Influence without Organizations: State-Business Relations and their Impact on Business Environments in Contemporary Africa

Abstract

Formal institutions such as business chambers have been assumed to be a key indicator of the health of state-business relations (SBR). Yet in Africa these organizations have seldom risen to the level of access and influence enjoyed by some of their counterparts elsewhere in the developing world. A number of recent studies of SBR in Africa continue to overstate the importance of business associations (BAs). Yet despite the widespread marginality of BAs in Africa, the receptiveness of African states to leading firms and business interests has increased markedly. While this poses certain risks of increased corruption, collusion and monopoly, the institutional and political environment for doing business has also improved, thereby fostering new opportunities for further business-related growth and business sector development among bona fide firms. Drawing on evidence from Zambia and elsewhere, this paper finds that the benefits provided to individual firms who enjoy state access can, paradoxically, contribute to an improved environment for other private sector actors whose interests are directly represented only in moribund formal associations. Even without strong BAs, when aided by the state, individual firms, and/or international actors, Africa's improved business environment has a salutary impact on growth.