The impact of the corporate sector of the Sahel-Saharan States on ensuring economic sovereignty: opportunities and limitations

Filina Aleksandra Dmitrievna ORCID: 0000-0001-7796-288X Postgraduate student, Financial University under the Government of the Russian Federation 125167, Russia, Moscow, Leningradsky Prospekt, 49/2 mrs.alexandra.filina.@mail.ru

At the end of the 20th century, most African countries went through the process of transition to new regimes after a decade of military government, for many of them it seemed not only a logical alternative to repressive dictatorships, but also a possible solution to chronic economic and social problems. However, after two decades of relative stability, the new democratic regimes have not been able to create a solid base that would really solve such problems, which is why the population of the entire continent is beginning to react ^[1].

Thus, after a decrease in the number and intensity of conflicts in sub-Saharan Africa, which began in the early 2000s, in recent years there has been an upsurge in violence in the region along with an increase in conflicts in the rest of the world. Overall, about a third of the region's countries have been affected by conflicts in recent years. As history has repeatedly shown, conflicts cause immeasurable human suffering and entail high economic and social costs. Loss of life, destruction of infrastructure, human capital and institutions, political instability and increased uncertainty associated with the conflict can hinder investment and economic growth not only during the conflict, but also after it, making it difficult to get out of the "conflict trap" ^[2].

In addition, conflicts usually affect government spending: revenues tend to decrease due to a shrinking tax base, and military revenues tend to increase. This leads to an increase in budget deficits and public debt, as well as to a reorientation of resources to the detriment of social and development spending, which further exacerbates the weakening of the economy due to conflicts. At the regional level, conflicts pose an additional problem due to the risk of consequences spreading to neighboring countries - direct consequences – but also have indirect consequences: a slowdown in economic activity (for example, as a result of increased uncertainty or disruption of trade) or the emergence of social pressure (due, in particular, to the massive influx of refugees) in neighboring countries, even when these countries are not involved in the conflict.

All of the above is directly related to the insufficient level of ensuring the economic sovereignty of the Sahel-Saharan states, which actualizes the purpose of this article aimed at studying the influence of the corporate sector of the countries of the region on ensuring economic sovereignty, highlighting the most promising opportunities and critical limitations based on the results of the analysis.

The idea of economic sovereignty is a controversial and dialectical concept: used by developing countries, especially those that recently gained political independence as a result of the decolonization process – the Sahel-Saharan States. This concept has been an evolution over the years, which, by developing and applying various principles and methods, gradually expanded it and at the same time radicalized it. At the heart of the theory and as a driving force of economic sovereignty lies the consequence of the sovereign equality of states and especially the equality of the rights of peoples and their right to dispose of their own resources ^[3].

One can agree that political sovereignty is not enough if it is not accompanied by adequate economic sovereignty: almost all underdeveloped countries are already fully aware that the political sovereignty they achieved at the first stage of their independence cannot have any impact on the reality of their backwardness from developed countries ^[4]. The principle of economic independence, endowed with a new important legal function and thereby elevated to the category of principles of modern inter-country interaction, should be translated, in particular, into the right of peoples and States to dispose of their natural resources, into the prohibition of all forms of illegal interference in economic affairs, as well as the prohibition of the use of force or any other form of coercion in international economic relations. relationships ^[5].

The obvious insufficiency of the classical concept of state sovereignty is quite obvious, this concept, determined solely by its political elements, in no way taking into account its economic aspects, allowed new states (which arose as a result of decolonization) to recognize the obvious, external signs of their sovereignty, while the reality of power was not obvious. Behind the factuality of the legal and institutional structures created to create the appearance of national sovereignty of the new African states, forms of real dependence based on organized economic subordination are revealed, the incompatibility of which with the true concept of sovereignty is dangerous ^[6].

