The current landscape of retirement in Nigeria will change in the next couple of years as the aging workforce is becoming increasingly visible in businesses, government, politics and in sports. Besides, with or without employment retirement phase will surely come for every individual. However, persistent high rates of unemployment have been a serious concern in the country over the years, without any visible unemployment benefit, insurance or social policy. The reality is that many in this unemployment category will equally be reaching retirement age and will be transiting in few years. So the impact of unemployment should be seen as long term and life- long, because it affects living standards even in retirement,when active age and work life has been passed with no palliatives or supports.It is not uncommon for employees,politicians, entrepreneurs and the unemployed to live more than 20 years after the retirement age of 60years but the issue is usually the sustainability of wellbeing, livelihood, lifestyle, status, and social demands. The longer the time spent in retirement, the harder it becomes to be certain about the adequacy of resources to keep the livelihood and lifestyle going. For those that care to know, individuals will need to have enough funds, assets that generate steady income, family support or investments saved to last even beyond 20 years. Unfortunately, with a recent survey in Lagos State amongst the cluster of entrepreneurs and older adults majority may not have enough to meet and maintain their standard of living particularly livelihood, in an era of uncertainty, increasing inflation and harsh economic environments and much more at retirement.This piece present insights from business owners and businesses around Lagos State the economic capital of the country on retirement planning. A follow-up survey in computer village Ikeja area of the State was carried out, where respondents (entrepreneurs) indicated that they will only be willing to grow and expand their businesses at the expense of retirement planning, how ironic? Few mentioned that the only motivating factor that can increase their confidence on retirement is if their businesses succeed.One of the key finding in the survey was that only a fraction of businesses are aware of the importance of pension and retirement plans. It was a stiff struggle identifying businesses with adequate arrangement of pension for staff, owner manager or the business operator. Even though a retirement plan through pension arrangements can help ensure that business owners and their staff have enough funds to live on in their later years, this all important scheme is found missing in majority of small busineses in Lagos State. Recall small businesses are over 90% of existing businesses in the country and provides significantly for majority of homes and family in terms of employment, sustainability and livelihood. Many entrepreneurs are so busy growing their businesses that they put off planning for retirement, this growing trend is not only worrisome but disturbing. Surprisingly as important as a retirement plan is, aging business owners and operators rarely consider it imperative.The survey further indicated that the majority of the businesses especially the self-employed do not have retirement savings plans, and 40% of business owners in the survey are not confident that they will be able to retire before the age of 65. Nevertheless, the good news is that those small business owners have more options available to them than traditional 9 am to 5 pm office employees, yet this advantage is not explored. Because it presents an option of flexibility in the date of retirement. Retirement can either be considered early or later, in some cases business owners might choose not to fully retire. The flexibility gives entrepreneurs the option to determine exactly when to stop working, yet majority continue to operate without ceasing.Indeed, according to the survey, 70% of the self-employed and entrepreneurs in computer village do not save regularly for retirement. The reason adjudge to this phenomenon is that they do not receive a steady salary pack, so many of these hardworking individuals forgo retirement plans. The survey further highlights that some of the small business owners have the mind of selling their businesses to fund their retirement and relocate to the village when the time arises. However, the risk of this option is that entrepreneurs and small business owners can overestimate the value of their businesses and eventually run at a lost. Counting entirely on the sale of the business to fully fund a long retirement is highly risky due to unforeseen circumstances.The survey also found that many business owners would appreciate guidance when it comes to retirement because they lack knowledge of it. It is important to note that before death, especially under normal conditions in life, there is a phase called old age; a period where entrepreneurs have almost exhausted intellectual values and strength. Consequently, there is a need to prepare for such a phase of life with adequate retirement planning and possibly business succession.Retiring is a real-life changing phase with far-reaching implications, dreadful stories most entrepreneurs would not want to hear or discuss this reality but unfortunately, there is nothing one can do about it; it is bound to come one day. Business owners cited cost and lack of resources to administer the plan as the leading reasons why they do not have a retirement plan in place.Please note if you are a small business owner reading this, you are likely busy running your business and have not had the time to research the best retirement option. While retirement may not be on your mind currently as an entrepreneur, the sooner you start planning for this all-important aspect of your business the better. Here are simple steps entrepreneurs and small business owners can take right now to prepare for retirement in my opinion.A good start is by implementing the 10% rule which is a lot easier than you can comprehend. Achievable by simply setting up an auto-transfer system with your bank, that is automatically transferring 10% of all your earnings out of your business account into your savings account every month. Then you can place the accumulated fund into a low-risk investment at intervals and allow compounding interest to grow your fund. This applies whether you are an entrepreneur or not. It is a simple trick to grow your wealth and support retirement plan. Real estate investments can also help give succour in retirement, but professional guidance needs to be sought.Another approach is to develop an exit strategy in your business, that is, have in mind right now what will happen to it when you retire, when you intend to eventually quit and set up strategies to guarantee retirement income. One other important factor to consider is what will happen to your business when you retire. Will you pass it on to family or sell the company to another business or owner? Will you have someone currently working for you take over? A simple retirement model can give you a simple leeway, but you have to plan for it and stick to it. Because retirement age varies so drastically, small business owners need to evaluate their lifestyle, savings, and the company's overall performance to determine an ideal retirement option.In conclusion, a bit of research, adequate planning, and seeking advice can help with achievable retirement goals. A professional can also help streamline your business and help with the necessary details required to have a comfortable retirement. Good luck!How may you obtain advice or further information on the article?Dr. Timi Olubiyi, an Entrepreneurship & Business Management expert with a Ph.D. in Business Administration from Babcock University Nigeria. A prolific investment coach, seasoned scholar, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and Securities & Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: email@example.com, for any questions, reactions, and comments.
