Sage Journals: Discover world-class research

Abstract

Scholars have acknowledged that government policies habitually affect business activities indirectly and directly. However, limited focus has been given to their impacts across business sectors. Hence, the question here is whether government policies exhibit equal impacts in every business sector. Hence, the study examined some selected policy factors that boost business activities in two emerging African economies. Specifically, it identifies the most auspicious government policy in each sector. The study was conducted in the commercial hubs of two emerging African economies (Nigeria and South Africa), where most business activities take place. A total of 1,200 semi-structured questionnaires (550 in Johannesburg, South Africa, and 650 in Lagos, Nigeria) were administered. Principal component analysis was utilized to pinpoint the most favourable government policy in each business sector. The findings highlight that some variations exist in the policy implementation tactics of both economies and that government policies exhibit unequal impacts in all the business sectors of both economies. Also, the findings further clinched that some government policies are more auspicious than others in some sectors. The implications for entrepreneurs, researchers and policymakers are further discussed, while a clarion call is made for more in-depth studies on government policies for specific businesses in selected sectors.

Keywords

Government policies business sectors emerging economies Nigeria South Africa

Introduction

One of the distinctive features between industrialized and emerging economies is undoubtedly the efficacy of policy design, development and implementation process in the health, education and business sectors, to mention but a few (Sachs et al., 2021). Some broad macroeconomic policies that can influence business outcomes include monetary and fiscal policies (Ibrahim & Muritala, 2015). Some of the monetary policies include exchange and inflation rates, pricing policy and interest rates, while fiscal policies include government spending, debt management and taxation. Other specific policies that apply directly to the business sector range from tax policies, access to capital, trade regulations, subsidies and business registrations.

The business sector reflects a nation’s economic power, which is largely contingent on the various entrepreneurial activities. Clusters of independent businesses make up business sectors and serve as the backbone of economic growth, political prowess and development. For instance, these businesses provide their local communities with job opportunities, revenues, services and tangible products. They not only contribute economically but also innovatively to social entrepreneurship and charity organizations, while the large businesses help in building dynamic infrastructures and serve as catalysts for other sectors to grow. Second, businesses may start as aimed at solving local challenges, meeting indigenous needs, but ultimately become transnationals and help in solving global challenges. Moreover, most of the multinational corporations control financial and human resources of a high magnitude, thereby increasing their relevance across borders.

Policies that shape entrepreneurial activities in emerging economies are known to be fraught with many challenges. For instance, some studies have reported the dual effects of government policies on the growth and sustainability of entrepreneurial activities (Anusha, 2012; Zhidebekkyzy & Zada, 2021) and, in some cases, outright negative effects (Ibrahim & Muritala, 2015; Mark & Nwaiwu, 2015). Meanwhile, factors including grants (Dvouletý et al., 2021), basic infrastructures and enabling environment help entrepreneurship thrive in industrialized economies (Kurpayanidi, 2021; Mohammadi & Zivari, 2021), but the influence of governance vis-à-vis entrepreneurial activities, business growth and economic development is still unclear in emerging economies. This is especially with recourse to government policies having rippling effects not only on entrepreneurial activities within a region but also on the general well-being of the citizens (Durand & Exton, 2019; Huang et al., 2018). The entrepreneurial dimension within business sectors is of peculiar interest in this study, given that government policies can go a long way to shape risk-taking outcomes, wealth creation, innovation, new jobs and economic growth.

Some studies have examined the effects of government policies on economic activities (Akinyemi & Adejumo, 2018; Kamal et al., 2015). Other studies have presented discussions on specific sectors such as agriculture (Smith et al., 2019), telecommunications (Bankole et al., 2015) and textiles (Muhammad et al., 2017), but have not presented the holistic views in specific sectors of an economy. In other words, there is a dearth of studies on the holistic effects of some government policies on specific groups or clusters of related or similar businesses, otherwise known as business sectors. One study that examined government policies on entrepreneurship growth and development in Nigeria analysed entrepreneurship and monetary policy as exogenous components to explain entrepreneurial outcomes (Salami et al., 2023). However, this study makes a shift by examining some selected government policies across the business sector in two emerging African economies—Nigeria and South Africa. Specifically, some of the government policies utilized cut across businesses, which include taxation, labour law, market regulation and the business registration process. Therefore, the main issue of interest within this study is to examine the most crucial policy enhancing business activities in each sector. To address this issue, the objectives examined include identifying the frequency of policies enhancing business outcomes, confirming whether government policies exhibit equal impacts in every business sector and identifying the most auspicious government policy enhancing entrepreneurial activities in each sector and subsequently comparing them in each sector of both economies.

The study utilized a quantitative method of analysis that administered semi-structured questionnaires to a total of 1,200 respondents—550 samples for Johannesburg, South Africa, and 650 samples for Lagos, Nigeria. The findings show that variations exist in both economies’ policy implementation tactics. Meanwhile, we find that government policies exhibit unequal impacts in both economies’ business sectors. Also, the findings highlight that some government policies could be more favourable in some sectors compared to others. The implications of these findings depict that policymakers in emerging economies need to make some beneficial sector-specific policies targeted at advancing entrepreneurial activities in specific sectors.

Theoretical Overview of Government Policies and Entrepreneurship

A policy refers to a set of ideas or plans used as a basis for decision-making, especially in government, management or business (Akinyemi & Adejumo, 2018). In other words, a policy can be stated as a plan or course of action, made by a governing body, political party or business organization, intended to influence and determine decisions, actions and other matters (Minniti, 2008). Government policies in emerging and industrialized economies range from rules targeted towards ensuring law and order, such as traffic laws, to rules about citizens’ safety, defence and economic activities. These policies, undoubtedly, affect the targeted activities (Minniti, 2008).

