The role commerce plays in a developing economy

After the whole world moved from subsistence living — the state of having just what one needs in order to stay alive, and no more — to exhibit acquisitive traits, people have found that they can no longer afford not to deal with each other in other to have what they desire or what they could not produce, a practice known as commerce. The exchange of goods for services, goods for other goods and services for other services (trade by barter) and goods for money are daily occurrences in gregarious human communities. Commerce is the livewire of production and national efficiency. If there was no opportunity for exchange of goods, products and services, there would not be innovation and invention. Commerce is the motivation for improved production of goods and services as it allows for competition among different producers and marketers. In simple terms, commerce can be generally defined as the exchange of goods and services and all activities that facilitate business.

Commerce is the exchange of one’s valuable for another’s; for example, a car or real estate for money (financial transaction). It is the pillar of our financial system. It deals majorly with the production and distribution aspect of the economy. When a company produces something, that product is meant to be consumed in one way or the other, and in order for consumption to be facilitated, there must be a proper channel of distribution. Realistically, without commerce in today’s world, no one will survive because no one is self-sufficient. No individual can produce all that he or she needs to live a meaningful life, and it is as a result of this that every human being needs to depend on another in order to acquire means of living well. The commercial system of a nation includes the manufacturing system, markets, shopping malls, warehouses, transportation system, banking and finance, insurance companies, manufacturing companies, wharfs, services industries, business schools, etc.

Governments of all nations are responsible for the facilitation of commerce in their countries. According to Chapter II, Section 16 (1a) of the Constitution of the Federal Republic of Nigeria 1999, “The State shall, within the context of the ideals and objectives for which provisions are made in this Constitution, harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self-reliant economy”.

“National prosperity and efficiency” is a factor of effective commerce in an economy. Section 15, subsection 3 of the Constitution provides that: “For the purpose of promoting national integration, it shall be the duty of the State to: (a) provide adequate facilities for and encourage free mobility of people, goods and services throughout the Federation”. The “free mobility of people, goods and services throughout” a nation is commerce.

It is due to this constitutional provision that roads and housing infrastructure are the major activities of most governments in Nigeria, without consideration for commerce development which is a form of investment, means of job creation and income generation. Commercial activities are enhanced by the government in developed countries by the provision and maintenance of centrally accessible dedicated areas for commercial activities known as high streets or central business areas (CBAs) and industrial estates. Security and infrastructure of these areas are enhanced by governments. Citizens are encouraged to go into industrialisation and commerce. Commerce has many importance; some of which are:

(1). It brings producers and consumers together. Everything that is produced on earth either manually or technologically is made for human consumption. Commerce makes it possible to link consumers and producers, either directly or through middlemen (retailers and wholesalers) and through the aid of advertisement, transport, insurance, communication, technology, market, etc.

(2). Commerce creates job opportunities. The growth of commerce, industry, and trade has brought about the expansion of agencies that facilitate trade such as advertising, warehousing, banking, transport, media, etc. In order for these agencies to function better, they need to employ people to man some available positions and by doing that, many unemployed persons are gainfully employed. Commerce is an activity that individuals can start without depending on others.

(3). It increases the gross domestic product (GDP) of the nation’s economy as well as creates wealth. As long as there is an increase in the production rate of a company, the income of the nation will continually increase. In developed nations where there is little or no mineral resource, commercial activities usually account for nearly 80 percent of the total income of the country. This helps greatly to earn foreign exchange through income from export and excise duties that are levied on imported goods. By doing this, commerce increases the national income and wealth of a nation.

(4). It aids the growth of industrial development. Commerce aids the smooth distribution of goods and services produced or rendered by industries in a nation. If commerce had not been in existence, industries will have found it very difficult to keep up with the pace of operation. Commerce helps to increase the demand for goods and also helps industries to get raw materials as well as other needed services.

(5). Commerce encourages international trade through identification of areas of comparative advantages and economy of scale. Through commerce, every individual, organisation and nation can secure a fair and equitable distribution of goods all over the world. With the help of the development of transport and communication, countries all over the world exchange those commodities that are already surplus to them and earn huge foreign exchange.

(6) Commerce is a tool for international cooperation and economic development. It integrates countries who are trading with each other. Commerce ensures the faster economic growth of international trade. It is one of the means of developing goodwill of states. Countries which produce quality goods and products are usually respected by those nations that patronise them. This is why some countries painstakingly produce more quality goods for export.

Countries must look into developing their commerce and how to ensure a positive “balance of trade” if they want their economies to be sustainable.