Entrepreneurs Should Form Alliances in Nigerian Economy

Mazi Sam Ohuabunwa is the President/Chief Executive Officer of at least nine business firms.  A pharmacist by training, Mazi Ohuabunwa has served his fatherland on more than seven platforms including the Vision 2010 Committee and the Nigerian Extractive Industries Transparency Initiative.

Sam Ohuabunwa

He is a Member of the Order of the Niger (MON) and belongs to seven professional associations in pharmacy, management, marketing and public relations. In this interview with Saturday Vanguard Business, he suggests ways government could support entrepreneurship and what entrepreneurs need to do to remain in business.

Sir, the cost of production in Nigeria is high and that affects the standard of living, which at the same time has thrown entrepreneurship off-balance. As an industrialist, what would you advise government to do?

We can agree that the greatest challenge in our country today is poverty and unemployment. And to deal with both, unemployment that causes poverty, we need to get more people employed but government cannot employ enough. The existing organisations have a limited number they can employ. So, we need to get more people employed, and that is where entrepreneurship comes into place, micro finances, more businesses, as many of them as we can get in the economy, the more we can increase our GDP. The more we can create wealth, the more we can eradicate poverty. And you have said that the cost of production and cost of doing business is high and that also becomes a discouragement, because sometimes a little producer tries to make a few things and he cannot sell them. Again, sometimes, he does not even have the resources - acquired resources to be able to produce what he wants - be it products or services. Therefore, I believe that government ought to focus on these points: One, how do we reduce cost of doing business, cost of production for people who want to produce on their own and provide their own services?

We know that the major issues are infrastructure, power supply, transportation and road. We believe government is making efforts but we are not going to wait until government finishes providing roads, light before we go into entrepreneurship. What we expect government to do is to introduce an incentive that says if you can bear all these costs and still produce, government cannot do something for you, but might benchmark it to the number of people working for you. For instance, if you have up to five people working with you and they have one tax or the other to pay, government can pardon or forgive these taxes so that you can use the money saved from it to pay for the extra cost you are incurring by providing those services so that you can compete with imported products, services somewhere. That is one way government can help encourage entrepreneurship and living in the face of high cost of doing business in our country.

 
Government can give some incentive, some tax relief, tax forgive and a couple of things which can benchmark or be tied to productivity.  If you are able to this, we will do this for you. If you employ this number of people, we will do this for you. Believe me, people will be willing to take the pain and pay the extra cost.

You said government cannot provide all jobs needed. What advice would you give an entrepreneur who wants to operate a business under this environment where there is no power supply?

My advice to an entrepreneur is to try and seek like minds because for individual small operators, this economy will not help. So, you need to seek alliances, seek cooperation, form cooperatives, form strategic groups so that you can pull your resources together and save cost. Because if me and you are in business, instead of you having an office and me having an office, we have one office; instead of you having a secretary and me having a secretary, we have one secretary; instead of you having a truck and me having a truck, we have one, so that we can save more money to put into working capital. Instead of us buying generator separately, we buy one, it can serve the same purpose.

 
So entrepreneurs can either get into alliances. If five of us are doing the same kind of business, we can strategically ally and save cost. We can build one level of security, we can do things together.

So, my advice to entrepreneurs is that they should not allow the current issues to discourage them. They should look for ways to reduce cost, and one way is strategic alliances, forming cooperatives and sometimes out-sources. Rather than trying to do everything for themselves, they can out-source. You don’t need to owe an office. They can use virtual methods of getting things done. Out source what you can out-source, buy those ones you can buy; lease the things you can lease instead of buying because in leasing, you are putting little money up-front. That is the advice I can give to an entrepreneur who wants to do business under this environment.

What steps would you suggest that government should take to reduce the growing problem of unemployment and corruption in the country?

Government can do two things - first is to support the companies that are in business now to employ more people. Just like I said, if government comes to Neimeth and said, how many people are you employing and I said I’m employing 300 people and it said fine, what will I do for you for the next one year for you to employ another 60 - 100 people. I tell you, if I were the minister of Industry, I would not be sitting in my office; I would be going from office to office asking these questions.  And if they get all that information and government now goes back and prepares a package of incentives and gives to these companies that are willing to enter into a covenant, some may say reduce tariff, some may say give tax incentive, some may say cancel this, cancel that.

