As a result of the problems highlighted in the above section, many Nigeria business enterprises, both in the public and private sectors, have failed partially or completely as earlier explained. However, business failure just like any other failure has myriads of negative impacts on the economy. For instance, when an enterprise intended to provide services and other benefits to the populace fails, the consequence is the forfeiture of the benefits such enterprise would have yielded, thereby aggravating public sufferings which such benefits and services lost would have abated.
Most business enterprises, for instance, involve a huge amount of capital outlay, which might have been generated through several sources including borrowing; the Solave being the returns and other benefits anticipated from such investment after its completion. This means that the failure of such investment purports a loss of the capital sum invested and the entire returns anticipated from it leading to severe hardship. In short, some of the major specific consequences of the failure of business enterprises on the Nigerian economy manifest in the following ways:
(a) Discouragement of investment;
(b) Inefficient public service;
(e) Inability to obtain loan;
(f) Decrease in Per Capital Income and standard of living;
(g) National Income Disequilibrium;
(h) Political and Social unrest;
If the various problems identified for the various Nigerian business enterprises in this paper are not adequately addressed, it may lead to a situation where investors would decide not to commit their resources to business projects especially where there have been available facts and figures (evidences) that the investments maybe unprofitable. When investment in a particular business line suffers the services and benefits there from are forfeited and people will be constrained to look for alternatives or substitutes to such projects which might even prove to be more expensive. The multiplier effect on investment will be lost should investment be discouraged. Again, when a business enterprise fails, most of the workers involved in the management of the enterprise might feel demotivated due to the snag associated with being a failure thereby reducing the confidence they have in the protagonist of the ill-fated enterprise. When workers are demotivated, their productivity reduces, leading to decrease in the efficacy of their operation’s and increased unit cost of production.
In addition, the failure of business enterprises in Nigeria, irrespective of the nature of the problems, implies that the employment of the services in which most of the workers are directly involved will be discontinued. This leads to unemployment. Again, when government spending on investment in enterprises slackens for fear of loss of the capital sum to be involved, economic growth and development are not enhanced. This resorts to economic dependence on foreign efforts.
Also, inflation is the concomitant effect of reduced investment and productivity resulting from business failure. Inflation connotes a situation where too much money is pursuing too few goods and it is characterised by high cost of goods and services, and a fall in the purchasing power (real value) of money. When enterprises to boost the production of certain goods and services fail, the supply of such products become less than the demand; thereby laying the foundation for inflation. Next, failure of business enterprises, especially these financed by loans, could lead to difficulty in servicing and repaying such loans, assuming that the conditions of the loan warrant that it should be serviced and repaid from the income which these enterprises are anticipated to produce. When this happens, the creditors will loose their trust and confidence in the debtor company resulting in the debtor enterprises losing their credibility and their efforts to obtain subsequent loans from the same creditors might be frustrated by way of creditors insisting on harsh and somewhat inhuman terms. Can you imagine what the fate of a Nigerian business enterprise would be should it find itself in such a circumstance especially when it involves foreign creditors?
Inflation, decrease in productivity mid unemployment resulting from business failure all lead to decrease in per capital income. Per capital income results from dividing the total income generated in a country by the population of the country in a given year. Per capita income falls because reduction in income resulting from business enterprises is not accompanied by proportionate reduction in population.
As regards National income disequilibrium, imports are withdrawals from the nation and if they are not counteracted by proportionate income via exports, it leads to national income disequilibrum. National income is said to be in equilibrium when the total withdrawals from the economic base (1.e. savings, taxation, imports, etc) equates the total injections into it (1.e. government spending, investments, exports, etc).
Finally, when a major business enterprises fails, especially in the public sector, people agitate, and this might escalate to something serious if not checked. Political and social unrest are characterised by the citizens feeling that they are being marginalised by the powers that be and demonstrate their ill -feelings via strike actions, criticisms, and suggestions that there is a need to change the powers that be. Students and workers demonstrations for instance are all indications of social and political unrest.
