Global development is entering a phase where Entrepreneurship will increasingly play a more important role. An analysis of sources of economic growth by the World Bank( 2013), finds that the biggest differences between developed and developing economies are in innovation performances. It emphasizes that while Entrepreneurship and Innovation are very critical for economic growth,they have also become increasingly important for addressing major development Challenges, such as the ones related to poverty, inclusion and sustainability.
According to the World Institute for Development Economics Research( United Nations University), it is expected that Entrepreneurship will continue to make significant contribution to growth and employment generation in advanced, emerging and least developed economies alike. This is a reasonable expectation- one that is supported by recent findings of historians, economists and management scientists.
In the highly industrialized West, economy of the 1970s-2000s, characterized by reliance on big business and mass production has given way to an ' entrepreneurial economy'. In the emerging countries, most notably the BRICS countries, impressive growth has been driven by a veritable ' entrepreneurial revolution'. Even in the least developed countries, where aid dependency is high, donors have been shifting the emphasis in development cooperation towards private sector development.
Unfortunately the developments in this sector in LDCs, Nigeria inclusive,remain a far cry from the quantity and quality required to effectively fire up the economies. Issues of infrastructural inadequacy,weak funding,and unaffordable financing, low entrepreneurial capacity, corruption and the surfeit of cheap foreign-made goods that choke locally made goods out of the market, coupled with a barrage of policies, like multiple taxes and difficulty in acquiring property, that appear insensitive to the existence of these challenges, particularly at the sub-national levels, all combine to militate against meaningful progress in this sector.
World Bank statistics shows that, as at 2012, Nigeria had a new business density( a measure of the growth of Entrepreneurship) of 0.91. Though this represents an appreciable growth from its rating in 2004, when it had a new business density of 0.32, the country is still significantly behind such developing economies as Uganda (1.17), Tunisia (1.52), Malaysia ( 2.28), South Africa ( 6.54), and Singapore ( 8.04).
There is therefore a crying need to conscientiously transform the structure of Nigeria's economy by propelling positive industrial trends through growth in the small and medium scale industrial groups and eventually in the large scale manufacturing sector. This must involve a major and revolutionary effort to galvanize and motivate the entire citizenry to adopt the Entrepreneurial mindset. And to do so will require a holistic review of the Policies and incentives on ground to promote enterprise development.
First, we need to rethink our educational philosophy, to graduate students who are solution providers and job creators. The current preparation for seeking jobs and carriers in employment can no longer handle the volume of products from our institutions of higher learning, hence the unacceptably high level of chronic unemployment and underemployment, with its consequences on our social milieu. Thank God, the Government has taken some initiative in this direction but what is on the ground is only symbolic. Theoretical teaching only will not do it , we need a lot of experiential impartation and mentoring.
Second, we need strong, consistent and carefully structured awareness creation. This must be run as a campaign, not propaganda and tokenism. Every person must know what is in place to promote entrepreneurship. The objective should be to make enterprise development a first option for young Nigerian graduates, not a fall back option when nothing else is forthcoming. For many young graduates today, their first option is political appointment, because that is where it is 'happening'.The few who are lucky to be employed in companies still depend on their parents, five years post graduation whereas the councillor, Local government Chairman's PA or Party youth leader achieves financial independence within 18 months with Jeep and house to booth.
Third, we must maintain an unceasing focus on building capacity in all ramifications of the Entrepreneurial pursuits. It must be emphasized that possessing technical or vocational skills does not translate to entrepreneurial skills. The financial,the business management skills, the ability to measure and manage risks are critical skills for enterprise development and we must develop an integrated capacity building scheme that will enable our young business men and women build successful businesses .
Fourth, we need to ensure that we have, develop and adopt appropriate technologies that will leverage product and service delivery. In the global competitive market environment of the 21st century, Technology has become a major differentiating competitive phenomenon. If we drive on the left when others are driving on the right, we may be the only ones who will buy our automobiles for example. The World has gone digital and the Nigerian business culture must therefore be run on this 21st century technological platform. Luckily our youth are highly adaptive to this new technology, all we need is to create generous access.
Fifth, there is a crying need for enhanced access to Venture capital. In Nigeria there is a deficit of entrepreneurial 'promotive'capital. Some reasonable efforts are currently being made with the support of the Central Bank and the Federal Ministry of finance. As much as this is important and most welcome, private venture capital is more sustainable. Given the attractiveness of our market, we need to get other elements of competitiveness in place to build confidence and attract a lot more of venture and equity capital from the global private sector to complement the domestic public-sector supported initiatives.