By Timi Olubiyi, Ph.DWorld over, competition exists across several fields and sectors of the economy and it is inevitable in business regardless of the business type, structure, size, and industry of operations. Fair competition exists when no single buyer or seller can control the price or product in the market.Even if a business enjoys a monopoly in a sector it must compete with other businesses over where consumer spend their money. Consequently, competition is really not a bad phenomenon as it can spark innovation, productivity, competitiveness, and it largely contributes to an effective business environment. For this reason and more businesses needs to continue to attract consumers with innovative behaviors.In fact competition is a natural and healthy part of running businesses in an adequately regulated economy. Because when businesses vie for customers, competition makes prices fall, and with that economic output increases. Therefore, if practiced the right way competition can ensure consumers have a range of choices, businesses can equally strive better, and workers can be retained.However, the place of anti-competitive practices which is a huge challenge for businesses particularly small businesses at this time is the focus of this piece and awareness needs to be brought to it in my opinion.Although anti-competitive practices which are acts that prevent or reduce fair competition in a market often enrich those who practice them, it is widely believed to have a negative effect on the economy as a whole.From context observation, these anti-competitive practices exist in the various business landscape in Nigeria and indeed many African countries and this behavior continue to fester.Anti-competitive practices can include unfair mergers, cartel conducts, collusions, price-fixing, the overbearing influence of vested interests, deceptive marketing practices, monopolization, price discrimination, political patronage, and predatory pricing amongst others.Cartel conducts are one of the most harmful anti-competitive practices a nation can deal with. For instance, the businesses are ailing in Nigeria, not only because of the weak infrastructure environment but largely due to several cartels' conduct and collusions, exacerbated by the current economic downturn and stiff challenges.A visible trend is the engagement of individuals or few businesses amongst the cartels in taking samples of products to a foreign country to reproduce on a large scale, dump at a predatory price into the market, where no room for fair competition can exist.This pattern happens with many household items and consumer goods such as textiles, building fixtures, and fittings, detergent, cosmetics, tissue paper, biscuits, shoes, clothing, vehicle spare parts, all types of electronics, phones, generators, and to a commodity as low as nylon bags, etc.Predominantly having predatory pricing is usually the strategy of the cartels, where prices drop so low until the local businesses are driven out of the market. But sadly these products are usually substandard and with grave health and safety implications.For instance, in the textile space, six yards of African print (Ankara) can sell as low as N1, 500, that is N250 per yard, can a Nigerian textile manufacturer with the humongous cost of running a business beat that?Can the product be durable? These are the questions. Further to this, a colleague Dr Akinwumi Ajayi recently bought a flash drive of 32gig capacity for use and he could not copy an 18gig presentation file with video onto the 32gig flash drive, an example of deceptive marketing practice in every sphere of business life in the country.These sharp practices are a result of a weak regulatory regime and lack of consequences for such acts of anti-competitive behaviours.So, overall the local manufacturing sector continues to suffer on the account of this unchecked behavior where importation of substandard products prevails despite the ban on some of these imported finished items.I, recognize that Nigerian consumers are highly price-sensitive due to limited income and shrinking purchasing power, but the worry is the unabated importation of these items at the detriment of health and safety.Without doubt, poverty plays a significant role in all these because it has been one of the increasing challenges facing the country today. More so ceaseless dumping of foreign-manufactured substandard products into Nigerian markets has been a major problem and this needs more attention by the International Organization for Standardization (ISO) and Standards Organization of Nigeria (SON) to achieve significant effort on non-shipment of sub-standard goods to Nigeria.The whole idea is that this anti-competitive behaviour is used by a few dominant individuals or businesses to generate abnormal profits and it erodes fair competition within the market.The central thing is that if this activity continues uncontrolled it may take a negative toll on the Nigerian small business ecosystem, create market failures, erase job creation, and wealth creation within the economy.It is imperative to mention that one of the biggest challenges that result in business failure aside from financial constraints, lack of manpower necessities, operational difficulties, and absence of adequate structure by businesses particularly the Small and Medium-sized Enterprises(SMEs) in Nigeria is the negative impact of anti-competitive behaviours. It is so bad that it can affect not only the businesses but the entire economy if it remains unchecked.Small businesses have been seen to be an effective bedrock of any economy be it developed or developing, therefore it is imperative to consider their survival in the face of current realities and the impact of anti-competitive conduct of the few. One of the important functions of government is to create an enabling environment in which businesses can operate and compete fairly.It is therefore key for the government to offer protection to SMEs, and large industries against anti-competitive behaviors in the country because the future of businesses particularly manufacturing looks bright if government support is there. The Nigerian market is increasingly viable because of the population which can drive volume and demand for products and services at any level.I am aware that the Nigerian government recently enacted a national competition law, the Federal Competition and Consumer Protection Act 2019 (FCCPA), 17 years after the first idea was pushed. The role of FCCPA is to oversee consumer protection and competition issues in commercial activities within or having effects on Nigerians.This step is laudable, however, for meaningful impact, the specific focus should be on proper implementation, enforcement, and prosecution. Adequate sanctions have to be in place to check fraudulent trade practices or unfair anti-competitive practices.This responsibility of government is expressly stated under the United Nations (UN) Guidelines. Consequently, if well implemented it can create confidence in the economy, promote good corporate governance, create market stability that can attract new business entrants, and promote efficiency. It can even attract Foreign Direct Investment (FDI) and enhance the competitiveness of the domestic market.By and large, operators and other key stakeholders such as Organised Private Sector (OPS), The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Manufacturers Association of Nigeria (MAN), Lagos Chamber of Commerce and Industry (LCCI) should continue to engage government and policymakers on the need for clear policies to foster a competitive environment for businesses in the country.In fact, when anti-competitive practices are controlled, it can help to ensure that the quality of goods and services remains high in the country. Evidently, with a strong political will, government action can block most of the anti-competitive practices. Good luck and God bless Nigeria!How may you obtain advice or further information on the article?Dr. Timi Olubiyi, an Entrepreneurship & Business Management expert with a Ph.D. in Business Administration from Babcock University Nigeria. A prolific investment coach, seasoned scholar, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and Securities & Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: firstname.lastname@example.org, for any questions, reactions, and comments.
