Breaking News
Translate

Developing Entrepreneurial Spirit in Nigeria PT 1

A recent collection of essays on entrepreneurial innovation in developing economies, titled ‘Lessons from the Poor’, mentions an aspect of Nigerian clothing design. Examining the traditional adire dye industry, author Thompson Ayodele informs that the bottom 19% of entrepreneurs polled for the study earned more than state and federal civil servants.

For the purpose of this essay, the story is significant in more ways than one. First, it is a classic instance of entrepreneurial spirit, describing the transformation of an established Yoruba craft into a venture for wealth creation and employment generation. Second, and perhaps only in between lines, it reflects a measure of the serious imbalances that plague Nigeria’s economy.

Africa’s second largest economy is a bundle of extreme contradictions; with billions of dollars in annual oil revenue on one end and pervasive poverty for most of its 148 million people on the other. Relative political stability since 1999 has delivered some reform and regulatory initiatives to correct huge and long-standing macroeconomic disparities, yet the country remains overwhelmed by persistently dismal indicators and human development indices.

Nigeria’s current per capita GDP of $1,418 ranks it below much smaller African economies like Sudan, Congo and Swaziland. The latest UNDP poverty survey of 108 developing nations placed the country at the 80th position, below Rwanda and Malawi. Achieving the UN Millennium Development Goals and its own, and more ambitious 2020 target require a paradigm shift in mindset and priorities. It also requires the successful engendering of a broad, pan-Nigerian entrepreneurial spirit!

A slew of relevant policy redirections have already been initiated in this regard: The government has deregulated oil prices, disinvested public sector undertakings, created special economic zones and passed assorted legislation to encourage enterprise development. While some of these measures are starting to show positive results, many have been largely ineffective while yet others have completely collapsed.
For instance, a massive privatisation drive launched after 1999 managed to rake up private sector investment. However, Abuja’s simultaneous inclination for micro-enterprises, instead of small-scale ventures, did little to curb unemployment. The failure or even inadequate success of these measures is attributed primarily to disregard or ignorance of ground realities, and lack of a coherent, consistent, macro-level vision.

Nigeria’s unique set of problems calls for broad-based policy intervention from the bottom up, and any individual law or policy that is not part of a unified effort is unlikely to make much difference. The ‘bottom up’ analogy is pertinent, as one of the first things Nigeria ought to be doing is improving the condition of its roads.

The business environment in the whole of Africa is crippled with massive infrastructure shortfalls that result in the continent’s high enterprise mortality rate. Significantly, the rate of failure affects older and new entrants alike. A leading cause is almost always infrastructure deficits that critically hamper genuine economic growth and productivity.

Nigeria likewise suffers from endemic infrastructural woes with regards to roads, communication and especially power (small and large businesses alike across the country rely heavily, and at times exclusively, on backup electricity). There have been no worthwhile attempts so far to radically upgrade the power sector, or attract private investment. Another menacing challenge, compounded by the recent proliferation of militancy in the Niger Delta region, is security. Continued use of outdated technology and lack of trained manpower are a few more of the many difficult bottlenecks facing Nigerian entrepreneurship.

At the administrative level, Nigeria needs radical changes in fiscal, monetary and industrial policies to both promote new enterprises and aid existing ones.

The bulk of the problem is the impaired access for small and medium enterprises to capital markets. To improve this situation, lawmakers have made it mandatory for commercial banks operating in Nigeria to keep aside 10% of pre-tax profits for equity investment in small businesses. While it was a reasonably sensible move, it failed to meet avowed targets because the rate of actual disbursement was significantly lower than expected.

In the context of cultivating a wholesome entrepreneurial spirit, policy changes can often be superficial unless followed through with flexible implementation and constant monitoring.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.