By: Nzan Ogbe, Group Chief Executive Officer, Levene Energy Holdings
As Africaโs largest economy, Nigeria is strategically positioned to be a significant player in the global economy. Given the right support and the fact that the country is potentially fertile ground for massive growth and development, Nigerian businesses can claim the top spot globally. But for this to happen, several issues must be considered.
Entrepreneurship largely depends on the existence, maintenance, and improvement of adequate infrastructure. Given that Nigerian roads, ports, and airports are often in disrepair, it has made logistics a nightmare, and reaching new markets has become a difficult challenge. Additionally, there is the insidious challenge of frequent power outages, which disrupt business operations, making it difficult for businesses to attain optimal performance, and this, in turn, hinders competitiveness for Nigerian businesses, both locally and internationally. It would be easier for a business in a country with already existing basic infrastructure to grapple with other essential issues such as finding customers, recruiting, and retaining staff, expanding to new and foreign markets, etc.
However, when one has to constantly expend most of their capital on buying fuel for backup generators, vehicle repair, costly transportation, and excessive turnovers, one begins to wonder at what cost an average entrepreneur would be able to develop and maintain their customer base as well as reach new markets.
For a country tilting towards industrialization, thanks to the increasing number of manufacturers, production is only sustainable if these infrastructural needs are met. Most of the work to be done in this regard lies with the government and the people of Nigeria, who must adopt a production mindset, contrary to the consumption mentality that existed before this era.
Another crippling issue of competition among SMEs in Nigeria is the lack of access to capital. Many businesses do not have adequate access to capital at reasonable rates, and this limits their ability to grow and compete. As a result of the lack of support from financial institutions, SMEs often struggle to secure needed funding. Nigerian businesses must invest in the latest technology and training to ensure growth and success in today’s global market. They need funding to make these investments. A quick solution would be for the government to conduct a review and implement existing regulations, the passing of more business-friendly laws, and expressly encouraging more financial institutions to lend to SMEs. Alternatively, businesses can seek other sources of financing, such as crowdfunding and peer-to-peer lending, which have become increasingly popular in recent years.
Yet another significant challenge is corruption. Businesses are often faced with this issue, especially in their first few years, but even older businesses are not exempt from its effects. Corruption is a major obstacle that plays a part in every sector of the country. For SMEs, corruption is a familiar enemy, and the consequences are stunted growth, lack of competition and, ultimately, this leads to the death of innovation. Many businesses are over-taxed by government officials who demand bribes for โlittle favoursโ. This increases businesses’ difficulties in operating effectively and limits the incentives found in systems where healthy competition is encouraged. Naturally, this leads to a lack of trust in the business community, as well as a loss of confidence in the government. To resolve this, the government, as well as the people, must take a zero-tolerance approach to corruption and work to create a more transparent and trustworthy business environment to attract investors and encourage competition, thereby making it easier for businesses in Nigeria to reach their full potential.
The most basic aspect of entrepreneurship is innovation. This is why SMEs must take steps to become more competitive. Investing in technology and training is a perfect way to improve operations and gain a competitive advantage. Businesses can increase their efficiency and competitiveness by adopting modern technologies such as cloud computing and data analytics because what gets measured gets done. Training and development opportunities must be provided for employees to achieve consistency in this area. Another result that can be achieved by this form of investment is that employees are more likely to be retained, especially those who are talented and whose careers would benefit greatly from these self-development initiatives. Employees generally stay when they feel like they are part of a bigger dream. Companies that invest in their employees and provide them with growth opportunities are more likely to retain talented employees, giving them a competitive advantage.
One other way to enhance the capacity of employees is through mentorship. Businesses can set up mentorship programmed to help employees at all levels, from new hires to executives, with advice and support. By implementing strong mentorship programmes, businesses in Nigeria can tap into the knowledge, experience, and expertise of seasoned professionals and develop the skills and competencies needed to compete on a global stage.
Diversification of products and services is also an excellent way of increasing competitiveness. New markets offer fresh perspectives, challenges and opportunities. Total reliance on a specific product or market could limit the business and its potential for expansion and expose it to economic downturns. If a business can tap into new and growing markets, it can increase its competitive advantage.
For global dominance, Nigerian businesses must look beyond the countryโs borders and explore opportunities in other African countries. An opportunity for Nigerian businesses to access a market of over 1.3 billion people and a GDP of over $3 trillion has come to light with Nigeriaโs ratification of the African Continental Free Trade Area (AfCFTA) agreement which came into effect in January 2021. Businesses can now take advantage of the growing intra-African trade and expand their customer base. This will not only help them to become more competitive globally but will also contribute to the overall economic development of Africa.
In conclusion, for Nigerian businesses to compete globally, both the Nigerian government and stakeholders in these industries must come together in their numbers to address the issues as stated above. The government must take the lead in addressing infrastructure and corruption issues, while businesses must focus on investing in technology and training (including mentorship), diversifying their products and services, and exploring new markets.