By Timi Olubiyi, Ph.DAfrica's youth unemployment problem has been the subject of so many debates in recent years because of its prevalence in Africa. The youth unemployment rate simply refers to the percentage of the unemployed in the age group of 18 to 35 years as compared to the total labor force.In Nigeria, for instance, the unemployment rate is often higher than the overall Africa's average due to the country's total population. According to reliable data, by demographics, over 60% of the population of Nigeria are youths. However, the majority of these youths are without gainful employment, many of them are equally vulnerable and out of any significant social welfare system. This situation also exists in many African countries such as Namibia, Angola, South Africa, and Mozambique, to mention a few.With the novel coronavirus (COVID-19) outbreak which is running for over a year now, has negatively impacted many economics with outlook dampened, and this has necessitated the higher unemployment rates in many countries. Therefore, in addition to the life-threatening and health risks of the pandemic, the socio-economic impact is likewise real, most importantly with many workers still likely to face job loss, job cuts, salary cuts, and low-income or no-income or even redundancy.In fact, the combined consequences of COVID-19 and youth unemployment is severe and damaging to any nation. For instance, before now, unemployment has been a rising phenomenon in Nigeria, as many of the youths are jobless, to the extent that the Government itself may not know the rate of youth unemployment precisely.Therefore, with the negative impact of COVID-19 particularly on economic growth, it is inevitable that the unemployment rate as well as the poverty rate will go further up and might even be on a steady path of increase if no meaningful step or measures are taken.With the current realities the opportunities for jobs for these teeming youths continues to wane due to the high population, inadequate qualifications, and depressed economic, which are some of the factors that have prevented these young people from finding gainful employment.However, to avoid the impacts of unemployment, coupled with COVID -19 consequences, which include a surge in the prevalence rate of crimes and criminality, it is recommended that sports participation be encouraged by African Governments and policymakers. The participation of young people in economic and social areas will have a great significance for the countries development and improvement.Africa needs to see sport as a business and also a way to promote healthy and promising citizens. Sports, more importantly, is one of the easiest avenues for young men to quit the poverty lane and unemployment. It's important to note that with sports, the teeming youths can become athletes and be gainfully employed.Besides, there will be more job opportunities and commercialization on the continent for companies, investors, talent scouts, agents, coaches, referees, trainers, sports analysts, media companies, facilities management companies, sport wears companies, and merchandisers.A pleasant sports environment will equally encourage partnerships between businesses and sporting entities such as what is visible with stadia bearing the names of companies and sponsorships deals with company logos appearing on athletes' clothing and equipment and so on in the developed countries around the world. Studies have shown that sports can provide a reduced risk from alcohol use, smoking, terrorism, criminality, and illicit drug use amongst young people versus those who do not indulge in sports.That said, in the world today, it is quite challenging to estimate the exact number of sports or games around the world. However, a reliable report has shown that there are more than 8000 sports in the world. Yet, there are roughly 200 sports that have international recognition through a reliable international governing body.Nonetheless, the Olympics, which is the pinnacle of sports, has only validated 28 sports as of 2016. To give a general idea of some of the most participated sports using available data from the Olympics, we have adventure Sports (kayaking, canoeing), aquatic sports (swimming, bodyboarding), strength, and agility sports. (aerobics, gymnastics), ball sports (baseball, basketball, football), mountain sports (climbing, cross-country cycling),and motorized sports(formula racing).Most of these sporting events are seen as lucrative career options, and in most developed countries, so much effort and resources are channeled into it. From a European perspective, sports-related employment represents a significant percentage of total employment on the continent.The amount of investment and cash that several sports stars earn around the world is mind-blowing. From football to tennis, basketball, motorsport, and boxing, to name a few. Excellent examples from Nigeria are Anthony Oluwafemi Joshua Nigerian-born British boxer (world heavyweight boxing champion), who commands more than £30 million for every fight. This is apart from several endorsements he enjoys.Another athlete is Divine Oduduru, the second-fastest African athlete earning around N180 million yearly. Nigeria's top table tennis player, Aruna Quadri, has started the year 2020 as the 18th best player in the world and doing well with the sport. Likewise, John Obi Mikel, Odion Jude Ighalo, Victor Moses, Wilfred Ndidi, Victor Osimhen are earners to reckon with in football. In the ultimate fighting championship (UFC) and kickboxing career, the following Nigerian-born individuals Kamoru Usman, Isreal Adesanya, Sodiq Yusuff, and Kennedy Nzechukwu are active and dominant in the sport.According to the National Basketball Association (NBA), four of the players have Nigerian origin, and they are Al-Farouq Aminu, Giannis Antetokounmpo, Chimezie Metu, and Josh Okogie.Interestingly, these sportsmen get additional income from endorsements and sponsorships all over, which leads to additional millions of dollars in earnings. This situation is not only applicable to Nigerians but other well-meaning African nationals.The point is that money will always flow to where the attention of the masses are, such as sports, particularly football, basketball, and boxing. In the same vein, according to compiled data by Forbes magazine, some of the wealthiest athletes globally, are as follows: Floyd Mayweather (boxing), Tiger Woods (Golf), Lionel Messi (football), Christiano Ronaldo (football), Conor McGregor (kickboxing), Neymar (football).It is imperative to state categorically that most of these athletes probably never registered any startup businesses to gain prominence, but they are undeniably talented in what they do because of consistency and dedication. While talents are essential, a lot of seriousness, concentration, and motivation need to go into it to become a great successful athlete.Therefore, for millions of African youths, particularly Nigerian youths, energies can be channeled into mastering and pursuing careers in several sports, just like we have seen in the entertainment and the music industry. Without a doubt, it could lead to a strong sports culture and competitiveness in both domestic and foreign markets.Admittedly, sport is a veritable outlet that can offer a pro-active solution to youth unemployment in Africa. This is because sport skills can be learned, developed, and made a professional career, and it can provide a considerable positive impact.Nonetheless, for these to come into fusion, policymakers, sports associations, and the Government need to make decisive and responsive policies to encourage aggressive youth participation in sports and learning programmes. This will give the needed encouragement and guidance to sports interest and development in Africa.Besides, if a more professional approach is adopted in the sports industry, the Government, too, will benefit and generate consistent income. It can even provide a new source of national economic growth, and reduce sports tourism in developed countries.Supportably, the various sports association, should be designed to run professionally, with a competent governing board just like any major global corporation.This will ensure adequate structure to guarantee adequate followership, which eventually will lead to huge sponsorship, great athletes, and substantial marketing revenues, among others. So many stakeholders -fans, advertisers, TV stations, investors, and collaborators can equally benefit. Many of the functions within the sports industry are service-based, which means it will be a labor-intensive industry.In conclusion, sports can make a positive contribution in helping to increase Africa's labor numbers, eventually leading to the creation of sports that can provide a cost-effective tool to address political agendas such as unemployment. It can also be an avenue to promote a healthier lifestyle amongst the teeming youths.Governments can develop sport policies and situate community hubs across cities to bridge the unemployment gap, where young people could come and improve their sports skills and become professional athletes. Therefore, I see a tremendous opportunity for African countries and the citizens if they can adopt these principles and begin to design systems around sport and create well-paying jobs for millions of young people to strive. Good Luck!