If government does the calculation because it is the greatest need of government, sometimes they begin to say give a waiver. Government begins to talk how much tax they are losing. How much tax they are losing, yea, but if you give a waiver, let’s say on raw materials and I import it, you lose the import duty but I use it to manufacture, and when I manufacture, I employ 10 people and these people will pay their PAYEE tax, some will pay VAT, some will pay other taxes coming from my vessel. Though I didn’t pay custom duty, I’ll pay income tax, because I’m now doing business. If you didn’t give me that waiver, I will not import the goods and I will not do any business, you will not get my own tax and the tax of other people. So when we just look at waiver and then you say you lost so much that is one side of the story. We must do a balance; government can’t give people incentives that are attached to employment.

 Two, government needs to support entrepreneurs, for instance, the greatest needs of entrepreneurs are to first build a good business plans, to get funding and managerial competence. In all these areas, government can help to build business plan so that organisations can be multiplied and it makes geo-political zones a centre for entrepreneurship. I learnt CBN is doing something like that around some areas. Young people can go and help develop their business plan. Then you have a funding organisation that can help them access funds and some cases when they have very good ideas, government can give some undertaking. It’s like what they are doing for agriculture. If you go to borrow for agriculture, you pay 8% and government subsides for you. So, for good, young entrepreneurs who have good ideas can enter into that kind of method to help them source funds.

Within this managerial capacity, government needs to pile up opportunities for people. Many people don’t learn entrepreneurship in universities. An entrepreneurial idea can come to a journalist or pharmacist. They don’t teach it but when we come to the real life, government should have opportunity to teach us that. And also should begin to inculcate that into our curriculum so that when people are leaving school, they will think of employing themselves instead of looking for somebody to employ them. That will help government to reduce unemployment.

Why is it that entrepreneurship in this country is growing at a lower pace?

Well, it is a matter of our own level of understanding.  Government should appreciate that they are not government for government but government for the people. Our government should appreciate that the totality of the contribution of every individual adds up, that they are government of the private sector and public sector. They should understand why America is good. People are saying it is private money when they are bailing out banks, because they know that if those banks fail, many people are going to lose their jobs and when they lose job, there will be unemployment; tax will fall, purchasing power will decline, demand will decline, economy will be pulled down. So why do you want economy to be pulled down before you start doing something? That is why they are putting government’s money.

Nigerians will not do that because they will say it doesn’t concern us. It is a private sector. They don’t know that the private sector is their life.  As I say, there are 140 million people in Nigeria, maximum of 2 million are in government in the 36 states of the federation. 138 million people are in the private sector. We are the bigger size of the economy. So if government ignores what goes on in the private sector and only uses public money to treat public issues, then we are ruined and the more the private sector fails, the economy is dead. That understanding we have not come to it. I believe that some day we get to understand it and therefore take interest in the private sector Sometimes you don’t need to give them money, mere recognition of what they are doing, advisory services, commendations, those things make them know they are making contributions and can make the difference.

Your company won an award recently, how did it happen?

We thank God. It’s the Nigeria Stock Exchange Award in the healthcare centre. I believe we have been paying our dues. The company has to strive for excellence, not only in rewarding the stakeholders but also being corporate responsible, submitting our reports to the market regularly, providing adequate information to shareholders and to stakeholders in the stock market. I think there is a reward for those efforts.

What we have seen of your company today is group effort or one man’s initiative that brought about this achievement? What is your propelling factor?

I think that I’m driven first by my understanding of my place on earth. We are driven by the realisation that God created us for a purpose, He will give us the ennoblement to fulfill the purpose. So we have confidence in His goodness because He said that His thought towards us are thoughts of good and not thoughts of evil, thoughts of peace to take us to an expected end. We believe that and therefore are adjusting ourselves. So if we see opposition signal, we don’t recognise them. Every challenges we see it as an opportunity because we know that the God we are working with says He is taking us to a future with an end. So why should we be looking back. So, that is the understanding that is driving us.

What have been your challenges nationally and internationally?

We are a manufacturing company like other manufacturing companies. We are facing challenges others are facing.  The major issues are infrastructure deficit, high cost of doing business, multiple taxation. Those are the three major challenges every manufacturer in the economy is facing now and I believe all that are being addressed. The other thing that is unique in our own industry is high-level fair competition in managing superior, fake and substandard products that people are getting into this country. For now, that is going down but it remains a challenge in our industry.

By Moses Nnosike: Vanguard, Saturday November 29, 2008