Small businesses are also waiting

There has been a lot of conversation about the need to restart the Nigerian economy following the conclusion of the recent general elections. Many people are of the opinion that real economic activity, which practically came to a halt before and during the general elections, was taking too long to return. Many are also afraid that continued delay in restarting the economy may erode some of the benefits we stand to gain from the successful election. I agree and believe Nigerians have paid enough for this peaceful transition and we should not further their pains. It is easy to say that no price is too much for the stability of our country. I also agree. However, we need not stretch the demands of the peace and stability we sought and have substantially achieved.

The elections are over having been won and lost. I believe that a lot of healing has already taken place, except for those for whom victory at the polls is a matter of life or death. It is expected therefore that costs relating to the elections should be thinning out rather than increasing. In other words, we have the option of extending the waiting period or the time the economy is on stop, thereby imposing greater costs on ourselves. We can also shorten the healing time by what we do with the victory, which I think is a collective victory for the economy. I therefore agree with those who appear to be in a hurry to have Nigeria back in business but I differ slightly on the reasons they provide for their seeming hurry.

The major argument of those concerned that we are not getting back to business fast enough is that foreign investors are waiting, literally at the borders, for Nigeria to declare her economic intention before they come in. According to them, the apparent lack of clear economic direction of the moment has prevented foreign capital from flowing into the country and until it does, we all must fold our hands and wait. I agree that foreign investment or capital has alternative uses and Nigeria is but one of the many directions to which it may head. Besides, even on a good day, Nigeria’s business environment is not famous for its friendliness. So we need not compound our case through prolonged inertia. Indeed it is wise to make hay while the sun shines even as I agree that it is important to get things right the first time than do the wrong thing and repeat the action.

Besides, capital thrives in risk. Those with the right investment strategy will know that Nigeria is now even a better investment direction. If they took a break for security reason, they should be heading back to us. We all may recall how so many companies poured into Iraq a few weeks after Saddam Hussein, with all the risk involved. I believe the forces that drive hot money are still at work and will play in our favour.

Having made this point the main reason for this contribution is to say that something is wrong with an argument for kick-starting the economy if the main objective is to make way for foreign investors to come in. What about local investors? Are they also waiting at the borders? It is not a kind word for us that in 2015, after a surprisingly successful election, Nigerians are waiting for foreign investors to lead the way to the recovery of their economy. Is this an indication that we do not have faith in our own country or lack investible funds? Perhaps we do not want to invest in Nigeria the money we make in Nigeria. But we always say we love Nigeria and have faith in it. Is this playing to the gallery? This is the time to show our faith in Nigeria. The people of this new Nigeria that is about to unfold will not wait for foreigners to lead their industrialization effort. Everyone says Nigeria has a bright future and I subscribe to that premise. If so, why do we wait for foreigners to read our economic signals and show us the direction to go when we should know our country better?

The Nigerian economy went into slow motion and finally paused well over one year before the elections. Capital flight, even by the Nigerian nationals, was rife. It is no longer a secret that this flight of capital was spearheaded by foreign investors, especially of the portfolio investment category. Of course, that is characteristic of that kind of investment – hot money. It comes in fast and leaves first. Most developing countries with signs of instability as we do experience such capital movements. This is why we should not sit by and urge government to hasten the arrival of hot money while our own funds lie idle, probably abroad.

Another point I need to make is that we should stop talking as if our small business people do not exist. These MSMEs sustain the more people than our multinationals and foreign investors. Whichever way we read it, these small enterprises still constitute the home for over 60 percent of our population and the bulk of our energetic youths. So I expect to hear us say that the delay in restarting the economy is hurting MSMEs and by extension hurting employment. To focus on the impact of the apparent delay in restarting the economy only as it relates to big business and foreign investors is to lay the foundation for further neglect of the already marginalized MSMEs. Needless to say for the umpteenth time that the Nigerian economy does not consist of the urban sector alone.

Events of the last one and a half years or so relating to the general elections have drained life out of the economy and mostly the small economically active members of our society. From galloping deterioration in exchange rates to the consequences of the wait-and-see approach adopted by the big businesses on which small enterprises depend, all the costs were heaped on MSMEs. And, I bet you, they are going to bear the brunt of the new wave of internal revenue generation drive occasioned by factors in no way connected to them.

I think we should all be united in pushing for the provision of infrastructure as a key requirement for the development of MSMEs. There is nothing so romantic about small businesses if they have no social overhead capital they need to operate. As I have said in several fora, capital or finance is not the only problem of MSMEs and certainly not the most important. Some governors have continued to promise to industrialize their states within the next four years. I join my faith to theirs and pray they succeed. However, any such promise of industrialization without a resolution of the abject condition of infrastructure – energy challenge for instance – is not realizable, to put it most charitably. This is why I have my fears about the so-called intervention funds we frequently institute. The beneficiaries should first be put in a position in which they can benefit from the funds before such funds become useful. We have had many such funds. We may remember NERFUND, Export Stimulation Fund and such interventions of the Babangida administration – great ideas or superstructures but false substructure.

Besides, governments should not forget their role, which is the provision of enabling environment to boost private enterprise. Industrialization, except in communist enclaves, is a preserve of the private sector. And our MSMEs will do well with common services, especially when offered to them in industrial clusters that recognize their peculiarities. So, while foreign investors are waiting for the economy to restart so they can invest, we should not forget that small business is also waiting for enablement to thrive, and that enablement is not just cash.

 

Emeka Osuji