The Future of the Nigerian Business Enterprises
We have discussed the major problems that are confronting the Nigerian, Business Enterprises. Also, the main consequences of these problems have been highlighted in some details.
Now, what are the remedies to the problems and what will be the future of the Nigerian business enterprises? Experts in business management and administration have agreed that for a better future for business enterprises in any economy, certain steps must be taken without delay. These steps have been highlighted as follows:
1. Adequate feasibility study of business enterprises and their environment;
2. Appropriate Corporate planning and timing of investments;
3. Objectivity in business performance appraisal and selection of personnel to execute them;
4. Behavioural refinements;
5. Encouragement of education and emphasizing the relevance of being educated for business managers;
6. Ensuring accountability and control;
7. Proper fiscal and monetary policies;
8. Adequate finance, personnel policy, and management; and
9. Provision of relevant infrastural facilities,
The inability of the investment owners to conduct a realistic feasibility study of their business and its environment has accounted for high rate of investment failure in Nigeria. Hence, before embarking on any business investment, a critical feasibility study about the reality and viability of the venture should be ascertained in order to avoid its failure in the future and also to save cost.
As per timing, business enterprises should be established at the right time and financial, manpower and material resources disbursement should be done at the right time, place and cost. This makes business investment meaningful, viable and acceptable to beneficiaries in the society. Hence, the perpetual existence of the enterprise can be guaranteed. Again, it is time Nigerians understand that businesses can only be conducted successfully if the ascertainment of their potential viabilities and the choice of personnel to executive them are based on a very high objectivity. This implies that Nigerians should endeavour to make decisions that are devoid of tribal, political and other types of subjective sentiments when the issue of setting up of business enterprises is being considered. For instance, should a typical Nigerian refrain from deceit, selfishness, dubiousness and the inculcated propensity to embezzle company fund, there is apparently no doubt that ceteris paribus business enterprises will be successfully executed, managed and controlled in the Country.
Furthermore, most business enterprises have failed in Nigeria due to inadequate competent and skilled personnel to execute them. Inadequate manpower to manage enterprises could be combatted via personnel Training and Development by ensuring that a greater proportion of the citizenry receives proper formal and informal business education. These can be achieved through encouragement or inducement, on the part of the government, by granting scholarship and subsidising the cost of education in the country.
Accountability and control are vital to the successful management of business enterprises in every part of the world. The concepts of accountability enhances proper keeping of accounting records of all transactions pertaining to the enterprise in question; the reason being that one is made answerable and responsible for his job or duties. Control, on the other hand, involves avenue for ensuring that accruals tally with the intended results. Accountability enhances control because where management of the enterprise are made answerable and responsible, for projects entrusted to them, they tend to be more meticulous and conscious of all transactions relating to the project under their auspices.
Another remedy is that government should strive to design policies in such a way that the execution of business of the enterprises in the country will yield desired results while taking cognisance of the impact of such successful management of the enterprises on the national income. In a nutshell, government should strive to abate funding most of the business enterprises through foreign loan. The reason is that these foreign loans contracted are to be serviced and repaid, and this. might lead to capital flight, which does not augur well for the economic development of the country.
In many cases, business investments in Nigeria failed because they need to make use of infrastructures such as electricity, pipe-borne water, good roads, good communication network. Owing to their being located in place where they are not economically viable. For instance, most enterprises, whose raw. materials are obtained from rural areas (where infrastructures are lacking) have been constrained to be sited in urban areas far away from the rural sources of raw materials due to the need to use the infrastructures available in those urban centres.
Granted that all these remedies are fully implemented and that at the corporate and individual levels adjustments are made, one can rightly submit that a prosperous future awaits the majority of business enterprises in Nigeria. This is predicated on the fact that Nigeria, as a nation, is naturally endowed with human, material and ecological (environmental) resources, which can be proud of by all standards.