CHALLENGES ASSOCIATED WITH THE TERTIARY PRODUCT FINANCING OF AFRICA  INDIGENOUS PRIVATE SECTOR

The article express-objective, is to address the challenges in attracting quality investors to the tertiary sector venture financing of the third world countries; revealing the major causal factors of these challenges to guide entrepreneurs, who are seeking to launch service oriented products in the area of IT-consultancies in various fields of professional service delivery, to have the wide understanding towards influential issues of the service industry as a precept in making critical decisions, whenever there is a desire to outsource for equity or debt financiers in the early stages of the enterprise growth circle.

It is generally an entrenched perception globally that the third world countries economic market is best known for its ‘green’ primary sector industries, with few of such countries being successful in the ability to slightly transition their economy to the secondary sector industries of which they have the capacity to convert their raw materials extract from their economy into processed goods before export, thereby economically labelled as ‘developing’ countries. These two major sector structures, the primary and the secondary, which highly characterized the stylish Africa industrial economy, are expected to co-operate with its quaternary sector described as the knowledge-based part of that same economy. The article will discuss subsequently in detail the quaternary sector for a quality understanding, as well as its functioning structure within an economy, which should be a compass guide to any start-up ‘services-provider’ from developing and underdeveloped countries. An entrepreneur within a developing country needs to acknowledge the fact, that to operate from an investor’s perspective, easily command investment support, rather than engaging in an abstract tertiary-sector-service, with a market penetration focus of advertising and branding, which, in most cases, the service product suffers market penetration frictions and stagnancy, which grant the basis for enterprise investment proposal rejection at any point in time.

In the interest of this article, the tertiary sector of an economy will be defined as the ‘service producing’ industry for both external and internal market consumption of any nation, which to some extent holds a similar characteristic of the quaternary sector. However, the difference between the tertiary and quaternary sectors in services product offering is that the tertiary sector functions as an autonomous industry or independent system of any sovereign state economy, but the quaternary sector is a service dependent industry per the functioning performance of the primary and secondary sector of any sovereign State economy.  

With such a brief submission is to admonish a potential entrepreneur seeking quality financier(s) towards their venture projects, having the location of the business in a third world country, to have the following outlined precautionary measures, as a guide towards a well understanding ‘product-service’ architecture before establishing the vision of the business and its related mission.

As a business promoter or entrepreneur in the services delivery industry, you have to take into consideration that you cannot engage in a product/service, you have no control over the clients’ target and attention within the choice of market to serve, which means, you cannot promote a type of tertiary sector products with your major target clients outside the country of the business origin, and more so without such trading country partner having a strong positive historical performance evidence of the country your business is located within. As a matter of fact, it will be difficult to be successful in your venture-service delivery. No matter your competency in that services delivery, it will still not draw investors’ interest in your enterprise.

          For example, you cannot establish a venture in any of the West African countries currently, and claim to offer Space Satellite Engineering Services and proceed with decorative ‘information of memorandum’ for the business, and expect competent investors will take your venture seriously for funding.

In the past six (6) months most of the project-services document submitted to my table for a review and assessment of the risk content for funding procedurals held such stylish weaknesses in the project model as stated above. You could realize the project promoters have high enthusiasm and hypothetical confidence towards their project model and potential performance. However, after their submission is vetted their confidence level seems to reduce completely, especially at the stage of the risk assessment test in the area of the market, operational, and finally, the value-at-risk test.

It never the desire of any competent Investment Banker to kill a dream or any vision, which have the possibility to propel this world to its pinnacle of civilization. Investment Bankers are professionals who aspire to become a qualified medium for great ideas that will stand any adverse effects with time to the benefit of humanity, in other to offer capital engineering support. Therefore, it becomes imperative that both the entrepreneur and the investment banker in their exchange transaction will hold a professional consensus towards a particular project vision, despite different angles of evaluation of potential enterprise success.

A [quaternary] sector of an economy has been briefly defined earlier, as an information centre of any economy. This implies any kind of quaternary sector service, have to focus on the context and benefit of a national economy, like the information and communication technologies, consultancies services, research & development designed, should all be of national dependents.

When a service provider of a developing and underdeveloped economy is capable to assure investors of quality services delivery in a quaternary perspective, it makes an easy effort of a banker to define the business’ basic market scope with a very high degree of certainty and potential corresponding rewards to easily compute the financial metrics and models for the risk assessment test.

It is on this level of cogent conceptualization of the business-venture, which does attract investors’ risk curiosity for funding consideration. Therefore, if you believe you have the capacity as a service delivery entrepreneur, whose service offering falls within the Global Industrial classification standard, which is an industry taxonomy accepted by the United Nations and was developed by Morgan Stanley Capital International and Standard & Poor’s in 1999. Then my recommendation to you, as an Entrepreneur is to have the desire to design the venture-services innovation within the framework of the quaternary sector perspective of the country where the business is sited, in other to command a strong investment prospect as a domestic enterprise of African origin.

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Emmanuel TWENEBOAH SENZU Ph.D., professor of Economics and Finance at Njala University, School of Social Sciences & Law. And a technical fellow to Sierra Leone Central Bank.

Post source : Frederic Bastiat Institute library

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