DEVELOPING ENTREPRENEURIAL SPIRIT IN NIGERIA PART 1
By Peter Osalor
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 $1,371.31 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.
Since 2008 the government has began to show the political will to implement the market-oriented reforms urged by the IMF such as modernizing the banking system, curbing inflation by blocking excessive wage demands, and resolving regional dispute over the distribution of earnings from the oil industry. GOP rose strongly in 2007-10 because of increased in oil exports and high global crude oil prices.
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 religious uprising in the northern 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.
In 2010, President Jonathan has pledged to continue the economic reforms of his predecessor with emphasis on infrastructure improvements. Infrastructure is the main impediment to growth and in August 2010 Jonathan unveiled a power sector blueprint that includes privatization of the state-run electricity generation and distribution facilities.
The government also is working toward developing stronger public- private partnerships for roads. Nigerian financial sector was hurt by the global financial and economic crises and the Central Bank governor has taken measures to strengthen that sector.