And sixth, we need to be deliberate in promoting Innovation and innovative entrepreneurship. Most of our current entrepreneurial pursuits are directed to meeting basic human needs-raw materials, cocoa, flour, sugar, cereals, cement,crude Petroleum, importation of refined fuels, trading, banking services,tele-communications etc. Most of these are commodities with global price ceilings. But in the innovative realm which is essentially creative destruction of what exists and creating new or bringing what only exists in the imaginary realm into present reality. Here, the inventor and creator determines his margin and can quickly ramp up wealth. Most of the wealthiest men in the developed world come from the knowledge and innovation realm- Microsoft,Apple, Yahoo, Goggle, and Alibaba.
The truth is that these can be achieved only through strategic partnerships among key stakeholders- governments( and their agencies), Research centers, educational institutions and well-meaning private sector organizations( including NGOs) and individuals to form a network that can drive the movement for revolutionizing our entrepreneurial land scape. The current efforts by the government must be widely promoted and supported. I believe that it is in the pursuit of this need to form a coalition, that will ignite the Entrepreneurial revolution in Nigeria that the African Centre for Business Development, Strategy & Innovation ( ACBDSI) has organized the National Summit on Entrepreneurship & Innovation (NSEI) which will hold 20/21November at the Lagos Sheraton Hotel.
This summit with the theme: Entrepreneurship, Job creation & Poverty Reduction will bring together Policy Makers,Financial intermediaries, Industry Leaders,Business Promoters, Business Researchers, Professionals and budding Entrepreneurs in Nigeria and the West African sub-region to network, share ideas,question paradigms, challenge status quo and generate creative solutions to contemporary issues revolving around the use of entrepreneurship & innovation to stimulate economic renaissance. My hope is that the expected generous presence of the older and successful Entrepreneurs will motivate,stimulate and mentor the younger and struggling Entrepreneurs with their stories. This in my view will show that so much is possible in our country and help change the narrative.
Mazi Sam Ohuabunwa OFR
Monday, 1 December 2014
Those who know me or who read my writings will agree that I am very optimistic about this Country. I believe in the resilience of the country and its ability to withstand centrifugal forces trying to tear the country apart and abort its destiny of leading Africa and the black race.But I must say that I am worried with recent developments in the Polity. The signs are omnious and troubling.
First, the onslaught of the terrorists is not abating. The terrorists are bombing and killing themselves and many innocent Nigerians. They are also capturing and occupying territories in the North East Nigeria, precipitating the highest level of internal displacement of Nigerians since the civil war. Many Nigerians are truly troubled with the apparent difficulty our Security forces are having in halting and dismantling this vicious rebellion. To put it mildly, Nigerians feel despondent and helpless and are wondering what next we need do to resolve this seemingly intractable national challenge. It was suggested, we should seek International help and I believe we have had American advisers for a while, some of whom survived a recent Helicopter crash landing in Yola. For me and for many, all that we can do now is to pray harder for our Security forces and for the suffering Nigerians. God, please save us!
Second, all of a sudden, the price of crude Petroleum has been dropping and hell seems to have been let loose. There is an economic fever spreading all over the Nation. Indeed there is some panic in the air. I am afraid that this panic is causing serious injuries to the economy. The Federal Government has announced some austerity measures and the MDAs are in state of ambivalence. Some State Governments are almost declaring 'force majeure' and declining or are unable to meet their commitments. Un paid salaries and unpaid contractors bills are beginning to pile up.The Stock market is in a down ward trend as equities loose value and there is some divestment and capital repatriation.The Naira exchange rate is under pressure and a devaluation is being predicted. The stable macroeconomy we have had over the last few years seem to be under threat. This calls for the best of our economic management skills and an effort made to calm the pervading panic.
Third, we hear of the political rumblings in EKITI State. The APC Legislators in the State have determined that Governor Ayo Fayose will govern alone, with no commissioners and no aides. Just as was done when the EKITI Eleven wanted to employ the judiciary to stop the swearing in of Fayose as Governor, after what was a convincing win; which led to the mishandling of a Judge in the State, the PDP has used its minority members in the house, to approve the Governors request and to impeach the Speaker, Dr Adewale Omirin. Hon Oladele Olugbemi of PDP has been installed by the Minority and Governor Fayose has recognized this travesty.
