Entrepreneurship is one of the factors of production; and the others are: land, labour, capital and technology. But the place of the entrepreneur is so critical that without him, the rest could practically lie fallow or may not even exist. His role is akin to that of a “net external force” in Isaac Newton’s First Law of Motion (in Physics), which says that “a body at rest tends to stay at rest…unless acted upon by a net external force.” This is to say that it is the ingenuity, vision, creativity and drive of the entrepreneur that puts the other factors of production to use, and through transformative processes, lead to industrialization. This has to happen in an enabling business environment anchored on a deliberate policy of the Government within the jurisdiction.
The industrial policy of government per time therefore provides the substratum or “pull factor”, among others, that moves the entrepreneur to bring his vision to reality, taking along all the risks. Let’s consider a bit of the Nigerian situation. In his Goodwill Message in a document titled “Industrial Policy of Nigeria” issued in 1988, the then President of the Manufacturers Association of Nigeria (MAN), Dr. Ismail Babatunde Jose had this to say: “For so long, industrial investors have been groping in the dark with no beacon to guide them. Most often, beautiful and viable investment projects embarked upon by investors have turned into failure because of frequent and unanticipated changes in government policies. Even where attempts have been made to chart a path and provide incentives, expectations have been frustrated by poor implementation.” Dr. Jose said further “…the procedures for setting up industries in the country have proved agonizingly tedious, involving as it were, a maze of regulations and permits that are administered by an array of slow and, often, indifferent bureaucratic machinery.” He however hoped that the document (Industrial Policy of Nigeria) would close a major void which had hampered industrial investment in the country, adding that private entrepreneurs would no doubt be forthcoming, if the climate was conducive.
In 2004, the National Economic Empowerment and Development Strategy (NEEDS) document observed that “overdependence on oil and traditional sectors, such as agriculture and services, is partly due to the hostile business environment,” stressing that “businesses wishing to operate in Nigeria face many constraints, including poor infrastructure, particularly road networks and electricity supply; inadequate physical security; corruption; weak enforcement of contracts, and the high cost of finance”. The document summed up that these factors have deterred foreign entrepreneurs from investing in Nigeria and induced many Nigerians to take their money and skills abroad. Unfortunately, fifteen years after these worrisome observations were made in the NEEDS document, the conditions have hardly improved.
However, government policies that are pivotal to entrepreneurship and industrialization are not all stories of woes. The communication policy that unleashed the Global System for Mobile Communication (GSM) in Nigeria in 2001, in all considerations, transformed not only the business landscape, but lives of the citizenry generally. From less than half a million connected telephone lines in 2001 in Nigeria, the number of active telephone lines in the country stands at over 175 million today; just as the number of Internet users has hit about 123 million (Nigeria Communications Commission, NCC, data). The revolutionary effect of all these on entrepreneurship and industrialization in Nigeria is really enormous. In Nigeria today, from the comfort of your bedroom, you can call and discuss with anybody in any part of the globe. So, you can run your “business at the speed of thought” as envisaged by Bill Gates.
The obverse side of this phenomenal development is that some businesses were put out of business; for example, most post offices and postal agencies across Nigeria are practically lying fallow today, with the buildings decrepit and overgrown by weeds. Many that went into ‘business-centre business,’ using fixed or landlines in the early days of the ‘telecom revolution’, soon went out of business, as virtually everyone got a mobile phone/line. Similarly, manufacturers and dealers in desktop computers have almost been driven out of business by those who produce more compact laptops, tablets and smart phones with wide-ranging functionalities.
Also, in the banking sector, the July 6, 2004 consolidation policy ended up making a revolutionary impact on the industry. In the policy, the minimum paid-up capital for banks was raised from Two Billion Naira to Twenty-five Billion Naira, with a deadline of 18 months (ending December 31, 2005) for each bank to meet the needed capital. By the close of the exercise, the number of banks had dropped to only 25, as against the 89 at the commencement of the consolidation.
The upside of the ‘revolution’ was that the 25 banks that emerged became ‘Mega Banks’, big enough to, either singly or in syndication, finance big ticket transactions in the country. Each of them commenced rapid branch network expansion, including setting up branches and wholly-owned subsidiaries offshore. In no time, most of them got listed among the “Top 1000 Banks” in the world by Financial Times of London. Also, many huge projects that hitherto depended on foreign/external funding got wholly financed by ‘local’ Nigerian banks. Thus, entrepreneurship and industrialization got some boost, as many local businesspeople and foreign investors took advantage of the new financial muscles of the banks.