The popular artwork ‘The Praying Hands’ reaffirms the need to support entrepreneurship development irrespective of learned or inherent capabilities or innovative abilities of an entrepreneur (Heathcote, 2015). The expected support ranges from internal and external sources. While internal sources of support could emanate from close relatives and family members, immediate work superiors and strategic leaders, external support emanates from institutions and the government. The Keynesian economics notes the possibilities of market failures originating from a completely free enterprise economy and, as a result, emphasizes the pivotal role of the public sector or government involvement in stimulating, stabilizing and sustaining entrepreneurial activities, especially when there are business troughs or general economic recession (Jahan et al., 2014).

Although entrepreneurs possess some traits and characteristics that can stimulate creativity and innovation, government policies affect business activities directly and indirectly. Policies such as taxes, tariffs and monetary policies have rippling effects on entrepreneurial activities. For instance, if the government decides to mop up funds from the economy, it can sell treasury bills to the public, which will reduce the money in circulation, affect investors’ willingness to release funds and cripple entrepreneurial activities. On the other hand, if the government decides to increase the money supply within an economy, through the apex banks, they can either reduce reserve requirements, lower discount rates or purchase securities (Chaitip et al., 2015). This will not only cause more liquidity to be available through the commercial banks but can equally stimulate economic activities through investments and entrepreneurial activities.

Furthermore, Adam Smith’s (1998) work on The Wealth of Nations highlighted that liberal commercial policies promote nations’ wealth. Countries that changed their policies from socialism to capitalism recorded increases in innovation and economic activities (Acs & Szerb, 2007). While the self-interest of entrepreneurs motivates them to set up businesses, regulatory policies can stimulate and promote entrepreneurial activities within an economy and are critical for boosting economic outcomes. As a result, Smith advocated for policy reforms such as the abolition of local taxes and duties, free choice of occupation, free trading activities across borders and the repealing of laws that restrict the free transfer of land.

When governments establish rules and regulations that guide business activities, entrepreneurs and business operators usually align their modes of operation to conform to the set rules and regulations. For instance, Pastor and Veronesi (2012) pointed out that when the government announces its policy decisions at a particular point in time, stock prices change. Meanwhile, the direction and magnitude of the change depend on whether the government decides to maintain or amend an existing policy, as well as the extent to which the decision is unanticipated. Also, when governments change the rules regarding business activities, entrepreneurs and business operators adjust the way they operate. For instance, instead of internal factors dictating the pace of business performance, institutional theory highlights the possibility of external forces, which may include governance, social or cultural factors, in shaping organizational behaviour (Willmott, 2015). Therefore, entrepreneurs and business operators must comply with regulations established at all levels of governance relating to their business. This is because economic policies and market guidelines impact the establishment, growth, attractiveness and profitability of businesses.

Government Policies on Business Sector Performance: Literature Review

If well implemented, government policies can act as market catalysts and provide political stability, good interest rates and trade regulations that boost business activities (Kirchner & Van Wijnbergen, 2016; Wallison, 2009). As a market catalyst, the government can implement policies that change social behaviour in the business environment (Kirchner & Van Wijnbergen, 2016; Pastor & Veronesi, 2012). For instance, governments can impose taxes on the use of carbon-based fuels and grant subsidies to companies that use renewable energy, by endorsing a fiscal policy that will support new technology that will result in the required change. And conversely, they can dissuade investors from participating in a particular sector by imposing excessive taxes or duties. Similarly, taxes and levy exemptions in some specific sectors, such as agriculture and education, can spark investments therein and stimulate growth (Crandall-Hollick, 2018; Dias & Rodrigues, 2019). Also, high levy rates on imported goods, for instance, may incite local production of such goods, while a high tax rate on raw materials would hamper domestic production.

Public policies are reflections of the political mindset vis-à-vis sociocultural context (Basheva et al., 2012; Durand & Exton, 2019; Ngugi, 2021). Some policymakers are more open-minded and implement policies to enhance the general well-being of the citizens, while some implement policies based on sentiments. Policies hewed in diplomatically stable economies will be very different from those formed in unsteady economies. An unwavering political system often creates business-friendly resolutions that foster local businesses and magnetize foreign investors, while an unstable system with policy overlaps or somersaults brews hurdles that cripple the government’s ability to sustain law and stability, which, invariably, have deleterious effects on business activities (Pergelova & Angulo-Ruiz, 2014). Governments usually generate money from taxes. Therefore, increased spending requires increased levies; tax increase usually discourages investments, remarkably among entrepreneurs, who assume the risks of birthing and overseeing businesses (Tolakov & Boypulatov, 2019). Increased tax burden eats into the restricted pool of reserves, leaving less money for private investments. Additionally, depletion in private or individual investments shrinks economic activities and production of quality goods and services, which may lead to limited opportunities for expansion and loss of jobs. Meanwhile, lower taxes and interest tariffs attract investment and enable businesses to increase their production, while higher rates can usher in shrunken consumer expenditure.

Furthermore, government policies influence interest rates, a rise that increases borrowing costs in the business community (Wallison, 2009). Sometimes, governments impact interest rates by printing more money, which oftentimes leads to inflation, and businesses do not bloom during such high levels of inflation (Amhimmid et al., 2021). Also, government policies in the form of commerce regulations, a modicum wage and the statutory requirements for licenses or permits affect businesses (Mele & Sangiorgi, 2021). For instance, business activities are impaired when entrepreneurs and business owners spend lots of time and wealth to comply with regulations that ultimately prove to be superfluous and ineffectual. Just and efficient regulations, conversely, promote business growth (Rasulova & Obidova, 2019).