For the countries of the Sahel-Saharan region, the existence of foreign companies in the country is a phenomenon of their dominance in key extractive industries. Thus, in our opinion, the instrumental nature of the economic principle of sovereignty is manifested: This is one of the tools used by developing countries in the process of transforming the structure of the international economic system, characterized, according to a well-known theory, by an imbalance between the "periphery and the center", ensuring greater equality ^[7].

According to some researchers, with whom one can agree, the condition for socio-economic development and ensuring the economic sovereignty of any state is the constant growth of the corporate sector and competitiveness at the local or regional level ^{[4, 8]}. Therefore, the corporate sector is an important factor in economic growth, it involves the creation of new jobs, which significantly improves living conditions the local community. Corporate sector policy should be aimed at removing existing barriers and creating favorable conditions for the development of companies. These activities can be implemented through the use of various development support tools that more or less intensively affect the creation of new enterprises (mainly small and medium-sized enterprises.

The corporate sector makes a significant contribution to the development of countries and regions, and creating conditions conducive to its development is especially important in underdeveloped countries at risk of marginalization. It should be noted that production in the countries is underdeveloped, the most dynamic are the extractive industries, which are dominated by foreign corporations. In addition, all Sahel-Saharan States are net importers (Figure 1).

P isunok 1 – Balance of foreign trade turnover in the Sahel-Saharan States, 2010-2020 ^[9]

The data show a negative balance of foreign trade turnover, and the excess of imports over exports has increased significantly since 2010. Agriculture is an extremely important part of the African economy and the main source of employment, but it is poorly mechanized and characterized by low productivity ^[10]. Due to the lack of innovative technologies, know-how and significant underfunding, agricultural culture is at a low level ^[11].

There has been positive growth in many parts of Africa, but for more than two decades it has been partly driven by the commodity supercycle. This can also be explained by other factors, such as increased trade, prudent macroeconomic management and individual investments in infrastructure development. Despite the efforts and measures taken by many African countries, it has been difficult for them to maintain high growth rates, especially during a crisis or in the face of other difficulties, but above all, to take advantage of this growth to transform the economy and ensure economic sovereignty.

In addition, some factors of change (such as the evolution of the global economic and financial situation, climate change, renewable and non-renewable natural resources, or the skills of the African workforce) can have a negative impact on export diversification and development in Sahel-Saharan States if the right policies and regulations are not implemented and institutional capacities are insufficient. Thus, the limitations of the development of the corporate sector are dependence on transnational corporations, underdeveloped technical infrastructure and a low level of socio-economic development, imperfect institutional support and internal conflicts ^[12-13].

In the Sahel-Saharan States, the most important factor stimulating the corporate sector is access to finance and information support, which allow the development of human capital through professional development.  The most desirable measures for entrepreneurship in the region are ^[14-15]: investment assistance to enterprises engaged in development activities, facilitation of loan applications, development of business environment institutions supporting entrepreneurship, promotion of the region as a place for doing business, creation of special economic zones, simplification of administrative procedures for the creation of a new enterprise, organization links between the fields of science and practice, local tax incentives, investments in technical infrastructure and activities aimed at obtaining foreign capital.

 These events are aimed at unlocking the potential of the corporate sector in the region, removing existing obstacles and revolutionizing the culture of the corporate sector. The purpose of such initiatives is also to promote the creation of new enterprises and a more favorable environment for entrepreneurs doing their business. One of the opportunities for the development of the corporate sector is the establishment of international economic cooperation with Russian companies. We believe that in addition to many advantages associated, for example, with the use of cost differences or partner resources, the establishment of international economic cooperation is an organizational task for the development of the corporate sector. One of the important foundations of existing differences and specific costs is the unique, country-specific national business systems (NBS), which are understood as a set of interrelated structures and institutions from various spheres of economic activity of a given market (state).

The location of these structures and institutions reflects the way of doing business specific to a given country and is determined by its history, culture, politics, etc. National management systems not only affect how economic entities operate in the market, but also shape the nature of relations, economic relations between entities operating in a given environment. The results of many studies confirm that institutional, ideological and cultural similarities between markets increase the efficiency of technology transfer between cooperating enterprises, facilitate the transfer of know-how and the implementation of organizational practices created on a similar basis, and reduce agency costs associated with control. and coordination of activities in the host markets.

