The failure of structural adjustment programmes to promote industrialisation
in Africa may be at least partly explained by the fragmentation of African
business systems. In Africa, the parastatal, foreign-dominated formal and
indigenous informal sectors are poorly integrated, largely as a result
of the
institutional environment in which they have developed. The lack of supportive
financial, state and social institutions inhibits trust and accountability,
and
impedes the access to capital, labour market flexibility, and sub-contracting,
which are needed for modern industrial development. More research is
needed, both detailed studies of business systems in individual African
countries, and cross-country comparisons of the linkages between the economy
and the wider social and institutional environment.