Recognizing the continuity, multiplicity and possible overlaps of government policies, it is possible to have different public policy roles in shaping business performance across different sectors. Therefore, by comparing public policies across two emerging economies—Nigeria and South Africa—this study delves into cardinal government policies that shape business performance in different sectors. In recognition of the need for policies that can boost enterprise performance, many countries have implemented policies to promote entrepreneurial activities. The Small Business Innovation Research programme established in the United States increased the survival and growth rates of SMEs in the region (Gilbert et al., 2004; Lerner & Kegler, 2000). In Europe, the Department for Trade and Industry develops policies to promote entrepreneurial activities and encourage SMEs to trade internationally (Curran, 2000; Wright et al., 2007). In Taiwan, policy measures such as establishing industrial parks, the Industrial Technology Research Institute and local industrial clustering have enhanced entrepreneurial vitality (Lin et al., 2010). In developing nations, entrepreneurship policies have been implemented to promote entrepreneurial activities. The National Small Business Act, 1996, of the Republic of South Africa was promulgated to promote entrepreneurial activities in South Africa (Ladzani & Van Vuuren, 2002; Nieman, 2001). The Small and Medium Enterprises Development Agency (SMEDAN) was established in Nigeria to promote entrepreneurial activities by facilitating access to funds and other resources needed for SMEs (Oliyide, 2012). All these policies and programmes are targeted towards promoting entrepreneurship.

Business Sectors

Entrepreneurial activities, irrespective of their nature and similarities, can be categorized into various sectors (Stumpf et al., 2021). Entrepreneurial activities in emerging economies could be classified into either three, five or seven business sectors. The three-sector theory on industrial classification comprises tertiary, secondary and primary sectors (Dias & Rodrigues, 2019). The five-sector theory describes business activities as consisting of primary, secondary, tertiary, quaternary and quinary. Meanwhile, the seven-sector classification gives an elaborate description and makes comparison across countries easier. Hence, it was used for this study. Table 1 shows the major lines of businesses operating in South Africa and Nigeria as well as the classification into seven sectors.

Table 1.

Major Lines of Business in Nigeria and South Africa.

S. No.	Sector	Description
1	Food	Production and sales of food items, drinks and beverages
2	Textile	Production of clothes, apparel and fabrics
3	Wood	Wooden items, paper and wood products like coal
4	Pharmaceuticals	Production and sales of drugs, insecticides, chemicals and rubber products
5	Metal	Fabricating metals, production of roofing sheets, cutlery and other steel products
6	Telecommunication	Production and sales of computers, mobile phones, electronics and electrical appliances
7	Service	Doctors, nurses, architects, plumbers, hairdressers, auto mechanics, engineers and other service-rendering organizations

Source: Adapted from Akinyemi (2016).

From the foregoing, numerous government policies are known to influence business activities, but their relative importance is unknown. Therefore, the hypothesis is that policy factors are equally important in all the business sectors.

Methodology

This research was steered in the economic hub of the selected Western and Southern African emerging economies, Nigeria and South Africa (Ngwenya & Simatele, 2020). Lagos is Nigeria’s commercial centre where most business activities occur (Tijani et al., 2012). It is located in the Southwestern part and is one of the most populous cities in Nigeria. Relatedly, Johannesburg is South Africa’s commercial centre where maximum business activities occur (Callaghan & Venter, 2011). It is also the largest city in South Africa and the provincial capital of Gauteng.

Nigeria and South Africa are two emerging economies of very high economic relevance in Africa and the globe (Herrington et al., 2011; Kolade et al., 2021; Ngwenya & Simatele, 2020). It is therefore important to understand how differently some government policies may affect different sectors of the economy. The major motivation, therefore, was to find out if the selected government policies are equally important in each business sector. To achieve this, the first objective was to examine the impact of government policies in each sector, the second objective was to identify the most enhancing government policy in each sector, and the third objective was to compare the findings at each level of analysis.

The marked population encompassed Nigerian and South African entrepreneurs. The sample mass entailed entrepreneurs in Johannesburg and Lagos. Overall, 1200 questionnaires were duly administered. And because the projected numbers found in existing literature divulged that fewer businesses existed in Johannesburg than in Lagos, 550 questionnaires were administered in Johannesburg and 650 in Lagos. They were made up of business owners between 18 and 64 years old, as embraced by the 2018/2019 Global Entrepreneurship Monitor that Ngwenya and Simatele (2020) used. The study samples mirrored a satisfactorily extensive depiction of entrepreneurs in all the business sectors, and quantitative analysis was used to achieve the set objectives.

This research was steered in strict compliance with social research ethics such as anonymity, voluntary consent and confidentiality. For the construct validity, the vital concepts were appropriately defined, and the operational measures were identified. Cronbach’s α was used to check for reliability (Cronbach, 1951; Santos, 1999). The investigation instruments were also pre-tested to certify that the subjects understood them well. Respondents were requested to hand-pick the level of importance of each of the four types of government policies—tax, labour laws, market regulations and registration process—based on Likert’s 5-point scale of most crucial, very crucial, somewhat crucial, slightly crucial and not crucial. Using principal component analysis (PCA), the responses were then analysed based on the business sectors identified in the extant literature. The data collected were cleaned and analysed using STATA. Non-parametric tests, specifically PCA and χ², were used because of the nature of the data. PCA was utilized to identify the most vital types of policies in each business sector. Also, the χ² test was adopted to display the connection between the variables, and Cronbach’s α was used to test the reliability and internal consistency of some of the key indicators.

Research Findings

Socio-demographic Characteristics of Respondents

After the 1,200 questionnaires were duly administered, the suited surveys were 1,148 (609 emanated from Nigeria and 539 from South Africa). Table 2 shows the backdrop functions of the appraised entrepreneurs and reports on their business organizations. Looking at gender, the vastness of the establishments surveyed was male-owned (63% in Nigeria and 62% in South Africa). The median age of the sampled entrepreneurs in each international location becomes very close (31 years in Nigeria and 32 years in South Africa). The age distribution leaned majorly towards the younger age range of 18–33 years, constituting noticeably more than half of the respondents (53% in Nigeria and 51% in South Africa). More than one-fourth were aged 34–41 years, and about 6% in Nigeria and 7% in South Africa were aged 50 years or more.