I have been worried about EKITI since Ayo Fayose came from the 'dead' to beat sitting Governor, John Kayode FAYEMI. The loss was unexpected and has been seen as a big slap on the face of APC leaders especially that of the Asiwaju. And it seems to me that what APC could not get from the ballot box, they are determined to get by other means. Now with their majority in the house, they have determined to lock down Ayo Fayose's government. They will not approve his list of commissioners and advisers and may never approve his budget proposals or other bills. That seems to have encouraged or "forced" Fayose to take the laws into his hands. The Parliamentary rascality we saw in Edo recently where the Minority PDP members tried to take over the Edo house seems to be repeating in EKITI , perhaps with more dangerous dimensions. This situation must be halted. My counsel is that Ayo Fayose must show exemplary leadership by finding ways to reach out to and accommodate the APC legislators. The strong arm tactics he seems to be adopting in what is truly a great challenge to him, may only yield temporary results that are not sustainable . He can not govern the State that way and succeed.
On the other hand, all well meaning Nigerians must appeal to APC and its leadership to learn to respect the wishes of the majority of the people of EKITI, no matter how 'stupid ' they think the people are in choosing Fayose instead of governor FAYEMI. They should allow Fayose to run the government for the good of the people of EKITI State. If they blatantly refuse to cooperate with him, the only party that will suffer, are the good and'foolish' people of the state. If governance is about the people, then, all the obstacles on Fayose's road to good governance must be dismantled by the APC and its legislators . I recommend that they should spend their time and energy more on strategizing for 2018. Four years run quickly and they could return to the staple . But if they continue to prevent Fayose from governing, they may actually be hurting themselves as Fayose could win the people's Sympathy.
Then when we thought that we had seen the height of political rascality, our sensibilities were badly assaulted by the specter of parliamentary brigandage we watched at the National Assembly a few days ago. Right in our eyes, we saw ' honourable' members of the house scaling fences, somersaulting and pushing down gates. Then we saw them and a motley of others running helter and skelter as the Police threw tear gas at the 'Invading' crowd. Then we saw the Senate President being hassled as he entered the Chambers of the Representatives, perhaps to calm the nerves of the Members who had literarily fought their way into the chambers. The Representatives were highly agitated and tempers were roof high and palpable. There was shoving and finger pointing. Indeed, some fisticuffs were exchanged and some 'honorables' took off their shirts ready for Fight. It was like a free-for-all brawl. I was shocked by the unfolding drama. I could not believe my eyes. I was downcast and I cried for my Country. What was all these about?
The Police in their 'wisdom' decided to lock out the Members of the National Assembly for security reasons. They said that they had intelligence report that hoodlums were about to invade the National Assembly. All well and good. How I wish they used more of this 'intelligence' expertise to stop Boko Haram bombers from destroying the North East. Now if the Police had this information and they were shutting the gates in good faith, why did they not find a way to send information to the members of the National Assembly alerting them of this plan of hoodlums and advising them to stay away until the threat is cleared. Why not ask each member to identify himself or herself, so we can separate the wheat from the chaff.How much will that have caused them and the Nation ? Can that cost be compared with the disruption of the polity that we saw on Thursday(20th. November) and the ripple effects that would last many months, leading to a further destabilization of our Nation.
If the police was wrong in taking this precipitous action of locking the gates against the members of the National Assembly without due notice, the action of some members of the house who climbed the gates to force entry was also reprehensible . Two wrongs can never make a right. If those representatives were honorable and law abiding as we expected them to be, then they could not have resorted to self help that made them look like miscreants and militants. And some of these are parents! What could they possibly be teaching young Nigerians? What message could they be passing to those on the fringes of society, those who are angry with Nigeria, those who are looking for opportunities to express their anger against the country( the 'dishonorable' members inclusive). If a privileged class( over indulged some would say) as members of the National Assembly can descend so low and promote deviance and violence, what do they expect most of the other 'angry' Nigerians to do. Is it any wonder that this Nation is gradually becoming a violent Nation? If Gold can rust, what will iron do?
In my recent commentary on Tambuwal, I had indicated that I was going to watch how far this 'cunny' man would go with his cunning. Something tells me that all the brouhaha and 'roforofo'that we just witnessed and may yet witness a lot more are all about him. May be he does not care much about Nigeria, just as the Boko Haram insurgents and their sponsors do not care. What is important to him and his ilk is to take political power, employing every trick available. If he cares for this Country's survival and peace, if he believe's that nobody's political or economic ambition is greater than the survival and peace of this Nation, then he should save this country from this avoidable cataclysm. If he is noble, then he should do the honorable thing; resign his position as Speaker of the House of Representatives, because he has moved from a majority party to a minority party in the house, and allow peace to reign. He can not eat his cake and still have it. The democratic right he has to switch from one party to another without blinking an eye lid, is the same right the majority party in the house has to elect the Speaker. He must stop being a dog in the manger. That way he will show his love for this Nation, regain his nobility, receive the gratitude of most of the Ordinary People of Nigeria who are not politicians and who just want to have a peaceful Nation to work, live and die. These Ordinary Nigerians are the ones making sacrifices and bearing the brunt. They pay the taxes that maintain the politicians in office.