By Timi Olubiyi, Ph.DThe coronavirus (COVID-19) pandemic so far has negatively affected the global economy and more severely developing nations of Africa particularly Nigeria. The COVID-19 has been devastating in terms of the impact on Nigeria’s economy, businesses, and households and still not looking abated.We have seen a troubling trend in the country in recent times, with, businesses and activities today facing increasing levels of competitive pressure and difficulties, coupled with persistent insecurity, and inflationary pressure where high price increases have continued in transportation, food cost, household needs, raw materials, pharmaceutical products, motor cars, vehicle spare parts, equipment, and in prices of services amongst others. The cost and price of virtually everything are much higher today, and it is because of inflation.Inflation is not only a serious problem but also it has a disturbing effect on the economic life, political system, and society as a whole, it has a corrosive impact on all savings and investments. Significantly every price rise is affecting the cost of living and many citizens are likely to be further pushed below the poverty line due to this price increase.So far in the year 2021 in Nigeria, we have seen a situation where the value of money continues to depreciate in terms of value, and the general price level of goods and services continues to spike and skyrocket.The uncertainty in the country is rather high and this has continued to discourage investments and impede projections and business plans because with persistent inflation, businesses and households perform poorly, and expectedly more money is paid for the same goods and services thereby eroding a large chunk of disposable income of the populace.Infact one of the obvious issues facing the Nigerian economy today is inflation which is persistently a complex issue that government needs to tackle headlong.It is important to note that one million naira (N1,000,000) today will not acquire the same value of investment, goods, and services in 10 years mainly due to this price increase. The fact is that it is bad for people to hold huge cash - or keep funds in current or savings accounts, which usually do not offer much of a return at this time.Without a doubt, a continuous increase in the rate of inflation erodes the value of money, even slow down financial market development, infrastructure development, economic development in any clime.It also increases poverty, lowers purchasing power, increases unemployment surge, weakens currency, increases business risk and these are somewhat evident in the country already. It is well documented in the literature and practice that inflation if left unchecked or unattended can even lead to more inflation- hyperinflation.However, investment is one of the important channels to curb the excessive impact of inflation in any economy therefore, regardless of current realities investment is key to hedge against the sharp inflation impact we are currently experiencing.For individuals, investing for inflation means choosing assets that keep pace with rising prices. Therefore, it is imperative to consider investment at this time, it is more profitable to invest in other currencies, diversify investment portfolio internationally to include shares of big tech and companies with high dividend payments.More importantly, inflation-protected investments such as real estate (property and land) with potential for higher growth can be considered. This is not the time for substantial investments in domestic equities and/or money market instruments unless the anticipated return is higher than the inflation rate which is hovering around 18.17% as at March 2021 relying on data from Nigerian Bureau of Statistics (NBC).In addition, Gold investing or Gold Shares Exchange Traded Fund(ETF), or professionally managed mutual funds with returns above the prevailing inflation rate can also be considered, all to mitigate the impact of inflation at this time.The government on the other hand needs to provide a low inflationary environment, this can be achieved by improving on the ease of doing business and handling of the perennial challenges from incessant insecurity, inadequate infrastructure, the severe and irregular regulatory requirements, to a high sense of entitlement, high cost of running business, corruption and the current macroeconomic uncertainty among others in the country.Currently, as a nation, Nigeria is losing its natural advantages to neighboring countries because of these challenges and this development is disturbing. Sending very little hope of economic development and growth of foreign private investment which is made up of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI), Foreign Direct Investment is often preferred as a means of boosting the economy and that it plays a positive role in the improvement of economic activities.Truthfully theirs an obvious linkage between FDI and economic growth, consequently the government of the day should make conscious efforts to provide a more enabling business environment and also issue incentives and policies to attract foreign private investment.There are benefits foreign private investment can offer Nigeria which includes the transfer of innovative technology, higher productivity, capital injection, more revenue for government through taxes, enhancement of balance of payments ability, employment generation, diversification of the industrial base and expansion, and even the modernization of some existing infrastructure.There is also a compelling need to support, and further consider the Small and Medium-sized Entreprises (SMEs) to improve manufacturing, production, and services to exportable level in the country.By so doing, it will reduce the pressure on import-dependency and improve the country’s business climate and also play a significant role in export growth in the country.Consequently, steps to attract more investments are key at this time and the Nigerian government can use this as one of the ways of boosting the economy and stem inflation. It is recommended that overreliance on imports should be reduced over the long term through aggressive export promotion and key SME development drives which when considered will improve the competitiveness of domestically produced goods. Good luck.How may you obtain advice or further information on the article? Dr. Timi Olubiyi, an Entrepreneurship & Business Management expert with a Ph.D. in Business Administration from Babcock University Nigeria. A prolific investment coach, seasoned scholar, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and Securities & Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: email@example.com, for any questions, reactions, and comments.
