Micro, small and medium enterprises (SME) remain the key to unlocking the potential of the Nigerian economy. Recently, there has been renewed focus on creating a supportive ecosystem for this critical sector. JOSEPHINE OKOJIE and ANGEL JAMES spoke with Iyiola Oyedepo (II), managing partner of IOC Law and initiator of the Enterprise Zone, who discussed how the zone would impact small businesses.
What is your assessment of the Nigerian business environment?
Despite the limitless opportunities that are in abundance in Nigeria, the business climate remains very harsh and unwelcoming, especially for the small-and medium-scale sector. Most of the challenges faced by businesses are not unique to Nigeria, but it is more difficult here because some of these problems have remained with us for a long time and now seem insurmountable. Take for instance the issue of power supply, which affects almost every business in Nigeria and ultimately increases cost of production. Billions of dollars have been spent over the years but with no real increment. The question then is, where and what were those funds expended on? We have seen some of our African neighbours achieve 24/7 power supply by developing and following a strategic power plan. Why is it that same cannot be said of Nigeria despite the humongous resources at our disposal? This is just one angle of some of the challenges, among others. There is, however, hope because I see some concerted efforts by the government of the day to improve on infrastructure and they have also developed initiatives that have improved the ease of doing business in Nigeria.
In your opinion, what are the factors that hinder the growth of Nigerian MSMEs?
Poor infrastructure and lack of credit are the usual suspects when it comes to limitations being experienced by MSMEs. You can also add the knowledge gap, which has also stifled growth. For example, most entrepreneurs complain of lack of credit but it would surprise you that there are several local and international growth funds dedicated to SMEs and start-ups which are accessible without someone being bribed. But because most business owners are not even aware of this, they cannot position their business to gain access to these funds. It is on record that African start-ups collectively raised almost $200m from venture capitalists and private equity firms in 2018 and Nigerian start-ups accounted for about 60 percent of these funds. That is to tell you that there are opportunities out there but it must start with you becoming aware of such opportunities and then positioning your business or idea accordingly.
You recently launched a book ‘Essays on Nigerian Business Law’. Can you explain briefly what this book is about and bow it helps business owners?
In 2014, having seen the knowledge deficit, we launched a weekly business blog dedicated to improving enterprise literacy and, over the years, we have seen testimonials of how the knowledge imparted by this blog has helped business owners achieve success. In 2018, we decided to compile our thoughts over the years into a book and this was launched on December 19th 2018 in celebration of the birthday of our illustrious founder – Akogun Iyiola Oyedepo. In the book, you will find chapters on protecting your idea, how to structure your business, how to raise finance for your business, how to manage taxes and other regulatory requirements, as well as how to handle your suppliers, contractors, and service providers, among others. It also has chapters dedicated to advising foreigners on market entry into the Nigerian business space and, finally, it explains the various dispute resolution processes in Nigeria. It is a handbook every business owner should have and read regularly as it keeps you abreast of the challenges and how you can handle them effectively.
What inspired you to write the ‘Essays on Nigerian Business Law’ for MSMEs?
The process to writing the book started in 2014. As a firm, we took the decision to start a blog to share information to entrepreneurs on things that affect them on a daily basis from the legal perspective. So we educate them on how to manage taxes, register their business, type of partnerships they should be involved and how to protect themselves from contracts with partners, how to handle suppliers, vendors and people involved in their business, among others. Those are the things we have been blogging about over past four years. We realise that we have developed a lot of materials over those years and that blog was becoming bigger as we reach thousands of people on the internet and we were seeing people’s response to it and how it has helped them make decisions that are crucial to their businesses. It was as a result of this that I was inspired to put all this knowledge in the form of a book that will be like a toolkit for entrepreneurs. Business owners would gain a lot from reading the book. It is a necessary tool for entrepreneurs for all entrepreneurs in Nigeria.
At the launch of the book, you spoke about the Enterprise Zone. What does this mean and how is it of benefit to SMEs, especially start-ups?
The articles we were churning out over these years were basically limited to the legal perspective but due to our interaction with entrepreneurs, we discovered that the problems were not only legal but also related to personnel, finance, marketing and ICT. Every business, no matter what sector, requires these support systems and unfortunately a lot of business owners do not pay adequate attention to these and it ultimately leads to the business becoming a failure. Having seen this trend over and over again, we decided to form a coalition of like-minded professionals across the key business support areas and this is essentially what Enterprise Zone is about. Together, we aim to offer tailor made and cost-effective business solution to SMEs along the key support centres of HR, legal, finance, marketing and ICT. Another critical part of the Enterprise Zone is our Business Incubation and Acceleration Centre which has the ambition to mentor 1000 business champions by the year 2023 and develop 200 business champions per year.
A critical point for a lot of entrepreneurs is lack of finance. How does your initiative aim to support start-ups with finance?
The funding gap for SMEs is not limited to Nigeria but common in a lot of developing countries, and it’s mostly due to the risk threshold associated with businesses operating in this sector. Our initiative will be positioning businesses to attract the necessary funding by helping them put structure, processes and corporate governance in place that will make investors and financiers comfortable. Once they are comfortable, you will be shocked at the funds available and accessible to this sector.
There are a lot of incubators with similar objectives to the Enterprise Zone. What makes your initiative different?
As long as enterprise thrives, you cannot have too much business incubation hubs, but to answer your question, most incubation hubs out there are primarily focused on the tech space and I do not blame them as it’s easier to hedge your risks in that space. However, amongst other sectors, we intend to accommodate the manufacturers, traders, and service providers, among others. We would also be rolling out innovative products that are customised for the Nigerian business space, and eventually it’s our hope to expand to other African nations because we share the view that the continent is waking up to take its space in the world economy.
What is your motivation for starting the Enterprise Zone?
Economic wealth all over the world is created through enterprises and the expansion of their output greatly enhances economic growth. SMEs contribute to the economy by creating value through the production of goods and services and by creating much-needed jobs. We see this initiative as our own little contribution to achieving social balance.