Many predictions have been made about the challenges facing Nigeria as we head to the 2015 Elections. In as much as many of us do not believe in those projections and 'prophecies', I think it is wise for our political leaders not to write off those projections with a wave of the hand. My leadership training tells me to hope for the best but to be prepared for the worst. In which case, I would be careful and sensitive. I would refrain from doing anything that will make the worst to become a reality. In addition, I will resist any temptations to play into the hands or circumstances that may promote the worst . What am I saying? Our Political leaders starting from the President to the Ward councillor must not light any fire that could burn the Nation or any part of it. They must also not stoke any destructive fire, no matter who lights the fire. My counsel is that it is the leadership's responsibility to calm every situation. Yes, leaders can be provoked, insulted or humiliated, but they must not allow themselves to be drawn into baits. I am convinced that there are people in this Country today( Boko Haram et al), who do not care a hoot about what happens to this Nation. I believe the Tambuwal's matter is a Bobby- trap. Let us be wise to jump and pass. Let us use constitutional means and legal methods to resolve it and other such matters. Resort to self help will only imperil our Nation. I believe that everything decent and right must be done to protect our democracy, peace and orderly development of our Nation. No sacrifice will be too much.A word is enough for the wise.
Mazi Sam Ohuabunwa OFR
Last week I admonished Nigerians to prepare for a rough ride ahead, given the Security, Political and Economic challenges confronting our Nation, one climbing on the back of the other. As I had predicted, some salvos were fired during the week by the Central Bank of Nigeria. The naira was devalued, though I hear that my brother, Dr Nnanna, Deputy Governor designate of the CBN, says it is not devaluation. May be we can call it a steep depreciation of the Naira. Today the dollar is exchanging for more than 180 naira in the Parallel market. The interest rate was adjusted upwards, prompting immediate review of the pricing of most bank loans and creating new nightmares for the industrial sector including the SMEs. With depreciation of the dollar in an import dependent nation and with rise in interest rates, it will not be long, before inflation will begin to inch up. The consumer at the end of the day will bear the full brunt of these austerity measures.
I had planned to do a follow up article on 'how to survive these austere times', as a modest effort to suggest to my readers, some steps they may need to take both in their personal and business conducts to overcome the current and developing economic challenge. But I was compelled to adjust the topic a little bit, when I realized that we may be taking some actions( consciously or unconsciously) that may worsen our ability to ride the storm. I was jolted into this reality when I heard that at its last meeting, the Federal Executive Council (FEC) approved the purchase of Cooking stoves worth 9.7 billion Naira. What kind of stoves? At this austere time ? I was really troubled to reconcile my self with how these stoves will help with tightening our belts which the Federal Government has advised the Nation to do.What fuel will these stoves use?Firewood, coal or kerosene? Who will procure the fuel for the rural women, who often spend many productive hours searching for kerosene. Or will the second phase of the contract be for the fuel supplies? I once heard that we wanted to move Nigerians from kerosene to gas for domestic cooking. How does this stove and 'wonder bags' business promote gas utilization ? Please I need some education!
To be sincere, I would have no problem with anything done for or in the name of our rural women were we not recently regaled with admonishments by senior government officials of the need to reduce expenditure in the face of dwindling income from crude oil. To send home this message, the CBN has decided to ' punish' importers with high exchange rate and industrialists with high interest rates. That tended to put me in the mood to think that we are going to be extraordinarily careful and selective in spending our National income henceforth. But these cooking stoves and 'wonder bags' have left me totally confused and wondering. What kind of austerity measures are we promoting? Are we truly serious?
And then the 60.9 billion naira contract award to KARKATAR for the provision of Engineering infrastructure for Kyami District, Zone C, Abuja. I knew it! When I began to hear and see on prime time advertising on Television of this hitherto unknown company, with claims of being entirely Nigerian and having built a bridge over two 'islands' in Abuja, I smelt a rat and suspected that something was cooking. I am happy that an indigenous Nigerian company has won a contract, the type that was only won by foreign companies in the past. My only worry is , must we be giving new contracts of that nature now? In austere times, should we not concentrate on completing ongoing contracts and paying off the huge debts owed Contractors. The last time I checked, Nigerian contractors are owed almost 1 trillion naira. My own sense of austerity dictates that I should be careful in entering into new debt obligations when I am uncertain of my source of income. May be my sense is exaggerated!
