THE HUB
The Private Sector is dubbed as the engine of Economic Development.
The question that one must ask is how does one define or measure
economic growth: is it based on the number of new business startup that takes place yearly; is it based on the rapid expansion of
businesses and the level of their contribution as tax payers; is it
based on the number of high paying / super salary jobs that are
created by innovative entrepreneurs that help to raise the standard
of living and the social status quo of people; is it based on the high
level of foreign export. This subject requires some discussion. The
Private Sector is not just the engine of economic development , it
is also the hub of social progress. Before investing any time in
addressing these rhetorical questions posited above, it is absolutely
necessary for me to give a definition of the composition of the
meaning of the term “Private Sector”.

What is the private sector. Who are its key mover and shakers. Why is
it considered the hub of social growth and economic progress?  The
Private Sector is the hub of economic activity where commerce and
industries fuel the trading in goods and services to satisfy the
diverse needs and wants of consumers and the socio-economic
aspirations of corporate innovators. In this process, the private
sector may represent many different legal structures, four of which are as follows.

Sole Traders:  this term simply represents a single individual that
functions in an area of business: 1) in the primary sector, 2) the
secondary sector or 3) the tertiary sector, as a dealer in consumer
goods, consumer services or capital goods. Many are quite familiar with
these terms; however, individuals that trade under this legal structure
while able to benefit tremendously from all the profits earn from
the activities of the business, have unlimited liability, which means
that the owner’s personal possessions – including property, can be
taken away to pay the debts of the business if it fails.

Partnerships: these are formed through agreements between two or more
individuals. This helps to overcome some of the drawbacks of a
sole trader, for instance, more work hours can be gained; more
responsibilities can be shared without added employment cost because
of the involvement of the team. The agreement to work as partners does
not allow the firm to constitute itself in legal terms as a separate
legal unit. And it does not make this team of individuals any less
liable to honor its debts than sole traders. Team work / partnerships
have many advantages and disadvantages. The team can bring various
levels of skills to the table that can significantly influence the
success of the business. Collectively they can raise much needed
financial capital to complement the growth of the firm. However, it is
important to know your partner (s) well before cementing any
agreements because the wrong partner (s) may post serious
disadvantages to the vision of the firm.

Limited Companies: these have three distinct and important differences when
compared to sole traders and partnerships. 1) the composition of the
leadership of these types of companies are primarily made up of
wholesalers and because of the legal structure of the business have
limited liability, 2)  it is recognized in law as having a separate
identity to that of its owners, which means that it is more usual to
sue the company rather than an individual or individuals of the
company in the event negative, unforeseen circumstances affect external stakeholders of that company. An example : if a
product is found to be dangerous and in fact has affected the life of
someone, you can only sue the owners where willful negligence, an act
of intent to harm or deceive the customer, can be proven against the
owners. The company which has a legal identity of its own, in usual
cases, can be held totally accountable for any shortcoming that may
endanger the health or life of others.
The last distinction of the
limited companies is 3) the issue of continuity. Financial
institutions / investors are more willing to invest because the death
of a director will not affect the continuity of the business. In a
future article we will look at the “Private Limited Companies and The
Public Limited Companies that fall within the ambits of “Limited
Companies”.

Cooperatives: there are several forms of cooperatives: Producers or
workers cooperatives that are involved with the making of goods;
agricultural cooperatives that benefit from bulk buying of seeds and
other materials to support the growth of this sector; there is also
consumer or retail cooperatives that provide goods and services to the
final consumers.
Cooperatives can serve as a useful means to aid in
the growth of communities by creating these institutions to address
problems that communities are faced with. These institutions may
function as both a profit and non-profit making institutions; however,
the gains are shared equally among its members.   In future articles we
will look at other private sector businesses, such as: Franchise,
Joint Ventures and Holding Companies.

The Private Sector is the hub of economic activity in any modern
democracy. It is also the hub of social growth and economic progress
because of its potential to employ large numbers of the working class,
whose livelihood, along with the growth of the economy, depends on it.
In the United Kingdom, just between micro and small firms, in 2004,
over 4.3 new firms were established that have accounted for over 50%
of the UK workforce. This has significantly reduced the level of
unemployment and raises the standard of living of millions of UK
citizens.

It must also be noted that the strength of the “Private Sector” as the
hub / engine of social growth and economic progress is a reflection of
the type of economic system in which it operates . The economic
systems can be of many types 1) Planned Economic Systems 2) Mixed
Economic Systems and 3) Free Enterprise Economies.
Each of these
economic systems, based on Government policies, influences how the
private sector conducts itself. In planned economic systems, the
business sector is hardly every the hub of the social and economic
advancement of any nation.