About 27% of entrepreneurs sampled in Nigeria and 34% of those sampled in South Africa had a college diploma; only 2% of those in Nigeria and about 10% in South Africa had a postgraduate diploma. Relatively, most of the sampled people, the ones in South Africa, confirmed a better percentage of those with a minimum of a university diploma than their opposite numbers from Nigeria. This is not surprising because a large chunk of the business proprietors in Lagos are Igbos, who would rather explore a trade and go straight into commercial enterprise than pass for a college degree.

The statistics at the business firms in Table 2 also show the seven main classifications of entrepreneurial activities in both economies, particularly meals/food, textile, prescribed drugs/pharmaceuticals, steel, wood, telecommunication and services. The three most populous sectors in both economies were the service providers, meals/food and fabric sectors. The service sector (30% in Nigeria and 47% in South Africa) is constructed from businesses, including hairdressing salons, medical practitioners and day care centres. Restaurant proprietors, cooked food and raw meal dealers dominated the food quarter (17% in Nigeria and 19% in South Africa). The textile businesses (13% in Nigeria and 15% in South Africa) included fabric-manufacturing corporations, sellers and dressmakers.

Table 2.

Characteristics of Sampled Entrepreneurs in Nigeria and South Africa.

Variables	Nigeria		South Africa
Variables	Frequency N = 609	Percentage	Frequency N = 539	Percentage
Gender
Male	385	63.2	336	62.3
Female	224	36.8	203	37.7
Age in Years
18–24	80	13.3	65	12.1
25–33	238	39.6	209	38.9
34–41	159	26.5	155	28.8
42–49	87	14.5	70	13.0
50–57	24	4.0	27	5.0
58–65	13	2.2	12	2.2
Median age	31.2 years		32.4 years
Academic Qualification
Below first degree	421	71.0	299	56.1
First degree	162	27.3	183	34.3
Master’s	8	1.4	43	8.1
PhD	2	0.3	8	1.5
Nationality
Nigeria	589	97.9	90	17.7
South Africa	5	0.8	280	54.9
Other	13	2.4	168	31.2
Religion
Christianity	474	77.9	407	75.5
Islam	122	20.0	47	8.7
Others	13	2.1	83	15.4
Business Sector
Food	104	17.4	103	19.3
Textile	77	12.9	80	15.0
Wood	43	7.2	21	4.0
Pharmaceuticals	43	7.2	7	1.3
Metal	75	12.5	25	4.7
Telecommunication	74	12.4	49	9.2
Service	182	30.4	250	46.7

Discussion of Research Findings

In order to confirm if there are similarities between the styles of authority policies for the commercial enterprise sectors, the regulations enhancing corporations in every quarter were first tested, and then the maximum critical factors were identified. The section ‘Socio-demographic Characteristics of Respondents’ provided the bedrock of the evaluation by means of imparting the reliability coefficients of the study findings and effects of the policy sorts on the commercial enterprise sectors. This next section addresses the goal of showing a vast-brush presentation of the various coverage types, enhancing businesses in every zone of each economy.

Distribution Pattern and Statistical Significance

The respondents were asked to rank the forms of regulations enhancing their companies. The bar charts (Figure 1) show the frequencies of decisions on rules improving companies, inside the business sectors in Nigeria and South Africa. This means that the guidelines for improving business activities in those economies vary. These findings are further shown within the next level of analysis.

Figure 1.

Policies Enhancing: (a) Food Sector, (b) Textile Sector, (c) Wood Sector, (d) Pharmaceutical Sector, (e) Metal Sector, (f) Telecommunication Sector and (g) Service Sector.

Table 3 offers the bivariate distribution of the guidelines with an emphasis on each distribution sample and the statistical importance of every variable within the purview. As shown in Table 3, without controlling for commercial enterprise sectors, all of the variables were statistically significant (p <.05) in each economy as well as for the mixed records set. Statistical importance is usually represented by way of a lowercase p and represents probability. Hence, p <.05 means that the possibility of those outcomes being a fluke is less than 1 in 20 instances, which translates to the accepted possibility level for studies inside the social sciences, whose effects may be inaccurate.

Table 3.

Cross-tabulation of Selected Policies in Nigeria and South Africa.

Countries	Nigeria (n = 598)		South Africa (n = 535)		Both Countries (n = 1,133)
Countries	Percentage (p Value)	χ²	Percentage (p Value)	χ²	Percentage (p Value)	χ²
Policies	4 items
Tax	0.7 (.00*)	53.62	1.1 (.01)	10.01	0.9 (.00*)	39.59
Labour law	0.5 (.00*)	53.61	0.4 (.01*)	9.99	0.4 (.00*)	39.56
Market regulation	1.2 (.00*)	53.65	1.1 (.01*)	10.01	1.2 (.00*)	39.61
Registration process	1.2 (.00*)	53.65	0.9 (.01*)	10.00	1.1 (.00*)	39.60

Note: *significant at p <.05.

For this study, the statistical significance highlights the relative significance of the rules enhancing organizations in every business sector. A fundamental, considerable truth in Table 3 is that the combined measures of the coverage elements align with the literature evaluation sections, where all of the factors have been reported as critical for entrepreneurial spots. The aforementioned research studies, flagging the importance of this coverage, were carried out independently, under extraordinary circumstances in time, and were not particular about their intensity. Hence, minus controlling for sectors, the holistic view is that every one of the policy elements is equally relevant. Meanwhile, when enterprise sectors are added, as proven in Table 5, thrilling insights are received.

Considering the holistic distribution styles in Table 3, market law and registration process are the maximum improving guidelines for entrepreneurial spots in Nigeria. In South Africa, tax and marketplace regulation have been the maximum. In the pooled data, registration system was the maximum. This shows that the entrepreneurs in both rising economies corroborated the fact that the improvements within the registration process in each economy did boost their companies. This shows that the entrepreneurs in both rising economies corroborated the fact that the improvements within the registration process in each economy did boost their companies.

