Making it big in the Nigerian economy
Not too long ago, I watched a speech presented by Elon Musk at Oxford University, England. Elon Musk is the CEO of Tesla motors (electric car company) and SpaceX, co-founder of PayPal and current chairman of Solar City.
In the presentation, he spoke of the achievements of Tesla, how despite vested interests in the energy business, the company was able to develop an electric car that outperforms most standard SUVs. Their ground-breaking work with Model S and now Model X (to be out later this year) has earned Elon Musk numerous awards, including Fortune Magazine’s Man of the Yearand MarketWatch’sCEO of the Year. Mr Elon has also found more than a six billion dollar fortune taking on seemingly impossible business projects.
No doubt, the energy business is changing and Elon Musk is among those leading this change. But the major point to note from his exploits and those of others like him (Jeff Bezos of Amazon, Steve Jobs of Apple, Mark Zuckerberg of Facebook and Bill Gates of Microsoft) is that the global business arena is now knowledge-based and that the great CEO of the future will be donning an academic gown. He may not have a university degree or a PhD but chances are that he will be technically savvy in at least one field.
In Musk’s presentation, he emphasised starting from the first principles, breaking down the variables and asking if “success is a possible outcome?”
Today, I wish to ask that question of the innovation-driven business landscape in Nigeria.
The Nigerian scenario
Nigeria’s Global Competitiveness Index as ranked in the 2012-2013 Global Competitiveness Report is 115th of the 144 countries studied. The Global Competitiveness Report presented by the World Economic Forum measures 12 pillars of competitiveness as shown in the spider web summary below:
From the above, it is easy to see where the country is wobbling. The report (that is, the Global Competitiveness Report) categorises the countries of the world into three broad categories:
- Efficiency-driven; and
Nigeria was categorised as a factor-driven economy along with 37 other economies. These economies compete on their factor endowments—primarily low-skilled labour and natural resources. In other words, our biggest assets are our raw materials.
From the report, some examples of other factor-driven economies include India, Ghana and Kenya.
Significance of being a factor-driven economy
The significance of our present scenario is that our GDP is a reflection of our raw productivity – in other words, our inefficient, minimal innovation productivity.
The challenge therefore is in achieving efficiency and innovationin our productivities.In the pharmaceutical industry, this is a real and present challenge. If we can achieve this, Nigeria can multiply her GDP by five.
According to the competitiveness report, the barriers we must overcome include:
- Access to financing
- Tax rates
- Poor work ethic in national labour force
- Inadequate supply of infrastructure
- Policy instability
- Inefficient government bureaucracy
- Tax regulation
- Foreign currency regulations
- Inadequately educated workforce
- Crime and theft
- Insufficient capacity to innovate
- Government instability
- Poor public health
The global market
Before considering the possibility of initiating projects that will deliver this efficiency and innovation, it will be good to evaluate the Influence of the global market.
Despite the data presented in theabove report, Africa(and Nigeria in particular) is still the beautiful bride at the moment for international businesses and the reason is quite simple – a growing middle class with a huge disposable income (as a result of our fairly large crude oil-induced GDP). The only problem is that companies coming to Africa need not sell Africa’s products and services. The point is, without a deliberate effort, this current attractiveness may not make much difference other than that we can live like our friends in the West and eventually get caught up in debt.
If you operate a foreign firm, a good business strategy will be to find ways to meet the needs of the market at present and to strategically position your firm within the productive chain of the nation. In other words, provide efficiency and innovation to Nigeria’s crude materials.For example, startbusinesses that deal in consumables, plastics, pharmaceuticals, toiletries, stainless steel, telecommunication, hospitals, diagnostics, shopping marts, cars, etc. Then continue to innovate around products and processes.
We are seeing a whole lot of this already and at the rate things are changing, the future will be remarkably different.
Nigeria: Does ownership matter?
For a Nigerian, the question will be “does ownership matter?” Does it matter who provides the innovative products and services? Well, it depends on the way you look at it, though I have decided to leave the nationalistic side of the discourse for another day.
Is success a possible outcome?
I believe it is, with the right management capacity, technology and finance–hence, my earlier reference to Elon Musk.
The ability to find finance for technological processes that offer innovation and efficiency to product or service delivery in Nigeria is key to achieving success within our context. Firms coming to Nigeria would have to do exactly this same thing – find the right management to deploy relevant technology in Nigeria and bankroll them.
No doubt, there are challenges to finding skilled people in Nigeria but I believe the real question is “who is doing the finding?” Who is building the team? This question is important because at the end, the character and dispositions of these individuals, much like that of Elon Musk, would influence all of us tremendously.
The team builders
Finding success in our horizon will be done by great teams; in other words, we all need to find a good team or create a good one.
Ideal team components
- Innovation – Processes and products
- Management – Proven ability/potential to lead the team and deliver
- Finance – Ability to raise money
There are lots of challenges and opportunities in Nigeria at the moment, and this calls for able leadership. In the pharmaceutical industry, it is even much more. The onus however is on finding management teams that have the integrity and character to raise finance and lead the technical team members to achieve outstanding success. I believe these leaders are really the scarce resources; their task is an earnest one and their cause is indeed noble.