How does capitalism help the Nigerian economy

Economy according to system "D" in West Africa

Economy according to "System D"

"System D" is used in many African countries. "System D" stands for "independent" and "smart" (French "d├ębrouillard") or for "muddling through" (French "se d├ębrouiller").

80 percent of all business in Nigeria is not booked, four out of five people work informally, which means: They are not registered, do not pay taxes, are not protected, but still stimulate the economies of their countries.

What problems do small business owners have?

Small traders in Lagos are struggling with constant blackouts. The ailing infrastructure is noticeably burdening the economy: power outages cost 0.5-2 percentage points of economic growth, says Professor Michael Grimm, economist at the University of Passau.

Many Africans cannot afford loans because the banks charge 20 to 25 percent interest per month and very fast repayments.

But illnesses are also a serious financial risk for small business owners. Malaria treatment in Burkina Faso, for example, costs the equivalent of around four euros. That corresponds to an income of three days.

Even so, so far only five percent of small business owners in Burkina Faso have taken out health insurance. One reason for this is the superstition of many people. They think that you shouldn't plan for illnesses, otherwise you will attract them.

Microcredit and health insurance

Burkina Faso and Nigeria: Two West African countries with flourishing black economies and different conditions for informal small business owners. In Burkina Faso there is state support in the form of microcredits and health insurance that protects the people.

The granting of loans could also afford Nigeria. The country is one of the largest oil exporters and has probably earned well over $ 280 billion in the past 30 years.

But the majority of the population and most small businesses do not get the money: no electricity, no infrastructure, no economic aid and no loans.

Loans and investments in the infrastructure of African countries would help small traders more than traditional development aid, which often only fills the pockets of governments.

That hinders the upswing in these countries, which is currently mainly coming from the small, smart entrepreneurs with the big ideas.

Authors: Tanja Fieber / Jan Kerckhoff

Status: 25.11.2016, 3:00 p.m.