African Entrepreneurship Record

Chapter 1384: Chapter 369: Crisis Awareness (Part 3)

”Especially in terms of tax policy, certain adjustments should be made to encourage the development of innovative technology companies and high-quality enterprises. For example, we should encourage the development of emerging industries such as electronic technology, electric power industry, alloy research and development, chemical industry, and new material research and development.”

”In the financial sector, rectification and correction are also necessary. Although our country’s financial industry has seen initial development, the problems revealed are quite severe. The experiences of past economic crises in Europe and America have taught us that inadequate regulation and excessive leniency in the financial sector are significant causes of economic crises.”

After all, the first investment for many entrepreneurs comes from banks and other financial institutions. If these funds are not used properly, it easily results in bad debts, leading to financial explosions. The last economic crisis started from the financial sector in Vienna.

”Lastly, in the private sector, East Africa has now entered the market economy era, and the proportion of private investment and privately-run enterprises has surpassed state-owned capital. However, the government cannot simply let private enterprises go unchecked because of their identity.”

”There should also be severe crackdowns on those who disrupt market rules, rectifying market behavior, while supporting high-quality enterprises to enhance the market’s risk resistance capability.”

Enterprises are connected to employment issues. If too many enterprises go bankrupt during an economic crisis, it can trigger serious social problems, but the East African Government definitely doesn’t have the capacity to act as the parent for all companies.

Moreover, private enterprises are relatively purer compared to East African state-owned enterprises, lacking corresponding social responsibilities and political tasks.

However, even in this context, many companies remain profit-driven and do not produce actual social value; instead, they harm the market environment and ethos.

For a typical example, during the railway construction boom in the last century United States, many shell railroad companies were afoot, which might not have built an inch of track but still made a fortune by hyping stock prices through public opinion.

Their existence not only left the final investors destitute but also marred social ethos. After all, many railway companies were earnestly building railroads but not making money, possibly even losing money, while shell companies using railroads as a front to speculate on stocks made a killing. Who can accept this psychological disparity?

The eventual result was that more and more railway companies chose to take ”shortcuts,” leading to the economic crisis in the 1970s United States.

The East African Government, aiming to stimulate the growth of the private economy, originally had relatively lax management, so such situations were bound to occur. What the East African Government needs to do now is nothing more than ”setting things right,” so that market order returns to normal.

Only when market order returns to normal can corporate and consumer confidence be restored, allowing truly responsible and industrious companies to thrive.

Of course, despite many existing economic problems, East Africa has not suffered significant impacts over these years due to the economic fervor. After all, when the economy is good, opportunities abound, and ordinary people’s margin for error is high, not leaving them with no way out.

However, pretending not to see because there are no immediate impacts will only lead to bigger problems when outbreaks occur in the future. The East African Government’s market environment rectification will certainly go through a period of pain, but compared to being turned upside down after an economic crisis, such a so-called pain period is trivial.

This also implies that the East African economy will surely not be as dazzling as before and may even enter a phase of relatively sluggish economic growth, which is a first in East African history. Before the 19th century, due to territorial expansion and other reasons, the East African economy had been in a high-speed growth phase. In the first two decades of the 20th century, the East African economy developed even faster, making this likely the first time for the East African Government to face an economic headwind.