(a) Outline any five reasons why small scale firms are common in West Africa.

Answer Details

Five reasons why small-scale firms are common in West Africa:

• Shortage of capital: Most entrepreneurs lack the large funds needed to set up big firms, and access to bank credit is limited, so they start small.
• Small size of the market: Low per-capita incomes and poor purchasing power limit demand, making large-scale production unprofitable.
• Nature of the product or service: Many activities (tailoring, hairdressing, petty trading, local crafts, personal services) are best carried out on a small scale close to the customer.
• Limited managerial and technical skills: A scarcity of trained managers and skilled labour makes it difficult to run large, complex organisations.
• Desire for independence and ease of formation: Individuals prefer to be their own bosses, and small firms are easy and cheap to establish with few legal formalities. (Poor infrastructure and limited access to modern technology also discourage large-scale operation.)