The disaggregated distribution sample (Table 4), on the other hand, indicates that some rules are sector-unique in their domains of effect. For example, in Nigeria, the meals/food quarter noise tax and prescription drugs echo all the selected policy regulations as enhancing their organizations. However, in South Africa, the telecommunications flag tax, whilst the service region flags all the selected guidelines as improving elements for their organizations. In the pooled facts, however, the service sector attests to the reality that each one of the chosen regulations enhances its sector, even as alternative regulation is the most effective policy enhancing businesses within the pharmaceuticals area.

Table 4.

Cross-tabulation of Government Policies Across Business Sectors in Nigeria and South Africa.

Sectors	Nigeria		South Africa		Both Countries
Sectors	Percentage	χ²	Percentage	χ²	Percentage	χ²
Food
Tax	1.9*	6.17	0.0	1.64	0.9	1.36
Labour law	0.9	3.70	0.0	0.66	0.5	1.35
Trade regulation	0.0	4.75	0.0	1.64	0.0	4.33
Registration process	0.9	3.22	0.9	0.18	1.0	1.36
Textile
Tax	0.0	0.59	1.3	1.03	0.6	0.63
Labour law	0.0	0.44	0.0	1.39	0.0	1.32
Trade regulation	1.3	0.02	0.0	2.14	0.6	0.93
Registration process	0.0	1.03	1.3	1.11	0.6	0.82
Wood
Tax	0.0	0.31	0.0	2.14	0.0	2.30
Labour law	0.0	0.23	0.0	1.94	0.0	1.98
Trade regulation	0.0	0.54	4.8	4.36	1.6	1.76
Registration process	2.3	0.57	0.0	2.09	1.56	1.81
Pharmaceuticals
Tax	2.3	3.10	0.0	0.69	2.0	3.44
Labour law	0.0	1.41	0.0	0.63	0.0	2.98
Trade regulation	4.7*	6.08	0.0	0.69	4.0*	6.42
Registration process	0.0	1.73	0.0	0.68	0.0	3.34
Metal
Tax	0.0	1.03	0.0	0.84	0.0	3.07
Labour law	1.3	1.67	0.0	0.63	1.0	2.81
Trade regulation	0.0	1.47	0.0	0.84	0.0	3.37
Registration process	0.0	1.47	0.0	0.79	0.0	3.27
Telecommunications
Tax	0.0	0.57	4.1*	6.60	1.6	2.72
Labour law	0.0	0.44	0.0	2.71	0.0	2.49
Trade regulation	1.4	0.05	0.0	3.17	0.8	2.01
Registration process	2.7	1.82	0.0	3.05	1.6	2.27
Services
Tax	0.6	0.13	1.2*	5.94	0.9*	8.80
Labour law	0.6	0.11	0.8*	8.33	0.7*	9.92
Trade regulation	1.7	0.66	2.0*	9.48	1.9*	12.22
Registration process	1.7	0.66	1.2*	6.34	1.4*	9.67

Note: * Significant at p <.05.

Factor Loadings and Reliability Coefficients of Policy Factors

Factor loadings denote how a whole lot of issue explains a variable in factor analysis. The loadings can range from 1 to −1, in which loadings near 1 or −1 suggest robust wonderful or poor influences, respectively, at the variable. Loadings close to 0 suggest that the aspect has a weak effect on the variable being measured. For this research, the loadings constitute the power of the government guidelines in every enterprise area and economic system. Therefore, elements with values, which include 0.8 or 0.9, imply that the rules have sturdy fantastic outcomes in the sectors and economies under attention.

Cronbach’s α, however, is a measure of internal consistency that suggests how closely related a set of factors in a set is. It is considered to be a measure of scale reliability, which measures whether or not several elements suggest the degree to which the identical well-known construct produces comparable ratings. Cronbach’s α in the findings of this research shows how closely related the guidelines are. It additionally shows the average covariance between each institution and the variance of the overall rating. Generally, a minimum α coefficient between 0.65 and 0.8 (or higher in some cases) is advocated; α coefficients that might be much less than 0.5 are generally unacceptable. So, an α rate of 0.83 or 0.75, for instance, implies that the rules in each organization are closely related and that they accurately measure what they were intended to quantify, thereby confirming the reliability of the results.

As reflected in Table 5, in each country, three variables recorded high issue loadings, with a reliability coefficient higher than 0.5. In Nigeria, enterprise registration manner had the very best factor loading of 0.7, whilst in South Africa, labour regulation had the very best factor loading of 0.8. For each international location, however, the labour law and registration system had the highest aspect loading of 0.7. This implies that the rules have robust results on the entrepreneurial activities in each economy and, in addition, affirm previous findings within the extant literature. However, while examined through some categorical business sectors as shown in Table 6, it becomes glaring that merely one or two have consequences in some sectors. In reality, not one of the guidelines had any impact on all the South African sectors; the most effective marketplace regulation had a sturdy fine effect in Nigeria’s food sector.

Table 5.

Internal Structure and Domain of Policy Factors in Nigeria and South Africa.

Two Countries	Nigeria		South Africa		Both Countries
Two Countries	Factor Loading	Alpha/ Variance	Factor Loading	Alpha/ Variance	Factor Loading	Alpha/ Variance
Policies
Tax	0.6		0.6		0.6
Labour law	0.6	0.67	0.8	0.62	0.7	0.65
Trade regulation	−	82.3	0.5	82.0	0.5	80.2
Registration process	0.7		0.7		0.7

Note: Only the factor loadings with 0.5 or more in the sub-scales are shown. The internal consistency is measured with Cronbach’s alpha and explained variance as presented in the same column.

Table 6.