However, on the downside, the consolidation saw the ‘death’ of some ‘financial empires’. Many entrepreneurial investors and shareholders literally lost their fortunes, as the number of banks shrank to only 25 within18 months. The multiplier effect of this reality also manifested in the bankruptcy of not a few businesses which had depended on the many ‘extinct banks.’ And for the next one decade or so (2005—2015), no new banks (especially Deposit Money Banks) were set up, either privately- or government-owned, because there was no more room for ‘starting small and growing big.’
However, it must be acknowledged that critical as the role of entrepreneurship is among the factors of production, technology remains a key driver of continuous change in every business environment. Again, the situation in the banking industry comes handy, where the use of financial technology (Fintech) has since put an end to ‘brick and mortar’ banking. Just as offices are going ‘paperless’, the entire Nigerian economy is going ‘cashless’.
Nobody carries bundles of bank notes any more, all the way from Onitsha (Anambra state) or Warri (Delta State) to Idumota (in Lagos) to buy some goods. Payment for such goods can now be made through Internet bankingand other e-channels, without the buyer travelling. Retail consumers of an assortment of goods nowadays procure them online, thereby boosting electronic commerce (e-commerce) within Nigeria and globally.
On the other hand, another victim of a changing business environment is the print media in Nigeria and elsewhere, where the ‘hard copy’ newspapers that we all know are badly hit, no thanks to the impact of information technology and/or social media. Almost everyone now reads the daily news online; more so, with what is now called “citizens journalism”. Virtually everyone today is a ‘journalist’ and a ‘photographer’ and in case of any incident, ‘live pictures’ are taken and in a matter of seconds, such pictures are made to go viral, with captions. And, although ICT makes newspaper production easier, but their ‘news’ are delayed. This is part of our changing business environment, where you read what is happening in every part of the world, almost ‘live’—minute-by-minute!
Without any doubt, ICT application in any business not only enhances efficiency of all processes, but also entrenches cost-effectiveness and good ‘bottom-line.’ Digital, as opposed to analogue has become the name of ‘the game’ in business. Every barrier is ‘pulled down’; and neither geography nor language poses limit or limitation to entrepreneurship anymore.
This is why the 21st century entrepreneur must, with all other attributes, possess above-average ICT-skills. Notwithstanding the traditional local constraints, such as poor infrastructure (as in Nigeria), leapfrogging digital opportunities and advantages remains a sure highway for an entrepreneur operating from wherever. The world is indeed, a ‘global village’, with barriers of distance and language already broken completely.
This is why whatever challenge is posed today by ‘Brexit’ in the UK, or President Donald Trump’s protectionist policies in the US, is impacting the entire world. For over three years (since June, 2016), the United Kingdom, following the outcome of a referendum, has been struggling to exit the European Union—where they have been a member for close to fifty years. Things have indeed gone awry in the UK, with two Prime Ministers (PMs) exiting in quick succession, and the incumbent facing very ‘cloudy days’ ahead. And for Trump of the US, his trade wars with China and others as well as anti-globalization stance, are fast defining a ‘New World Order’ that leaves the entire humanity in constant quandary.
And down here in Africa, the unfolding omen of the African Continental Free Trade Agreement (AfCFTA) on the entire continent is worrisome. In my article on this subject published in The Guardian(of Nigeria) on April 30, 2019, I said: “Already, the rising wave of nationalism and separatism across the African continent is manifesting in widespread xenophobic attacks, killings and looting of properties belonging to fellow Africans. Black Africans no longer want blacks from African countries on their soil. In South Africa, blacks from other countries of the continent are being killed in large numbers or pursued out of the country by ‘indigenous blacks’. In Ghana, on several occasions, Nigerians are being chased out of the country, and having their businesses destroyed by indigenous Ghanaians. In other countries such as Libya, Morocco, Sudan, etc., nationals of other African countries are being ‘bought and sold’ as slaves. Hardly is there a week that hordes of these Nigerian ‘slaves’ will not be repatriated and dumped at our major airports.” That my article is titled: ‘African Common Market, nationalism and xenophobia.’ The recent closure of Nigeria’s land borders has the capacity to worsen this already tension-soaked regional investment climate.
Globally, these uncertain business environments are further being complicated by the import of the ‘Fourth Industrial Revolution’ as adumbrated by Professor Schwab of the World Economic Forum. We already have with us some disruptive technologies and trends such as the Internet of Things (IoT), robotics, virtual reality (VR) and artificial intelligence (AI). With all these, and in all these, however, the entrepreneur, the ‘risk taker’, the inventor or innovator remains the pivot around which the industrialization process revolves. After all, technology, no matter the sophistication or complexity, is a creation of man.
Okeke, an economic analyst, lives in Lagos.