Wakanda Punishment is this? — Part 2: Is Bankruptcy the Ultimate Punishment or Protection for Entrepreneurs?
In the previous article (Part 1), we started the discussion on bankruptcy as an option for entrepreneurs. Here, we conclude this discussion.
As of now, bankruptcy is probably a fate worse than death to some African entrepreneurs. Yet, the entrepreneurs and personalities that have been listed in Part 1 were ridiculously successful and yet filed for bankruptcy at some point. Some managed to bounce back stronger and even more successful. Does it make you wonder what they had to deal with during and after that decision? Imagine the countless conversations with customers/clients, suppliers and sub-contractors? Imagine dinner with the family and having to tell them that everything was about to change? Now imagine trying to rebuild yourself after such a decision. Clearly, that could not have been easy. On the other side of the coin, dealing with someone that has been bankrupt cannot be easy.
Those success stories of people who survived bankruptcy are incomplete, in my opinion. Why? Well, because they do not shed light on the people and support systems that the bankrupt folks had that helped them climb back out from the mire.
In my opinion, those people that were willing to do business with formerly bankrupt businesses afterward, are the real MVPs. Think about it, they must have been:
- Understanding / Sympathetic: Some old and new customers and clients accepted this person’s bankruptcy status and were still willing to work with them. I can imagine that other entrepreneurs who’ve been close to the edge themselves could more easily empathize with them as well. After all, a lot of us are often very financially exposed at times.
- Those more cautious preferred to only do business with payment upfront but still did business with them.
- Others waited it out a bit and decided to do business when it looked like the person’s business was more stable.
Of course, there must have been some people who:
- Blacklisted them forever: After all, what if the entrepreneur goes bust again? In the case of entrepreneurs like Ford, perhaps customers worried about who would maintain or service their cars if the company went bust again.
- Marked untrustworthy: Some people surely just couldn’t shake the feeling that this formerly bankrupt individual just cannot be trusted.
However, what fascinates me is that somehow many of these entrepreneurs STILL bounced back. They didn’t let this stop them. They rolled up their sleeves, crawled out from out of the mire and started to rebuild their dreams, brick by brick. And you know what? They did it!
Why should we have better bankruptcy laws?
Entrepreneurs contribute to 50% of Malawi’s GDP. On the continent, according to the World Bank, Africa’s entrepreneurs contribute up to 40% of national income. Entrepreneurship anywhere has a high failure rate. Some often fail in their first businesses. Some succeed in subsequent businesses. As it stands in Malawi, bankruptcy robs you of all your credibility, as the same for many other African countries. I am not saying trust every person who becomes bankrupt. However, mistakes (even financial ones) are part of human nature, unfortunately. No human being has perfect judgment. When it comes to entrepreneurship which already comes with inherent risks, entrepreneurs are in the business of taking (hopefully calculated) risks. Sometimes are calculations are a bit / a lot off. The bottom-line is entrepreneurs fuel our economies in many African countries and if they are not provided the scaffolding that they need, these otherwise productive individuals could find themselves in dead-ends when they could be further contributing to their communities and nations at large. I am not saying that people should be irresponsible about their commitments and financial matters involving others. No, bankruptcy should not be a “get out of jail free” card. Rather my argument is: we must find ways to better protect your interests and the other parties for the benefit of the greater good and all involved.
What can we change about our bankruptcy laws?
Obviously, I am not a lawyer or a law professional. You can probably tell by how I avoided the nitty-gritties. However, I feel many African nations, including Malawi, could work on the following in their respective bankruptcy legislation:
- Making the law more easily understandable by the layman. I literally had to quiz a super smart law-student friend of mine to help me understand Malawi’s Insolvency act of 2016. Surprisingly, it seems that it is possible for some lawyers to not be conversant with bankruptcy acts themselves on our continent, as this article shares on this matter in Nigeria. So if lawyers don’t understand, what chance does the average Joe or Jane have? However, some countries like Kenya seem to be doing quite well, at making their laws accessible for the average person, including matters of insolvency.
- Make filing for bankruptcy less expensive. If you look at information from countries like South Africa, for example, it would seem that generally speaking filing for bankruptcy in Africa is quite expensive. For that reason, big businesses and richer entrepreneurs find this a more accessible option. Sadly, suicide seems like a “cheaper” or accessible option for small business owners.
- As above, make it so easy that an individual (in particular SME owner) can file for bankruptcy themselves (saving money that they probably don’t have in lawyer fees and court proceedings).
- Let formerly bankrupt people lead: If leaders like Donald Trump (bankrupt 6 times), Abraham Lincoln and Thomas Jefferson have been bankrupt in their time, and yet served their nations at some point: is it prudent for a nation to disallow someone who has been bankrupt before from public office? Is it useful for the greater good of Africa? (This is just a thought).
- In countries like the USA and UK, your bankruptcy status does not last forever. We need to ensure the same for our African countries. It should allow for a reasonable period of rehabilitation and then moving on.
My belief is that bankruptcy should not be a stigmatized punishment that entrepreneurs and businesses that failed must take. Nor should it be a “get out of jail-scott free card”. Rather, with the right policies, it can be the protection that they are privy to before they make an epic comeback and continue to productively contribute to their nations.
Lastly, if your finances are in dire straits, people you owe are hounding you (as they should) and you have no idea what you are going to do, I encourage you to speak to a lawyer. Discuss your options. Sometimes you have more options than you know. Get informed. ((hugs)) , Things can get better.
What are your thoughts? Please leave a comment below.
Want to discover more about Maclean Mbepula? Find her on Linkedin or here on Medium. She’s written 3 books (one in entrepreneurship from a grassroots perspective (“Challenge Accepted) and 2 poetry books which are available for purchase on Amazon or you can sign up and get the kindle versions 100% FREE.
Originally published at https://www.linkedin.com.