By Timi Olubiyi, Ph.D.It is no more news that US-based social media company Twitter Inc has concluded plans to establish a presence on the African continent in line with its growth strategy. Recall, that Twitter’s founder and CEO, Jack Dorsey, visited Nigeria, Ghana, Ethiopia, and South Africa in 2019 in anticipation of this major expansion and growth strategy.Sadly, to Nigeria and Nigerians, Ghana was announced to host Twitter's first Africa office.This was communicated in a statement, Twitter Inc described Ghana "as a champion for democracy, a supporter of free speech, online freedom, and the Open Internet."The social media company joins Facebook Inc in moving into Africa with the announcement made through a tweet by the founder/CEO just recently. However, when I remember that this action plan will improve Ghana’s outlook, improve Ghana-Twitter relations, increase job creation and opportunities in Ghana, improve the country's technology sector, and yet still serve the Nigerian large market, then I agree it was well thought out even though it ignites a further rivalry between Ghana-Nigeria.Likewise, when you consider that Nigeria currently has a population estimate of about 206 million and that Nigeria’s population is equivalent to 50 percent of that of West Africa where the population stands at 394,314,367 according to United Nations (UN) data, then it is depressing that we lost to Ghana.Further recall that Nigeria also accounts for over 50 percent of the GDP of the West African sub-region. Furthermore, Nigerian Internet and mobile penetration continue to grow with high relevance, as at 2020.About 50 percent of Nigeria's population use the Internet and around 90 percent of the total population have mobile phones according to reliable data. According to a survey online, 39.6 million Nigerians have Twitter accounts, which is more than the entire 32 million population of Ghana.It is on record that Ghana has just about 8 million social media users. All these data on Nigeria should offer tremendous opportunities for any investor particularly in the technology space, but on the contrary, the choice of Ghana over Nigeria for the Africa’s operation of Twitter Inc might just be due to the perennial challenges that exist in the country, from incessant insecurity, inadequate infrastructure, the severe and irregular regulatory requirements, to high sense of entitlement, high cost of running business, corruption and the current macroeconomic uncertainty among others.In fact stability, security of life, and assets come chiefly for any investment consideration before viability or returns. More so it is not enough for Nigeria to just be a big market for desirability of investors, FDIs consider much more other factors.In my opinion, another reason for Twitter Inc’s decision could be the power/electricity situation in the Nigeria which has remained unsolved and this usually increase the cost of doing business. It is a big challenge to businesses and FDIs when competitiveness is considered across borders.Without adequate electricity supply, it is extremely difficult to operate businesses effectively because companies will usually end up committing revenue to generate alternative power supplies which include buying generators and fueling such generators daily, this can drawback investments. If the power concern is addressed in Nigeria, it will contribute significantly to business growth, increase in FDIs, which in turn will contribute to sustainable economic activities and job creation for the citizenry.To this end, Nigeria needs to do more to attract investments into the country, because this is one of the ways to improve the economy, create more employment and engage some of the teeming youth gainfully in the country. Clearly, by demographics, the population of Nigeria is dominated by youths who are technologically savvy and full of energy, so good opportunities are available through FDIs.The largest rival of Twitter is Facebook Inc, and its first African office on the continent was opened in Johannesburg in 2015. According to plan, there is a move by Facebook Inc to have a second office in Lagos State Nigeria before the end of 2021, it is hoped that this decision stands.Ghana appears to be the destination of choice with Google, Microsoft, and Huawei among the international tech giants that have expanded their operations in the small but focused West African country. Sincerely, there are many lessons to be learned to remain a competitive destination for investors and to attract much-needed foreign investment in Nigeria the government, businesses and the populace must do more. In particular, security, the ease of doing business, and rule of law in the country must be rejigged and enhanced for meaningful competitiveness in Africa as it stands.A greater number of countries strive to attract Foreign Direct Investment (FDI) because of its acknowledged benefit as an instrument of economic development, Nigerian can leverage it too.For instance, a Facebook Inc office in Lagos State is likely to improve the partnership between Nigeria and Facebook, which is critical for the development of the country’s technology sector.Just like Twitter Inc and Facebook Inc other companies and tech giant businesses might be willing to have more presence in Africa to expand their services, therefore Nigeria should be more prepared.There is a large body of knowledge on the benefits that can be derived from FDIs, some of which are the development of human capital, more boosts in employment opportunities and job creation, enhanced competitiveness, access to management expertise, improved employee skills, transfer of technology, knowledge transfer, and above all it will boost perception and have economic effect of the host country.Historically, Nigeria is one of the countries in Africa with vast demand for goods and services in form of FDIs, sitting in third place behind Egypt and Ethiopia according to the United Nations Conference on Trade and Development (UNCTAD) 2019 World Investment Report.Nigeria needs to further improve on this or at least maintain the position by handling and tackling the myriad of challenges in the country as quickly as possible. The current decision by Twitter Inc to opt for Ghana only shows that more is required from Nigeria in all areas, more importantly in the business, economic, security, and governance landscape. Without doubts, things really need to improve in the country to attract much-needed foreign investment.Therefore, to attract quality FDIs and significant investments into the country, the government needs to do more on policy formulations and incentives targeted at FDIs including adequate enabling environment for businesses to thrive. Most importantly, the anti-corruption drive of the government needs to be stiffened accordingly.In conclusion, government and policymakers need to further initiate various policies and incentives to attract FDI inflows into the country as the competition for FDI intensify on the continent. More so the government needs to improve on policies and laws to promote private sector involvement in the economic growth of the country particularly the SMEs, startups, financial technology (Fintech), software and telecoms companies because they are essential in today's business world. Good luck!