Therefore, it is necessary, acting at the local level (municipal or regional), to avoid restrictions imposed by external influence, this would give the Government greater autonomy in policy development and would contribute to the development of the local public sphere. Similarly, such a strategy would mean the restoration of political power and the ability to respond directly to the needs of the State.

International cooperation tools can help eliminate some of the risks to attract investment. In this regard, mixed approaches to financing and insurance of political risks provided by public and private agencies (from development partners to export credit agencies) are becoming particularly relevant. Similarly, encouraging links between domestic and international businesses and encouraging integrity and responsible business conduct can help reduce risks and increase investor confidence.

In situations of instability, States wishing to support FDI can develop customized investment promotion strategies, in particular focusing on investors and industries, but also giving preference to pre-emptive measures, as well as communication, support services and effective dispute resolution mechanisms.

To improve the overall investment climate through the lens of instability, recognizing that attracting investment and promoting sustainable and inclusive development complement each other. Government decision makers can adopt approaches that take into account various aspects of instability and align their goals and investment strategies with national priorities for development, sustainability and inclusivity. Consider engaging development partners who could help Governments address the links between FDI and instability from a holistic perspective.

Make legal stability a political priority and lay the foundations for a high-quality legal investment framework. It is crucial to take investment protection measures that are both effective and transparent in order to address investor concerns about countries prone to instability. The international investment legal framework can also provide additional guarantees for investors, although during periods of instability there is an increase in violations that give rise to complex and expensive disputes between investors and the state. Awareness of these risks at the state level, coordination of institutions, management of investment disputes and the creation of prevention mechanisms are necessary to address sensitive and complex issues of investment protection.

It is also necessary to consider the possibility of adopting measures and tools that will help mitigate real and perceived investment risks. Encouraging business connections, honesty and responsible business conduct is essential to protect foreign investors, facilitate their entry and reduce uncertainty, while contributing to the overall positive impact on the economy and society. Other instruments can also be considered, such as risk transfer mechanisms such as political risk insurance and export credit financing, or even mixed financing approaches consisting of supporting private financing through government guarantees, public-private partnerships, equity investments or debt instruments. As instability increases risks and costs for international investors, it can deter them from investing and limit FDI inflows, reinvestment and investor retention.

In other words, if it is impossible – one might even argue that it is undesirable – to avoid the loss of sovereignty at the macro level, then the unsolved task will be to develop and/or strengthen sovereignty at the micro level. If this hypothesis is correct, it would mean that decentralized States are better prepared than centralized ones to maintain democratic institutions that are currently under pressure from the globalization process. Thus, in the new global context, decentralization will become not only another alternative to the organization of the state, but also a basic necessity for maintaining democratic systems.

Thus, all the countries of the Sahel-Saharan region are interested in ensuring economic sovereignty and achieving high rates of development, which will be possible only if, firstly, they can stimulate the growth of the corporate sector and their own demand, take advantage of the demand of others in conditions of growing international competitiveness, and secondly, they will They are able to attract foreign savings and turn them into long-term capital to expand their own production capacities of the corporate sector. The article presents the limitations of the influence of entrepreneurship on ensuring economic sovereignty as a result of high dependence on multinational companies, poor infrastructure development, lack of financial resources and human potential competencies.

The article substantiates the existence of a close relationship between the level of economic sovereignty of the region and the development of the corporate sector, with a higher level of development more stimulating the development of entrepreneurship, and less developed regions cannot reduce barriers to business development (for example, infrastructure). The possibilities of eliminating the identified problems associated with the intensification of international economic cooperation between companies of the Sahel-Saharan states and Russia are highlighted, which seems to be an important organizational task for the development of the corporate sector and, consequently, for ensuring economic sovereignty.