What An Entrepreneur Can Do To An Economy
I have the feeling policy makers in Cameroon and Africa in general are still to understand what an entrepreneur can do to an economy. The other day, the President of the Republic of Cameroon sent out a presidential decree to employ 2000 PhD holders into the state universities. It was just a decree and not something debated in parliament. Nothing was done by policy makers to find out if that was the necessary thing to do. The entrepreneur is still waiting for a day to benefit from such largess.
Dependence on government for employment
That same day the decree was passed, I received another document in our classmates forum – Rapport Du Groupe De Travail Sur La Fiscalite Mis En Place Au Sein Du GICAM. The report showed how the growth of the economy is in high contrast with the growth in tax revenue especially that collected by the Directorate General of Large Enterprises. According to the report, the Directorate General of Large Enterprises collected between 2013-2017 up to 750 billion francs as tax revenue. That is about +66% in relative terms.
This may look very promising in the eyes of the government or the layman. We may not know the consequences of this on the businesses that pay thneverese taxes. During the same period, the reports says that GDP fell from 5.4% to 3.2%, that is a drop of up to 2.2%. If you notice, the performance is not at all in line with the growth in tax revenue in the same period.
Effects on the economy
On a bigger picture, in this same period, the large enterprises (companies that have a yearly turn-over of at least 3 billion francs CFA and above) saw their combined turn-over reduce from 8,500 billion francs CFA to 7,220 billion francs CFA. That makes it a drop of 15%. Because the tax revenue increased doesn’t mean that more wealth was created. To GICAM, the companies involved rather had to deduct money from their running cost, were not capable of improving on their productivity or are non-competitive and could not increase their investment.
In a nutshell, the few companies involved are overtaxed. If they are already crying now, what will happen to them in two years when 2000 PhD holders will be employed; the military and police has recruited within a very short period thousands of youths and many other things.
An economy will never experience growth when the government serves as the biggest employer. An economy is strong because entrepreneurs are its backbone. Entrepreneurs and their businesses generate wealth in the economy. Entrepreneurs:
Create new businesses
An entrepreneur creates businesses. The businesses come in the form of products and services. This stimulates other businesses that support or work with the new venture, thus increasing economic development
Provide employment opportunities
If policy makers really want to reduce the rate of unemployment, then it can be done so by encouraging entrepreneurship. A new business by an entrepreneur doesn’t only make less one unemployed but may create more jobs, bring in more economic opportunities, increasing the standard of living of the community and many others.
Contribute to the gross national product
Above, we realize that the tax revenue increased 66% meanwhile the annual turnover of the large enterprises reduced drastically. One of the reasons may be because there are very few enterprises that pay the taxes making them over burdened. But with an increase in the number of entrepreneurial activities, there will be an increase in products and services that will lead to a higher GNP. Remember GNP is calculated on the bases of the total number of products and services that are available in a country.
Promote innovation and new technologies
An entrepreneur is someone who sees problems, finds solutions, puts in resources and sells the solution for profit. They turn ideas into products and services that are needed by the people to better their lives. For economic growth to occur, we need new technologies, innovation and creative applications. Where there is rapid innovation, we find it accompanied by strong economic growth.
The government as a regulator
The government has a great role to play in nurturing entrepreneurship as well serving as a regulator because it requires a balance. If entrepreneurship is also not regulated, it may have negative social outcomes like unfair market practices, corruption, financial crises and so on.
When the number of entrepreneurs are too high, it may lead to a fierce competition that comes in with high levels of aspirations and loss of career choices. However, from the look of things, our economy is not even near to such a situation. We are in need of more and more entrepreneurs to bring our country out of this economic crisis.
If Cameroon wants to become an emergent economy by 2035, then the government needs to encourage the creation of more businesses than employing thousands of Cameroonians into the civil services who consume more wealth than create.
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