By Timi Olubiyi, Ph.DIn the country, apart from the known business challenges such as the decrepit infrastructure, inconsistent government policies, double taxation, regulation irregularities and the pandemic disruptions in recent times, overwhelmingly, lack of capital or funding issues contribute majorly to business failures.According to findings of several surveys, one of the top challenges faced by entrepreneurs and businesses in Nigeria today is access to funding. Seemingly, funding is the bloodline of any form of business, therefore, whether it is a startup, nano, micro, small or medium-sized business, or an established large firm, knowing how to raise capital can often make the difference between business success and failure.In fact, funding is important at all business stages and cash which is most time refer to as “capital” in business terms majorly dictates the pace of performance in any business. Simply put capital is the energy source that all businesses need to operate, grow and mature into a strong, vibrant enterprise.Invariably, without funding or capital, it will be extremely difficult to get any enterprise off the ground. However, the structure that exists in the business significantly affects the access to the choice of fund options.Recall, every business has a different structure and needs, it is, therefore, imperative to state that no financial solution is one size fits all, fund options usually require different rules and steps. Consequently, businesses will be required to carefully plan, research, learn, and understand the necessary funding option in order to come up with the right decision.So, the big question for businesses is what are the ways to adequately raise capital for seamless operations? And this is the focus of this piece. Capital comes into any business particularly in two ways: as equity and as debt. However, donations, grants, incentives, interventions, or subsidies can also be employed in certain aspects of a business to encourage activities in particular industries or sectors by government.Some government agencies and institutions responsible for this includes the Bank of Industry (BOI), The Nigerian Export Promotion Council (NEPC), The Central Bank of Nigeria (CBN), Bank of Agriculture (BOA), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Development Bank of Nigeria (DBN), Nigerian Export-Import Bank (NEXIM) among others. Just like other forms of capital raising options these grants and subsidies can be initiated for either short-term or long-term purposes.That said, equity capital involves exchanging a portion of the ownership of the business for financial investment in the business, most times it involves selling shares of the company in exchange for funding.Equity capital is raised when a business sells its shares to investors. The ownership stake resulting from this equity investment allows the investor to share in the company’s profits. Equity capital is usually a cheap form of funding and is an important source of capital on a long-term basis. However, sometimes it involves going public, getting listed on an Exchange, and also giving up partial or major control of the business.On the other hand, debt capital is when a business borrows fund from individuals or institutions and agrees to pay them back later. Debt capital simply means loans and borrowings. The main consideration in debt capital is the ability of the business to generate sufficient returns to service the debt (interest and capital repayment).A typical mode of raising debt capital is through the bank loans. Banking institutions provide loans to individuals or businesses who approach them with a solid business plan, and good business structure with capacity for repayment. Bond is equally a debt instrument, and a way of raising debt capital as well.Without doubts, it belongs to debt capital categorization because the authorized issuer (business) owes the bondholder debt and it depends on the terms of the bond issuance. The most significant difference between equity and debt is that, unlike debt, equity capital does not require an amortization schedule for repayment. More so equity capital involves the investor taking an ownership position in the business.Significantly, there are several sources to consider when seeking business funding or any financing, some of it are expressed here. The easiest and starting point for small businesses from context observation is usually with self-funding and personal investment, where entrepreneurs leverage their financial resources to support business operations.Self-funding can extend to family, associates and friends for capital, otherwise referred to as bootstrapping. Both self-funding and bootstrapping lets business managers, operators, and entrepreneurs leverage their financial resources to support the business operations.Further to this is angel investment, where investors who are generally wealthy individuals or retired business executives invest directly in a business or startups owned by others.These angel investors are often leaders in their field who not only contribute their experience and network of contacts but also their technical and/or management knowledge. Most times this form of capital raising is in exchange for equity ownership in the business and an active management role. Also, trade credit is another significant form of capital raising option where business suppliers are willing to transact or sell on credit. Such credit may range anywhere from one month to three months or as agreed.This is a very good method for businesses to fulfill short-term funding needs. It is an inexpensive method of funding for any business, I must say. Further to this is private equity investment, where private equity firms raise equity capital that is not listed on any Stock Exchange for investment purposes. Invariably, these firms raise funds from investors and then invest these funds in promising startups and businesses that require capital.The drawback of this funding option is that a controlling position or substantial minority position in the business is usually acquired and then look to maximize the value of their investment. Thus, the entrepreneur might not have sole control over the business decisions, which may lead to conflict. Looking at another capital raising option is retained earnings as a way of raising finance, it simply means businesses can reinvest any set-aside profits for business operations for expansion, equipment purchase, and development purposes.In recent times, the use of crowdfunding to fund business operations is on the rise, where a large number of subscribers, called crowd funders, contribute or invest in a company or project. A typical example of crowdfunding is proposing subscribers to invest N1000, and even if 1000 people invest, the business can raise N1,000,000 easily. Crowdfunding is getting popular because it is low risk for business owners and full business control is retained.The crowdfunding continues to gain popularity with the rise of social media and internet because it became easier to reach several people by putting in minimum effort through this medium. Some not too popular funding options include invoice factoring sometimes referred to as invoice advances which is an option where a business sells its receivables at a discount to get cash up-front. It allows businesses to borrow funds against the value of invoices due from customers.Invoice factoring can be a great option if you have many corporate clients who have long payment terms or tend to pay as late as possible. In addition to this is business overdrafts, which can be an ideal source of finance for short-term funding. An agreed overdraft lets businesses use their current business account to make payments that exceed their available balance in the bank. Another similar source of short-term capital raising option is the business credit card, this is commonly used by structured businesses to access agreed funds on credit in the bank. Fund withdrawal in life insurance policies and pension funds are other options for entrepreneurs and business owners. Many insurance companies have, in recent years, liberalized their criteria for allowing policyholders to borrow against the value of their policy.There are other methods for funding such as though strategic alliances, getting business loans from microfinance providers, selling assets, access to inheritance, hire purchase/leasing, raising funds by winning contests, through co-operative society is another means, informal contributions (Esusu), gift and donations, franchising, or through on-line financing services are others but these should be used only if you need funds urgently, you are qualified and know the risks involved. The key information from this piece is that there are many business funding options available for businesses. Therefore, business owners, managers and entrepreneurs do not have to get discouraged if one does not work out, other options can easily be explored.To find the right fit, in-depth research and adequate due diligence are imperative, having in mind these following questions- how much is really required for the business? When is it required? How long will it take to raise the funds? What are the specific requirements to access the fund? What will the fund be used for? What are the associated risk with the fund type? From whom is best to raise the fund? How expensive is the fund? How and when is repayment? Is the business actually fundable or bankable? Because some fund option may be a perfect fit for a business situation, while others may be completely impractical, therefore due diligence is absolutely required.Aside from every business having unique funding needs, each funding option also differ in availability, terms, funding amount option, and eligibility criteria. Therefore, each fund option needs detailed attention ahead of time. Whether a business opts for a bank loan, an angel investment, or a government grant, note that each of these sources of financing has specific advantages and disadvantages. Good luck! How may you obtain advice or further information on the article? Dr. Timi Olubiyi, an Entrepreneurship & Business Management expert with a Ph.D. in Business Administration from Babcock University Nigeria. A prolific investment coach, seasoned scholar, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and Securities & Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: firstname.lastname@example.org, for any questions, reactions, and comments.
