much attention is often given to the daily operation of the business, while not enough care is given to bookkeeping and accounting practices, which are essential for profitable and efficient running of a business enterprise. Most times, this would require the owner of the business to fund the daily operation of the business from the government allocations to his/her office. Perhaps, this happens in a situation where the manager’s judgment is not fully trusted by the management. That is, when customers pay for the services rendered directly into the business owner’s account instead of the business enterprise’s account or when the manager is instructed to always offer free services to family members and political associates hence compounding the problem of keeping accurate financial records.

The management of most of these enterprises ignore the fact that all businesses have stakeholders, including the larger society whom their actions have an impact on. In an acclaimed agrarian but civil service state like Benue characterised by low income, non-payment of salaries and high level of poverty, a business enterprise that wants to succeed should offer its product and services at the price the consumers can get value for their money. However, and very often, some business enterprises arbitrarily set and review the prices of their products and services without regard to this peculiar consumer characteristic in their environment. In most cases, the staff of some of these ventures lack good customer relation as their remuneration is not dependent on how much they generate but how long the business owner remains in government office. In the worst-case scenario, the prosecution of some business owners due to fraud or corruption after they leave office also has strong negative effects on the perpetuity of their enterprises. These observations expose the fact that there exists poor or no understanding of business ethics by the owners and managers of some business enterprises in the state.

Consequently, all the constraints identified above have contributed to organization failure, declining customer loyalty, declining market share, loss of reputation etc. It worthy to note that the perpetuity of business enterprises would only be ensured when we start to do things the right way.


Ugbabe Adagboyi Damian is a student of Atlas Leadership Academy. He is also an alumni of IMANI Centre for Policy and Education, Ghana. You can connect with him via twitter @UgbabeD