But that will be my first advice to Nigerians that they should limit new commitments, except they can guarantee source of repayment. Not only are incomes sources likely to diminish, interest rates are going higher. So I would do my utmost to limit my commitments only to guaranteed income and minimize building up new debt obligations.
Second, I will do my best to carry or keep minimum cash around. I will also not leave much money in my current accounts. The minimum is that every kobo that I will not need in the next four weeks should be either in a savings account or deposit account. This will help me hedge against inflation and ensure that I make my money work for me at this time, even if passively.
Third, I will not make long term commitments in foreign exchange. I will be very careful if I have to borrow in US dollars or any other international currency. If I must borrow, then I must begin to plan repayment as soon as possible. If I sell in naira then I must convert into dollars soon after to hedge against further deterioration or devaluation. With the current devaluation, many who borrowed in dollars or who must pay their suppliers in dollars must be 'sweating' profusely. Some businesses could easily be wiped out!
Fourth, I will advise prioritizing of expenditure. I will recommend that everyone learns to work with a budget. Make a budget and do your best to match expenditure with certain income. This is not the time to spend anyhow, trusting that 'God will provide'. He expects us to be wise and not to be foolish. I will for now focus on meeting basic needs. I will ignore anything that looks like I can do without it. My major focus should be on how my money will work for me, creating more money and improving my ability to have money to spend in the future. Nigeria's main income earner- crude oil is under threat and no body, not even the CBN Governor knows how low the price will go. As I was writing this, I was watching on Television, the pain on the face of Governor Suswan as he tried to explain his inability to pay the salaries of the Benue civil servants for a couple of months now. He allowed the wage bill to rise when he was getting excess crude money and 'argumentation' but now, no more 'show' and he has decided to reduce salaries and the workers are resisting. Guys, this problem is more serious than many of us have been led to believe! And it has long been brewing!
Fifth, this is the time to seek multiple streams of income. Tell me how the Benue State civil servants are surviving if they do not have multiple streams of income? They must be yam farmers or have other forms of investment through which they are getting some food to eat while they continue to tango with their governor. Every able bodied man or woman, especially those in employment should seek something to do after office hours and at weekends for supplementary income . The anticipated rise in prices of goods precipitated by higher exchange rate of the dollar and the higher cost of borrowing, will lead to drop in sales in the short to medium time frames and this may also create cash flow problems for some businesses. Default in meeting obligations, including salaries may increase in the private sector as well. So all wise salary earners must hedge against this possibility.
Sixth, we may also need to review our investment portfolio at this time. In uncertain times like we are in or about to get into, we need advice on what kind of investments we should get into. As much as possible, we have to avoid speculative investments. It is better to invest in low yield,low risk and more guaranteed investment options. You may consider asset acquisitions at this time, especially immovable assets like land and building for those who have some cash. Landed properties are better stores of wealth at uncertain and potentially volatile periods as we are entering into. Also, this may be a good time to return to the stock market as many who divest from the currency and money market because of volatility may head to the stock market, thereby boosting the stock market and leading to share price appreciation. Secondly, the adjustments undertaken by the CBN promote some level of increased confidence by foreign portfolio investors who see opportunity for higher returns in the Nigerian stock market.
Seventh, this may be time for many to take positions in the export trade. Ideally, the devaluation of local currency makes domestic products cheaper and more attractive in the export market. Agricultural products and even manufactured products can now better compete in the international markets.
Eight, I advise a more aggressive approach to business. Given the anticipated overall drop in demand and re prioritizing of expenditure by consumers of all sizes, competition for market space will intensify. Those who win will be those who take a better advantage of the market opportunities by adopting more aggressive marketing strategies including offering bargains to the consumer.
Nineth, there is wisdom in minimizing risks this season. Every investment decision and business transaction must be fully evaluated to measure risks and deliberate efforts taken to hedge against risks. One major way will be to ensure binding agreements and contracts. Another way, may be to share risks. So we may consider strategic alliances, which in addition to helping us build competitive strength, can help us leverage the market and then share risks.
Tenth and last, this is the time to trust God more than ever. I know that God loves Nigeria but in times of uncertainties and increased volatility in the Polity and in the Economy we need to seek His Help more than ever. One thing is certain, this season too will come to pass.
Mazi Sam Ohuabunwa OFR
Chairman, African Centre for Business Development, Strategy & Innovation( ACBDSI)