Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited
Article Type: Guest editorial From: International Journal of Emerging Markets, Volume 3, Issue 3
About the Guest Editor O. Felix Ayadi is currently Professor of Finance at the Jesse H. Jones School of Business, Texas Southern University, Houston, TX. He has published over 50 refereed articles in several academic journals including: Journal of Banking and Finance, Global Finance Journal, Journal of Multinational Financial Management, The International Journal of Finance, International Review of Financial Analysis, Journal of Emerging Markets, Journal of Asian and African Studies, OPEC Review, Journal of Black Studies, American Business Review, African Review of Money, Banking and Finance, Financial Services Review, Global Business Journal, Savings and Development Quarterly Review, Nigerian Journal of Economic and Social Studies, Managerial Finance, Journal of Instructional Psychology, and The Journal of Applied Business Research. His first book, entitled, Modern Commerce in West Africa was published in summer 1995. He is currently the editor of a pedagogic journal, Southwestern Business Administration Journal (SBAJ).
Strategies for Africa’s economic development
The papers selected for this issue were presented at the 2007 annual conference of the International Academy of African Business and Development (IAABD) held at the London Metropolitan University in the UK. The theme for this issue seems appropriate because the current thinking within Africa is for African countries to partner with international institutions and governments to source funding for sustainable development. The vision of IAABD is to create an avenue for discussing, analyzing, and advancing solutions to the challenges facing development of African business – through business and management research, functional education and training, and information dissemination. In line with this vision is the mission to:
foster functional education;
broaden and deepen global understanding of the various challenges facing development of African business; and
advance alternative solutions to Africa’s business and economic challenges.
In view of the foregoing, the following papers were selected in this issue of the International Journal of Emerging Markets. It is my hope that these papers would proffer solutions to various economic challenges facing Africa at this time.
The first paper by Shrestha, Smith, McKinley-Floyd, and Gray explores issues relating to economic development in Kenya. The paper combines systems thinking and broad-based reasoning to develop a normative management framework for policy makers and for domestic and international business managers. The authors employ secondary data to describe Kenya’s status with respect to four environmental forces. The paper concludes that, if Kenya takes policy actions necessary to redirect and enhance its environmental forces, it would improve the efficacy of its resource management system and reduce the uncertainty inherent in the system. This could lead Kenya to become more competitive in the present global economy in terms of both increased foreign investment and export. Thus, Kenya could experience higher levels of private sector development, economic growth, and employment and, consequently, reduced poverty rate and higher standards of living for its citizens.
The next piece by Saffu, Aporih, Elijah-Mensah, and Ahumatah examines the effects of human capital, and venture resources on the performance of small- and medium-sized tourism ventures (SMTVs) in Ghana. The thesis of this paper is that in the Ghanaian tourism industry, higher level of education and previous entrepreneurial experience are a key to success. Furthermore, profitability in the tourism industry is contingent on innovation, customer service, financial resources, and cost control. The authors’ analysis of data was geared at testing hypotheses derived from human capital and resource-based literature to explore the predicted relationship between the theories and SMTV performance. The paper reports a significant but positive relationship between education, experience, and performance. There is no definite conclusion as to the relationship between venture resources and the performance of tourism ventures in Ghana.
The third paper that is authored by Adegbite, Ayadi, and Ayadi investigates the potential benefits accruing to Nigeria as a result of the 2006 debt relief granted by the Paris Club of creditors. A study by the World Bank concludes that even with good economic performance, Nigeria would not achieve economic growth and development without debt relief. In order to understand the impact of debt relief, the authors employ some econometric analysis of macroeconomic data from 1975 to 2005. This paper explores the impact of external debt burden on the economy by analyzing the applicability of “debt overhang theory” and the “crowding out” effect of debt in Nigeria. The results reveal a nonlinear effect of debt on private sector investment which presupposes the existence of a turning point representing an optimal level for external funds. The implication of the results for many debtor nations include: proper management of external funds by creating or improving debt management structures and decision-making process. The authors argue that external finance should only be sourced for the highest priority projects that must be properly appraised and be self-liquidating. Such projects should have direct impact on economic development. Moreover, the authors argue for a need to cultivate a culture of transparency in the issue of debt management. Governments should make fiscal adjustments through cuts in expenditures which could reduce the level of deficit financing which exerts pressure on the foreign exchange rate.
The next paper is by Iyanda and Ojo. These authors explore the motivation, influences, and perceived effect of information and communication technology (ICT) adoption within business enterprises in Botswana. According to the authors, this paper is an attempt to bridge the gap between technology adoption in advanced economies and less developed economies. The five questions posed by the authors are:
What motivated organizations in Botswana in their decision to adopt ICT in their operations?
What factors, internal and external, influenced the adoption decision?
Which sources did the organizations contact for information on the adoption of ICT?
What is the relative importance of those influencing/motivating factors and information sources?
What are the perceived effects of adoption?
The investigating approach is through a personally administered questionnaire. The authors report results which indicate that technology application in Botswana was still at an infancy level which consists of communications and record keeping. In terms of motivation and influence, the competitive motive and internal sources of information and influence were dominant and that the overall effect of ICT adoption on several organizational activities was moderately positive.
The fourth paper in this issue addresses the national poverty reduction objective among the rural population in Eastern Uganda with the aim of meeting the Millennium Development Goal of Poverty Alleviation. The authors are Kato, Hyuha, and Mugisha. The paper employs primary data collected using a structured questionnaire from a randomly selected sample of chicken farmers. The authors of this paper hope to explore the relative competitiveness of indigenous and upgraded chicken varieties. The results show that the most critical factors in increasing competitiveness of the chicken enterprise are proportion of birds weaned to the total flock, number of chickens reared, and farmer’s rearing experience. Therefore, the results imply that there are economies of scale in the local poultry industry. Thus, the importance of poultry to farmers in eastern Uganda calls for upgrading indigenous chickens and on improving management systems at low input cost. Improvements on cost side, especially on feeds and improvement in the production process through creating an enabling environment for farmers to access credit so that they are able to buy feeds and increase their flock size.
The final paper is authored by Richard, Chijoriga, Kaijage, Peterson, and Bohman. This paper studies credit risk management system in a banking institution in Tanzania. The popular models of credit risk management do not possess a perfect fit with institutions in developing countries where the financial systems are still in infancy. Through interviews with key management employees of a bank in Tanzania, the authors made an effort to propose a model that accounts for specific features of the Tanzanian environment. The main conclusion of this paper is that components of a credit risk management (CRM) system differ in commercial banks operating in a less developed economy than those in developed economies. This implies that the environment within which a bank operates is a critical consideration if a CRM system is to be successful.
I hope you enjoy this issue!
O. Felix AyadiGuest Editor