Internal Structure and Domain of Government Policies in Selected Business Sectors in Nigeria and South Africa.

Nigeria
Sectors	Food		Textile		Wood		Pharmaceutical		Metal		Telecommunication		Services
Sectors	Factor Loading	Alpha/Variance	Factor Loading	Alpha/Variance	Factor Loading	Alpha/Variance	Factor Loading	Alpha/Variance	Factor Loading	Alpha/Variance	Factor Loading	Alpha/Variance	Factor Loading	Alpha/Variance
Policy
Tax	–		–		–		–		–		–		–
Labour law	–	0.62	–		–		–		–		–		–
Market regulation	0.8	67.5	–		–		–		–		–		–
Registration process	–		–		–		–		–		–		–
South Africa
Policy
Tax	–		–		–		–		–		–		–
Labour law	–		–		–		–		–		–		–
Market regulation	–		–		–		–		–		–		–
Registration process	–		–		–		–		–		–		–
Both Countries
Policy
Tax	–		–		–		–0.7		–		0.7		0.6
Labour law	–	0.12	–	0.01	–	0.03	–	0.05	–		–	0.02	–	0.56
Market regulation	–	67.2	–	67.1	–0.7	50.8	–	51.5	–	–	0.0	67.6	–	86.7
Registration process	0.7		–		0.7		0.7		–		–0.7		–

Note: Only the factor loadings with 0.5 or more in the sub-scales are shown. The internal consistency is measured with Cronbach’s alpha and explained variance as presented in the same column.

In the pooled statistics, it was interesting to observe that for the first time, three policies (tax, marketplace rules and registration system) recorded strong adverse effects of −7 in the wood, telecommunications and pharmaceuticals sectors. This means that the equal set of regulations, which had sturdy positive consequences holistically, had dwindling outcomes when disaggregated, and then ended up reflecting robust bad outcomes while the disaggregated statistics were pooled together. In other words, it implies that the equal set of guidelines may have various effects, reliant on the lens through which they may be viewed.

Most Crucial Policies in Each Business Sector

With PCA, Table 7 shows the relative significance of the regulatory policies in every commercial enterprise zone. Two kinds of regulatory policies (tax and labour regulation) featured predominantly in both international locations. In Nigeria, labour law is the most enhancing policy in all sectors besides the service sector, wherein the tax is the maximum effective coverage. In South Africa, tax featured as the most improving policy in six of the seven sectors, with labour regulation taking the toll in the wood area. The effects from the pooled information suggest variations in the degree of importance, but had tax as the maximum enhancing policy in three sectors (service, food and textile). Labour regulation was not reflected as a crucial issue in all seven sectors of the pooled records. Registration methods merely featured in wood and telecommunications, while marketplace law most effectively featured in the prescription drugs zone.

Table 7.

Principal Component Analysis of the Selected Government Policies Across Business Sectors.

Nigeria
Sectors	Food (n = 207)		Textile (n = 157)		Wood (n = 64)		Pharmaceutical (n = 50)		Metal (n = 100)		Telecommunication (n = 123)		Services (n = 432)
Sectors	Factor 1	KMO	Factor 1	KMO	Factor 1	KMO	Factor 1	KMO	Factor 1	KMO	Factor 1	KMO	Factor 1	KMO
Policy
Tax	0.674		0.641		0.674		0.672		0.672		0.609		0.718^a
Labour law	0.712^a	64.6	0.710^a	63.9	0.712^a	64.5	0.711^a	65.1	0.711^a	65.1	0.709^a	63.7	0.552	60.1
Market regulation	0.576		0.580		0.549		0.572		0.572		0.581		0.553
Registration process	0.550		0.554		0.575		0.572		0.572		0.581		0.594
South Africa
Policy
Tax	0.778^a		0.790^a		0.488		0.783^a		0.791^a		0.785^a		0.711^a
Labour law	–0.075	48.6	–0.051	48.3	0.593^a	48.3	–0.064	48.5	–0.059	48.3	–0.060	48.3	0.626	63.6
Market regulation	0.536		0.487		0.477		0.451		0.518		0.538		0.583
Registration process	0.536		0.600		0.477		0.613		0.578		0.538		0.609
Nigeria & South Africa
Policy
Tax	0.711^a		0.711^a		–		–0.717		–		–0.713		0.799^a
Labour law	–	49.6	–	49.7	–	50.0	–	50.0	–		–	49.4	0.611	63.2
Market regulation	0.000		–0.711		–0.713		0.717^a		–		0.000		0.595
Registration process	–0.711		0.000		0.713^a		–		–		0.713^a		0.665

Note: ^aThe most enhancing policies.

Limitations of the Study

The data collected for this study are entirely primary and have the advantage of large data samples, but reflect a single data set that does not show trends and patterns of government policies across business sectors.

The research would have been extra vigorous if detailed policies, consisting of profit tax or import duties, for example, had been examined in more depth across each sector over a time frame, like a 5- or 10-year duration. This could not be done during this research due to time and resource constraints. More exhaustive facts could have also been received if this type of research could have been carried out in countries and posted periodically, just like the Global Entrepreneurship Monitor.

Conclusions and Recommendations

This study surveyed a few government policies enhancing entrepreneurial activities in two rising African economies and recognized the most essential in every business sector. Various government regimes roll out policies from time to time, and it is often believed that their effects cannot be ignored. Hence, the study examined the possibility that their effects may not be evenly spread across some selected business sectors and found it to be so. For instance, the findings of taxation as a crucial policy that affects entrepreneurial activities in South Africa and the wood sector in Nigeria are consistent with the findings of Dias and Rodrigues (2019). Meanwhile, the findings of the effect of labour laws as crucial policy effects for entrepreneurial activities in Nigeria are consistent with the effects of market laws noted by Rasulova and Obidova (2019). The findings from the study endorse that some policy regulations are more effective in promoting entrepreneurial activities than others and recommend that policymakers, as well as applicable stakeholders, be aware of this information in their bid to reinforce policies to drive entrepreneurial activities in particular sectors of the economy and at various times.