By Timi Olubiyi, Ph.D. In today's turbulent business environment, predominantly with the economic recession, inflation, and the disruptive novel coronavirus (COVID19) pandemic, strategy becomes the main source of competitive advantage for businesses and organizations. However, for a strategy to be meaningful, a business must have a reliable and working business and organizational structure.The fundamental problem that occurs in most businesses particularly the nano, micro, and small-sized enterprises in the country is that they operate informally and how to establish a successful and profitable enterprise in a way to satisfy the common and personal interest is complicated.I am delighted to correctly inform you that this issue revolves around sound business structure planning. Hence, when a business and its activities are divided, organized, coordinated, and controlled without duplications and is hassle-free, it is said to be structured.Organizational structure can be seen as ways in which responsibilities and power are allocated and work procedures are carried out in a business by operators and workers.From context observation small businesses in Nigeria are rarely structured, usually, they have a small working group and face-to-face communication is frequent, this generally undermines formality, business growth, and productivity.A point to note is that this informal arrangement is prevalent in the country and is a worrisome culture amongst startups and small businesses.Thus, this piece is to share the importance of business formalization and the need to have organizational procedures, established rules, and responsibilities assigned, regardless of the business size, employee size, revenue generation, or the range of the business function.Having a business incorporated or registered at the Corporate Affairs Commission (CAC) and setting up a business account in a commercial bank are only the starting points of formalization of business, structure involves a whole lot more.The idea of structure in a business is for efficiency and effectiveness because it affects the safety of assets, fundraising, taxation, customer experience, governance, and engagements.The smooth continuation of any business upon ownership change or succession and the financial information of the business is also affected by the structure in the business.Business requires structure chiefly for continuity, growth, and profitability. In my view, the efficiency of a business can be measured by how well the business is structured. Therefore, for a business either large, small, or nano to fulfill its purpose and have a mechanism constructed to achieve the purpose, a functional structure has to be in place in the business.More importantly, functional structure affects business operations in two ways. First, it provides the foundation on which standard operating procedures and routines rest. Second, it determines which individuals get to participate in which decision - making processes, and thus to what extent their views shape the business operations.To substantiate the perennial issue of informality and lack of structure among businesses, a survey was conducted on MSMEs in Lagos State the commercial nerve center of the country – (The computer village Ikeja, Alaba International Market, and within some market associations (Auto Spare Parts and Machinery Dealers-ASPAMDA and Balogun Business Association) to get more insights.The survey revealed that a large percentage of close to 97.4% of the respondents who are business owners and SME operators have organic structure (no accountant, no operating software, no technology usage, no rules, and procedures) in their businesses. With the survey, a high number of poorly run businesses with little or no structure were identified and this is a huge challenge to business continuity.Some of the issues they face as a result of this informality include high employee turnover, and hiring problems, low productivity, high number of low skilled staff, lack of bookkeeping, and in most cases no accounting or customer/sales data. However, such data could be used to gain insights into sales, profitability, patronage, and for strategy, implementation to stay ahead of the competition.More so with such data sets (business and customers) if available, it can help to identify areas of weakness and strength of the business and also ensure no part of the business operation or customer experience is overlooked. With good structure, businesses can provide exceptional customer service experience and audited financial statements useful for government procurements, services and public contract qualifications.For a business to have a good structure these components; the board, the management, business goals, vision, operations, governance, accounting, bookkeeping, human resources, and technology usage have to be defined. Because they have significant effect on the way the organization performs its activities and if one component does not fit, the performance of the whole business will be hindered.For instance, improper accounting systems and bookkeeping can result in financial disaster for a small business or even cause a business failure. In addition governance structures and leadership is equally important because it is the frameworks that can help businesses achieve long-term success for all their stakeholders.Significantly, to improve the structure and efficiency of a business the most central formalization tool available is the technology and the organizational chart. We live in an age of high technology development in various sectors and industries, this increasingly improves the adoption of automation for businesses and is, therefore, a more logical way to support business structure.Business structure with technology will reduce operational cost; provides standardized procedure, accountability, and clear reporting among others.For several reasons, large firms may have a comparative advantage over small businesses however mainly on business and organizational structure. Nano, micro, and small businesses are poorly structured all across the country, therefore formality and adequate structure are advised for business sustainability and growth.It is also apparent that SME operators need to adopt good governance, prepare a financial statement as at when due, and keep proper records. It will help such small businesses take other opportunities such as taking part in government services, procurements, Public Private Partnership (PPP) and contract exercises.Recall, the government is the biggest procurer of goods and services, operating in the public sector space should be a target, however it requires adequate formality and structure. If this part of your business is sorted it will be easy to identify and qualify for opportunities within the government and public space.This can provide a leverage considering the current economic realities. Other opportunity includes raising funds in the capital market, attracting foreign direct investment, seeking a loan from the bank, and so on. Raising long-term funds with low cost through the stock exchange should not be a daunting task for small businesses if a structure and good governance is in place.In conclusion, to stem the tides of the effect of this current reality and harsh economic climate, businesses need to innovate from an organic structure to a functional structure and divide the organization into units, based on their function. When a business environment changes, organizational strategy needs to change, structure, roles, objectives, and functions should realign with the new realities.The big question is, has your business acted? If you have a structure, have you done a performance review or done a technology upgrade? If it becomes increasingly difficult to re-engineer or structure your business where necessary, the engagement of knowledgeable professionals can make a substantial impact on your business operations and for strategy advice. Good luck! How may you obtain advice or further information on the article? Dr. Timi Olubiyi, an Entrepreneurship & Business Management expert with a Ph.D. in Business Administration from Babcock University Nigeria. A prolific investment coach, seasoned scholar, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and Securities & Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: email@example.com, for any questions, reactions, and comments.
