THE IMPACT OF PRICING ON SALES PERFORMANCE OF MICRO BUSINESS IN DEVELOPING SUB – SAHARAN COUNTRIES
The Sub Saharan region in Africa still suffer from economic poverty that fifty percent of their region is in rural areas and most of them has no electricity. Job employment, livelihood and health related issues such as malnutrition, famine, aids and more is still a growing problem in most of their communities due to this the small business industries may suffer from decrease in sales depending on the seasons while an ordinary villagers usually suffer from high rising cost of basic commodities such as food, clothing, raw materials for business, coal and oil, and agricultural materials. The impact of pricing in sales performance of micro business vary from different constraint this means that the performance and pricing of small business is predictable to their economic situation. Uganda, Gambia, Rwanda and other countries have a huge population that predicts the demand and price of most goods and services sold in each country.
One major determinants of price are tariff trade practices of international commodities which is increasing and therefore most micro enterprise demand an increase in price of the goods they sell. In Uganda the price of food and other commodity depend entirely on tradability and access especially if the commodity is sold or exported from other countries some business enterprise would usually take advantage of its price and usually they earn more because of the limited supplies available they may usually follow the price of the commodity in an international setting. Countries like Gabon, Seychelles, Ethiopia and Somalia has a very low access in media communication and technology while usually the only source of information is radio the high cost of television, computers, telephone subscriptions and its prices is usually high and still the access of the people are usually low and only people who mostly live in the urban areas can only afford to such access since they are the only one who benefit and enjoy the consumption and use of electricity.
Electricity and energy consumption and its price is absolutely affecting the micro enterprise practices that the subscription is too high for example the bakeshop who uses electrical tools, garment shops uses sewing machine, even the household business enterprise uses electricity consumption that adds up to the price of their goods and services the impact of changes in price usually affects them since consumers including the poor usually needs to buy but the high cost prevented them. This means that micro enterprise, small and medium business has learned to control or limit their business. The cost of electricity in Sub Saharan countries in the production of goods and service have somehow affected their production and the business themselves is affected. Small business considered electricity as a major constraint in their pricing especially in Nigeria, Uganda, Guinea, Tanzania and Rwanda.
Another major pricing determinant is transportation and distribution of goods. The limited access to roads and bridges and other infrastructure even add up to the basic price of commodities that goods and services came from very far location before it can be brought to business location and market places. This has been a long term problem for most of communities and villages in Sub Saharan countries. Perishable merchandise like fish, meat, vegetable and chemicals usually suffer in this conditions that impact the price of their merchandise consistently. In Kenya more than 50% percent of small and medium enterprise complains about transportation that they really charge up the services to the pricing a big amount to their products because of transportation expenses and this has been a major obstacle to conduct major transaction between buyer and seller that usually price agreed always include transportation expense.
They also admit that the pricing irregularities may definitely affect most micro enterprise and the poor consumers. This condition does not impact the region as a whole but the price commodity increase definitely will also hurt small business depending on their economic conditions but they also expect tighter sales. The solution of the Sub Saharan countries and their government to ease the suffering of their people in high price commodity is to allow business practices in operating business development through lenient business participation, if there are more business establishment competition may lower down the price of commodities in Sub Saharan nations therefore they are open for business. The Small and Medium business enterprise developer in Sub Saharan countries usually predict sharp price increase in food, coal, oil, fuel and other basic commodities in 2010 and they admit that it should be the case because of the different outcome to balance the supply and demand of such basic goods in order to protect the distribution and availability of such products.
References:
http://www.cgdev.org/doc/books/Africa_Private_Sector/Ramachandran_04_Two.pdf http://www.imf.org/external/pubs/ft/reo/2011/afr/eng/sreo0411.pdf
http://www.businesswire.com/news/home/20110922005619/en/Research-Markets-Sub-Saharan-Africa-Electricity-Pricing-http://en.wikipedia.org/wiki/Economy_of_Zambia
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