THE TRICK TO DOING BUSINESS IN NIGERIA
AN EXCLUSIVE INSIDE TO THE NIGERIAN ENTREPRENEUR AND MORE …

Renee Horne – London 30 May 2011

Nigeria – one of the most populous countries in the world and the largest on the African continent in both size and population. It is one of the fastest growing economies in world terms and the International Monetary Fund is projecting an 8% growth in the Nigerian economy in 2011.  But doing business can be tricky as the country is especially linked with the “419” scam or advance fee, which is a trick using a letter or email whereby the target is persuaded to advance sums of money in the hope of realizing a significantly larger gain. These trick business incidents alone cost the UK economy £150 million a year, with the average victim losing £31,000. However, Christian Udechukwu, Director of the Business Council for Africa and member of the Organisation for Economic Cooperation and Development (OECD), said there is much more to Nigeria than scams and corruption.  He disagrees with the common perception that Nigeria has a reputation for shady business dealings, “The fundamental truth is that all over the world one can see varying degrees of corruption;  the Nigerian investment climate is getting better and better. We now are more business savvy and have good policymakers. There is also more business information available in Nigeria which provides for more transparency”. Udechukwu, who is also Director and Founder of the UK based company, Business Event Africa, which is more than ten years old argues, “We are a communication company, promoting live events, round tables and conferences etc. Interfacing with business entrepreneurs is what we do.  This by providing a platform for business and policymakers to understand each other.  We also create opportunities as Europeans may not be familiar with African territory and vice versa, so we match like for like companies by creating business relationships and partnerships. As director of the Business Council for Africa, we've organised around four hundred meetings and networking sessions with multinationals such as Shell, Unilever, Standard Charter etc,” said Udechukwu.  As part of the “Africa Business Voice” series, the World Entrepreneur Society (WES) spoke to Udechukwu exclusively about doing business in Nigeria, one of the most important and robust economies in Africa. 

SHOOT FIRST AIM LATER 

So, what does it mean to be an entrepreneur in Nigeria? “Of course it is much more difficult for a person to start up a business in Nigeria, a developing country than it is in the United Kingdom, a developed country; the bureaucracy tends to get in the way when it comes to Africa”.  What’s your advice for would be entrepreneurs out there?  “One of the things of doing business in the .com era is that many people shoot first and aim later. So you shoot first, starting up your business with a bright idea and then run with it without thinking of how sustainable the business will be. So it has become fashionable for one to go with it without sitting and thinking, you need to plan properly, know your market, customers and rivals before you jump head first,” argues Udechukwu.  

THE ENTREPRENEUR CAPACITY GAP

“Small and Medium Enterprises (SME) financing is a priority for the Nigerian government and banks also advocate it, but there is still a capacity gap. For example, in Europe, if you want to be an entrepreneur you may ask a company like PriceWaterhouseCoopers to do a business plan for you, but not in Africa; so the support structure is not as strong as one would like for small entrepreneurs. However there are some that rise above this and not rely on government and banks.  They find an idea and rely on their friends and family to assist them to follow through on that idea. The industrial conglomerate, the Dangote Group is an example, the company started off with less than 5,000 US dollars, from borrowing from family and friends and has grown to its present size.  Small entrepreneurs need to toughen up.  They can launch their businesses without massive funds from banks. Some people start with less than £100 in Nigeria, but to make it from small to medium to large is a different story because sometimes there are limited support structures”. Indeed, cautionary words from Udechukwu, but is it viable to borrow money from friends and families? Where is government and the private sector when the would be entrepreneur needs them? “Access to funds, when most businesses start off relying on family and friends, this is sometimes not a sustainable business. In some African countries like Nigeria you can tap into government financing as their policies are designed for SMEs.”

AFRICA’S ECONOMIC GIANT? 

There is a common perception that South Africa is the economic powerhouse of the continent, but Nigeria is a much larger market than SA. What are the distinctions between the two? “South Africa is superior in terms of infrastructure and its overall integration into the global economy, although the global perception is that South Africa ranks higher.  In terms of investment, Nigeria is far superior to South Africa, as telecommunications company MTN and retail company Shoprite make much more profit in Nigeria despite these being SA companies. I think the contributory factors are market size and volume. So in terms of market size, Nigeria offers much bigger returns than the SA economy because it is three or four times bigger than SA”. What do you think of the fact that perhaps in SA so many politicians are dominant in business leaving little space for the small entrepreneur? Can the same be said of Nigeria? “I think that this is an oversimplification of the process.  I believe that if entrepreneurs have studied the market well, know their market and then have good ideas, good ideas can find a place anywhere. For example in Nigeria, the Bank of Industry has incubated and lined up over 100 SMEs”   said Udechukwu. 

DOING BUSINESS WITH NIGERIA

“It is easy to do business for any foreigner, the primary root is firstly diplomatic guidance and you can get these from your trade and industry department as it is in their interest to promote business. Then use the Nigerian Chamber of Commerce to get into the country. They will tell you of known business people in Nigeria, for example the list of Agriculture Business contacts, who you can contact.  So firstly diplomatic missions, then chamber of commerce will be your starting point, and then people should go to events and conferences. People usually at these events are serious about pursuing opportunities with likeminded people in same sector”, argues Udechukwu.

It’s all about research and networking for entrepreneurs to find their niche in the African markets, but this is easier said than done, as the continent is indeed a tricky business endeavour. Join us next week for part two of this interview as part of the “Africa Business Voice” Series, and as always, have your say……..