Poorly formulated and implemented policies often have dire consequences such as failed developmental goals, heightened corruption, wasted resources, loss of public interest and negative national image, to mention a few. Being oblivious of some defective policies would adversely affect the relevant sectors in both the immediate and near future. Hence, the policy implication of the findings suggests the need for policymakers to make some constructive sector-specific policies targeted towards boosting entrepreneurial activities in specific sectors. Meanwhile, we propose further extensions of this study and endorse extra rigorous research, in particular on those that examine the outcomes of some specific policy regulations on entrepreneurial activities across business sectors.

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

References

Acs

Z. J.

, & Szerb

(2007). Entrepreneurship, economic growth and public policy. Small Business Economics, 28, 109–122.

Akinyemi

F. O.

Sustainability factors for entrepreneurship phases in emerging economies: Nigeria & South Africa [Doctoral dissertation submitted to Wits Business School, University of the Witwatersrand]. https://www.wits.ac.za

Akinyemi

F. O.

, & Adejumo

O. O.

(2018). Government policies and entrepreneurship phases in emerging economies: Nigeria and South Africa. Journal of Global Entrepreneurship Research, 8(1), 1–18.

Amhimmid

O. M. H.

, Yanto

, & Setyadharma

(2021). The effect of interest rates, money supply and exchange rate on inflation in Indonesia and Libya. Business and Economic Analysis Journal, 1(2), 104–121.

Anusha

(2012). Innovative ideas in entrepreneurship: Key issues, challenges and future scope. AMC Indian Journal of Entrepreneurship, 4(2–3), 49–59.

Bankole

F. O.

, Osei-Bryson

K. M.

, & Brown

(2015). The impacts of telecommunications infrastructure and institutional quality on trade efficiency in Africa. Information Technology for Development, 21(1), 29–43.

Basheva

, Korunova

, Kuznetsova

, Ermolaeva

, Basheva

, Korunova

, Kuznetsova

, & Ermolaeva

(2012). Puzzle 6: Environmental governance and politics. In The Russian urban sustainability puzzle (pp. 83–95). Emerald Publications.

Callaghan

, & Venter

(2011). An investigation of the entrepreneurial orientation, context and entrepreneurial performance of inner-city Johannesburg Street traders. Southern African Business Review, 15(1), 28–49.

Chaitip

, Chokethaworn

, Chaiboonsri

, & Khounkhalax

(2015). Money supply influencing on economic growth-wide phenomena of AEC open region. Procedia Economics and Finance, 24, 108–115.

10.

Crandall-Hollick

M. L.

(2018). Higher education tax benefits: Brief overview and budgetary effects. Current Politics and Economics of the United States, Canada and Mexico, 20(4), 721–739.

11.

Cronbach

(1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16(3), 297–334.

12.

Curran

(2000). What is small business policy in the UK for? Evaluating and assessing small business policies. International Small Business Journal, 18(3), 36–50.

13.

Dias

C. S.

, & Rodrigues

R. G.

(2019). Agricultural entrepreneurship and the financial crisis. Global Business Economic Review, 21, 500–518.

14.

Durand

, & Exton

(2019). Adopting a well-being approach in central government: Policy mechanisms and practical tools. In Global happiness and wellbeing (pp. 191–214). Cambridge University Press.

15.

Dvouletý

, Srhoj

, & Pantea

(2021). Public SME grants and firm performance in European Union: A systematic review of empirical evidence. Small Business Economics, 57(1), 243–263.

16.

Gilbert

B. A.

, Audretsch

D. B.

, & McDougall

P. P.

(2004). The emergence of entrepreneurship policy. Small Business Economics, 22(3–4), 313–323.

17.

Heathcote

C. L.

(2015). Betende Hände: Albrecht Dürer’s self-portrait as a Gothic church. Brigham Young University.

18.

Herrington

, Kew

, Simrie

, & Turton

(2011). Global Entrepreneurship Monitor 2011 report for South Africa (pp. 1–74). University of Cape Town, Centre for Innovation and Entrepreneurship.

19.

Huang

S. K.

, Kuo

, & Chou

K. L.

(2018). The impacts of government policies on green utilization diffusion and social benefits: A case study of electric motorcycles in Taiwan. Energy Policy, 119, 473–486.

20.

Ibrahim

T. M.

, & Muritala

T. A.

(2015). Does government policies improve business performance? Evidence from Nigeria. Journal of Studies in Social Sciences, 11(2), 1–15.

21.

Jahan

, Mahmud

A. S.

, & Papageorgiou

(2014). What is Keynesian economics. International Monetary Fund, 51(3), 53–54.

22.

Kamal

, Grodzińska-Jurczak

, & Brown

(2015). Conservation on Private land: A review of global strategies with a proposed classification system. Journal of Enviro-nmental Planning and Management, 58, 576–597.

23.

Kirchner

, & Van Wijnbergen

(2016). Fiscal deficits, financial fragility, and the effectiveness of government policies. Journal of Monetary Economics, 80, 51–68.

24.

Kolade

, Atiase

, Murithi

, & Mwila

(2021). The business models of tech hubs in Africa: Implications for viability and sustainability. Technology Analysis & Strategic Management, 33(10), 1213–1225.

25.

Kurpayanidi

K. I.

(2021). Financial and economic mechanism and its role in the development of entrepreneurship. Theoretical & Applied Science, 1, 1–7.

26.

Ladzani

W. M.

, & Van Vuuren

J. J.

(2002). Entrepreneurship training for emerging SMEs in South Africa. Journal of Small Business Management, 40(2), 154–161.

27.

