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Made in Nigeria: Driving productivity and competitiveness

AfriOne phone and other mobile devices manufacturing plant in Lagos. PHOTO: George Osodi/Bloomberg

“We can compete significantly if we can deliver a quality that matches and exceeds those of imported goods. Think creatively, take advantage of your being Nigerian and deliver products that will meet the specific needs of your people.”
– Mrs. Ibukun Awosika, Chairman, First Bank Nigeria Ltd

Nigeria is richly endowed with the material and human resources needed to diversify her economy. There has been increasing talks about the need for a shift from majorly exporting and consuming foreign products to the local production and consumption of ‘Made in Nigeria’ products – Nigerians undoubtedly possess abundant talent in entrepreneurship and innovation with potential for high productivity and global competitiveness. When production and consumption are localized, wealth is kept within the local economy, jobs are created, the value chain is expanded, and these grow the economy.

The demand for higher efficiency levels in businesses has led to a shift toward technological innovations replacing much of the human workforce. Small and Medium Enterprises (SMEs) need to embrace the challenge of creating jobs for people to meet new needs, and fill the void being created by this increasing efficiency.

SMEs are ‘engines of growth’ for economies; particularly in countries such as Germany where SMEs make up 99% of the economy, driving high productivity and remaining globally competitive. Small local businesses can provide economic resiliency and create jobs through innovation. But beyond talk, action is required.

The key to competitiveness is to stay consistently better than competition. Competitiveness of SMEs can be analyzed from two angles – the firm and the nation. By maintaining focus on improved quality of goods and services produced, SMEs can drive competitiveness from the firm level, through to the national level, and beyond. Countries such China, USA, India and Germany, have uniquely positioned themselves as highly competitive nations by providing the much-needed support to their local SMEs to increase productivity and make high contributions to GDP.

Low productivity and poor quality output of Nigerian Small and Medium Enterprises means a very little contribution to GDP. Most often, these SMEs are limited by lack of talent and capacity, little or no access to finance, difficulties faced in making their entrance into target markets among other setbacks.

As a nation, Nigeria needs to create an enabling environment for doing business. Rather than providing political solutions to social problems through ineffective job creation efforts, the government can create a pipeline to support the creative capacity of entrepreneurs by providing critical business infrastructure, giving small business opportunities to showcase their works, gain visibility and improve competitiveness. Policy and deliberate action from the government is necessary. Government must be the first buyers of local goods and services, and then inspire its citizenry to buy ‘Made in Nigeria’.

The agricultural sector in Nigeria for example is falling short in terms of productivity. Low productivity is directly linked to low competitiveness. Increased competitiveness is required to enable access to finance, investments, markets, talent, research and development.

Nigeria has a huge market. To be productive and competitive, SMEs need to identify sectors where gaps exist and develop businesses to fill those gaps. Five notable sectors that show high potential for global competitiveness are: Entertainment, Fashion, ICT, Food and Fintech. Agribusiness, hospitality and tourism also possess high potential for growth. By focusing on improved quality and productivity, SMEs can drive their competitiveness.

Recommended Actions Going Forward
Small and Medium Enterprises (SMEs) need to start small and start right.

Nigerian SMEs need to increase their focus on quality and utilize their advantage of understanding the specific needs of Nigerian users, to prepare products and services that will match or even exceed the quality of foreign alternatives

Collaboration is key to meeting the challenges faced by SMEs.

SMEs need to take advantage of technology and free opportunities when it comes to setting up and scaling up their businesses.

Capacity building is important. Business ideas need to be articulated effectively and good record keeping is essential for SMEs to attract adequate funding. SMEs need to recognize that banks are also businesses in themselves and so require a proven concept, an understandable cash flow and a clear path from lending to loan payment before granting loans.

Explore opportunities and other sources of funding available for Small and Medium Enterprises.

Atanya is of First Bank Sustainability Centre Lagos Business School

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