July 19, 2024
The Information Paradox

The role of information plays key in informing people and role players on how to act during a game. Information informs strategic decisions at many levels individual, business, community, government and the world, which empowers these role players to act and behave according to the information provided. When one goes for a job interview they provide information about their background and qualifications as a signal to a potential employer about their ability and competence. Economists Spence (1973) and Stiglitz (1975) initially proposed the idea of signaling and screening in their studies. As we are in the information age it has become increasingly easy to pick up various pieces of information mainly because of the emergence and advancement of information and communication technologies across the globe with platforms such as Amazon, Facebook, Twitter, GitHub and so on.

Information technologies have created advantages and efficiencies for many emerging economies changing the way markets, civic activism, justice, accountability and economic participation are perceived in many countries across the globe. Despite the gains achieved in information dissemination in the socioeconomic sphere in Africa, the access to credible information has long lived to be a desire and now critically needs to be advanced to enable and empower key decision makers in the efficient allocation of resources. The Mo Ibrahim Foundation, a UK based African governance foundation, highlights from their research that statistical capacity, data collation and information dissemination on public and private issues needs to be improved. The research report raises the fact that although information production is expensive, which the Grossman-Stiglitz efficient market highlights, it essential for long run cost savings ensuring resources are allocated and matched in the correct areas.

The critical problem herein is an arising information gap in Africa, according to PositivityGlobal.com and the effect this has on the growing industry of entrepreneurs is the lack signal and discovery mechanisms. Active tracking of the qualitative and quantitative elements or variables affecting entrepreneurship have to be documented to activate the benefits of being able to discover economic opportunity, executing the respective opportunity and measuring performance of the arising opportunity by benchmarking. Just like how public companies are obliged to present their financial information publicly and bear the brunt of criticism or acquire the accolades of heroism, private companies and entrepreneurs need to adapt their stance in this information age. This is slowly becoming the standard for private companies and entrepreneurs to disclose “at least” some information if they really want to participate on alternative financing platforms such as crowdfunded investment banks. The United States Jump Start Our Business Startups (JOBS) Act of 2012 regularises the voluntary disclosure of information by private companies and entrepreneurs setting a global precedent for small companies to at least say something about how they plan to create value if they are going to ask for money even from friends of friends.

These are major developments and they affect the way entrepreneurs run their enterprises and especially when they require successive rounds of funding in the future. This opinion article call for the creation and development smart insights and information that inform the markets on African entrepreneurs and small businesses.

References –
Mo Ibrahim Foundation mo.ibrahim.foundation
Positivity Global (Africa) http://www.positivityglobal.com
Spence, M., 1973. Job market signaling. The quarterly journal of Economics, 87(3), pp.355-374.
Stiglitz, J.E., 1975. The theory of” screening,” education, and the distribution of income. The American Economic Review, 65(3), pp.283-300.