By Timi Olubiyi, Ph.DIt is no longer a secret that family businesses world over can struggle with governance, leadership transitions, and even survival, longevity or business continuity. From context observation, the majority of Small Medium Enterprises (SMEs) in Nigeria are family-owned businesses, more so over 60% of all firms in most nations are classified as family businesses according to an Irish report. Family businesses are common in Nigeria especially in Lagos State, which is the economic nerve of the country.The importance of this form of business cannot be overemphasized, they are expected to contribute to the economy in these three key areas: creating jobs, improving Gross Domestic Products (GDP), and improving the standard of living or reducing the poverty level.However, the failure rate of family business especially in Nigeria is high. According to data 95% of family-owned businesses in Nigeria, do not survive the third generation of ownership. This should be a huge concern to the government, policymakers, family business owners and future entrepreneurs. Apart from the known challenges such as decrepit infrastructure, inconsistent government policies, double taxation among many others, which are contributory to business failures in Nigeria, the lack of succession plan is a serious issue militating against the survival and continuity of these family businesses.Succession planning is the process of identifying and preparing suitable family members or employees through mentoring, training and job rotation, to replace key players within the family business as those key players leave their positions for whatever reasons such as retirement, advancement and attrition are usually missing. With succession planning as a very important aspect of a business, overwhelming evidence from a survey and finding from a study indicate that 94.2% of entrepreneurs and business owners in Nigeria lack succession plan or a poor succession plan exist in their business organization. This portends a concern for the multigenerational growth of SMEs especially family businesses and is also a threat to business continuity in Nigeria.Succession planning is one of the most demanding and necessary phases in business transition but this is usually left unattended or left till is too late amongst business founders and leaders in Nigeria. Unfortunately, many of the companies do not even prioritize succession planning, choosing only to focus on how to grow their business profits rather than consider it along with sustaining the next generation business leaders or having multigenerational business growth in mind. The purpose of adequate succession planning for family businesses is that it will minimize the gap and risk in the operations of organizations when key leaders or management staff suddenly leave the business.Remember in our country most especially in Lagos State, some prominent family businesses sprang up in the 1980s and the late 90s, however, these businesses were founded by then business mogul but if you look around the businesses are no longer in existence with significant examples such as Late Bashorun M.K.O Abiola (Concord Group, Abiola Bookshop and Abiola farms); Late Alhaji Ahmadu Chachangi (Chanchangi airline); IRS Group of companies founded by the late Chief Isiaka Rabiu Ayodele; Sunrise Group of companies founded by the late Chief Ajibade Falodu, Balogun Group of companies founded by the late Alhaji Lai Balogun; Sanusi Brothers Group of companies owned by the late Ayodele Sanusi, and late Chief Augustine Ilodibe, group of Companies are just some of the failed businesses.These businesses thrived while their founders were alive, but folded up few years after their demise. The lack of succession planning has been identified as one of the major reasons why many of these first-generation family businesses do not survive their founders.A significant number of these family businesses do not go beyond the first generation. Many of these companies failed not because of economic reasons or hostile business environment but because of poor management, lack of clear policies and strategy for continuity. Ordinarily, succession planning would have effectively taken care of the issues, if it was considered in good time. However, the case is different in climes where the importance of adequate succession planning is recognized. The growing role of family businesses is evident even after the exit of the founder in these countries.Largely the continuity of these businesses is supported by a good corporate culture of succession planning. Some of these companies are Walmart owned by the Walton family (USA), Ford Motor Company founded by Henry Ford in 1903 and now owned by the Ford family (USA), Tata and Son Ltd owned by the Tata family (India), LG Electronics owned by Koo family (South Korea). Nigerian family businesses can also build appropriate structures and culture to guarantee this form of business continuity and multigenerational growth.Succession planning can help achieve this, by considering a deliberate effort of developing competencies into the leadership positions of your business. Therefore, succession planning can be introduced into Nigerian businesses as an important tool to create this multigenerational growth. Coupled with having a formal corporate governance structure and adopting strong internal control measures in the businesses.Please note that by making succession plan arrangements early enough, business founders and owners can help make a smooth transition and minimize any negative effects of their departure from the company. Because succession planning is an essential part of doing business, no matter how certain the future of the company currently appears, if it is disregarded it can threaten the business continuity.Consequently, from a specialist perspective, the key assurance of multigenerational growth is to establish the right conditions as it concerns your corporate culture, governance, accountability, record keeping and information management so that the survival and multigenerational growth of your family business can be assured. The starting point of this whole awareness is to consider and allude to whether the business will continue to operate after the departure or exit of the founder from the business.Some business owners or founder choose to simply liquidate the assets and close the business with the exit of the founders or when they are no longer involved, while others wish for the company to continue. If the owners/founders decide the business should continue, one of the most important decision is to have the business succession plan. It will help identify, train and mentor the business successors. So, to ensure a high survival rate of family businesses, succession planning must be put into the family businesses strategic plan. Even though some SMEs adopt the informal approach, this usually ends up ineffective and undesirable for multigenerational business growth.If you want your children to carry on your business, you have to groom them and make sure they are competent to take over from you the founder. For a business succession plan to work, successors must have been adequately groomed through mentorship and training for them to have adequate capability and knowledge to carry on the family business.The succession plan should also be reviewed annually if it is in place to ensure up-to-date managers’ suitability and competency for the key positions and to also ensure that all aspects of the business management have been accounted for.Please note that the risk of the absence of a succession plan to your business is detrimental to the continuity of your family business. I, therefore recommend you hire a specialist to achieve or streamline this very important aspect of multigenerational business growth. If it is currently missing or unstructured, you need to address it before it is too late. Good luck! How may you obtain advice or further information on the article? [caption id="attachment_847014" align="aligncenter" width="760"] Dr Timi Olubiyi Phd[/caption]Dr. Timi Olubiyi, an Entrepreneurship & Business Management expert with a Ph.D. in Business Administration from Babcock University Nigeria. A prolific investment coach, seasoned scholar, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and Securities & Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: firstname.lastname@example.org, for any questions, reactions, and comments.