Lerner

, & Kegler

(2000). Evaluating the small business innovation research program: A literature review. In Wessner

(Ed.), The small business innovation research program: An assessment of the Department of Defense fast track initiative (pp. 307–324). National Academies Press.

28.

Lin

G. T.

, Chang

, & Shen

(2010). Innovation policy analysis and learning: Comparing Ireland and Taiwan. Entrepreneurship & Regional Development, 22, 731–762.

29.

Mark

, & Nwaiwu

J. N.

(2015). Impact of political environment on business performance of multinational companies in Nigeria. African Research Review, 9(3), 1–10.

30.

Mele

, & Sangiorgi

, (2021). Insider trading regulation and market quality tradeoffs (Discussion Paper No. DP15897, pp. 1–28). Centre for Economic Policy Research.

31.

Minniti

(2008). The role of government policy on entrepreneurial activity: Productive, unproductive, or destructive? Entrepreneurship Theory and Practice, 32(5), 779–790.

32.

Mohammadi Khyareh

, & Zivari

(2021). The impact of institutional quality and economic environment on entrepreneurship rate: Evidence from panel data. Journal of Entrepreneurship Development, 13(4), 621–640.

33.

Muhammad

, Mukhtar

M. I.

, & Lola

G. K.

(2017). The impact of Chinese textile imperialism on Nigeria’s textile industry and trade: 1960–2015. Review of African Political Economy, 44(154), 673–682.

34.

Ngugi

(2021). Think tanks in the context of Africa’s development. In The future of think tanks and policy advice around the world (pp. 45–50). Palgrave Macmillan.

35.

Ngwenya

, & Simatele

M. D.

(2020). Unbundling of the green bond market in the economic hubs of Africa: Case study of Kenya, Nigeria and South Africa. Development Southern Africa, 37(6), 888–903.

36.

Nieman

(2001). Training entrepreneurs and small business enterprises in South Africa: A situational analysis. Education & Training, 43(8/9), 445–450.

37.

Oliyide

(2012). Law, credit risk management and bank lending to SMEs in Nigeria. Commonwealth Law Bulletin, 38(4), 673–695.

38.

Pastor

, & Veronesi

(2012). Uncertainty about government policy and stock prices. The Journal of Finance, 67(4), 1219–1264.

39.

Pergelova

, & Angulo-Ruiz

(2014). The impact of government financial support on the performance of new firms: The role of competitive advantage as an intermediate outcome. Entrepreneurship & Regional Development, 26(9–10), 663–705.

40.

Rasulova

S. G.

, & Obidova

F. Y.

(2019). Issues of small business development. Theoretical & Applied Science, 9, 426–429.

41.

Sachs

, Kroll

, Lafortune

, Fuller

, & Woelm

(2021). Sustainable Development Report 2021. Cambridge University Press.

42.

Salami

C. G. E.

, Ekakitie

S. E.

, & Ebinim

L. O.

(2023). Impact of government policy on entrepreneurship growth and development of small-scale business. Journal of Global Social Sciences, 4(14), 73–102.

43.

Santos

J. R. A.

(1999). Cronbach’s alpha: A tool for assessing the reliability of scales. Journal of Extension, 37(7), 35–36.

44.

Smith

(1998). An inquiry into the nature and causes of the wealth of nations: a selected edition. Oxford University Press, USA.

45.

Smith

W. K.

, Nelson

, Johnson

J. A.

, Polasky

, Milder

J. C.

, Gerber

J. S.

, West

P. C.

, Siebert

, & Pennington

D. N.

(2019). Voluntary sustainability standards could significantly reduce detrimental impacts of global agriculture. Proceedings of the National Academy of Sciences, 116(6), 2130–2137.

46.

Stumpf

, Schöggl

J. P.

, & Baumgartner

R. J.

(2021). Climbing up the circularity ladder? A mixed-methods analysis of circular economy in business practice. Journal Of Cleaner Production, 316, 1–16.

47.

Tijani

A. A.

, Oyeniyi

G. O.

, & Ogunyomi

O. O.

(2012). The impact of technical entrepreneurial skills on employment generation in small and medium scale enterprises in Lagos State, Nigeria: A comparative analysis. European Journal of Humanities and Social Sciences, 13(1), 604–622.

48.

Tolakov

U. T.

, & Boypulatov

(2019). The new preliminary development of the tax system of the Republic of Uzbekistan. International Journal of Advanced Research in Management and Social Sciences, 8(5), 98–105.

49.

Wallison

P. J.

(2009). Cause and effect: Government policies and the financial crisis. Critical Review, 21(2–3), 365–376.

50.

Willmott

(2015). Why institutional theory cannot be critical. Journal of Management Inquiry, 24(1), 105–111.

51.

Wright

, Westhead

, & Ucbasaran

(2007). Internationalisation of small and medium-sized enterprises (SMEs) and international entrepreneurship: A critic of policy implications. Regional Studies, 41(7), 1013–1030.

52.

Zhidebekkyzy

, & Zada

I. M.

(2021). State support for entrepreneurship development: A cross-country comparative analysis. Journal of Economic Research and Business Administration, 136(2), 32–42.

Government Policies and Business Sectors in Emerging Economies: Nigeria and South Africa

Abstract

Keywords

Introduction

Theoretical Overview of Government Policies and Entrepreneurship

Government Policies on Business Sector Performance: Literature Review

Business Sectors

Methodology

Research Findings

Socio-demographic Characteristics of Respondents

Discussion of Research Findings

Distribution Pattern and Statistical Significance

Policies Enhancing: (a) Food Sector, (b) Textile Sector, (c) Wood Sector, (d) Pharmaceutical Sector, (e) Metal Sector, (f) Telecommunication Sector and (g) Service Sector.

Factor Loadings and Reliability Coefficients of Policy Factors

Most Crucial Policies in Each Business Sector

Limitations of the Study

Conclusions and Recommendations

Footnotes

Declaration of Conflicting Interests

Funding

References