• Monday, June 17, 2024
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How Nigeria can improve competitiveness, reignite growth – Verraki CEO

How Nigeria can improve competitiveness, reignite growth – Verraki CEO

NIYI YUSUF is a managing partner at Verraki, a business and technology solutions firm. Leading the firm in its mission to transform African enterprises and governments via smart, future-focused solutions and business insights, Niyi, in this interview with BusinessDay’s ENDURANCE OKAFOR speaks on what Nigeria must do to improve competitiveness, growth to attract better investments, talents, and resources to itself. Excerpts:

What does competitiveness mean in the context of Nigeria and how can it be improved?

From a layman’s perspective, competitiveness means being as good, or even better, especially when there is more than one participant. Competitiveness thus means, I have more strengths relative to my competitor, that is, from an individual perspective.

From the perspective of a country, competitiveness is broader. Here, you look at how countries are positioned to compete amongst themselves in the global markets, to attract more finite resources. The concept of globalization, global markets and competitiveness are intertwined as all countries are trying to position themselves to attract as much capital, talent, investments, and resources. Competitiveness from this perspective will examine how well-positioned your country is, to other countries within your geography, or within a market segment, among other metrics.

How is Nigeria rated, compared to other countries within the global markets as we seek to attract talent, capital investments, and industries into the country?

Ultimately, what attracts outsiders are the capabilities that you have, the type of enabling environment that you provide, that allows your enterprises and your companies to create value and allow your people to prosper. And if you use these lenses: how companies and enterprises create value and how people prosper, you will argue that Nigeria still has a lot to do to improve its competitiveness.

We don’t have a lot of Nigerian companies that are leaders in their markets globally or even on the continent. Also, poverty and illiteracy have increased in the country, and more so in the last decade.

We don’t have a lot of Nigerian companies that are leaders in their markets globally or even on the continent. Also, poverty and illiteracy have increased in the country, and more so in the last decade.

If one uses those two lenses as the parameters for evaluating the competitiveness of a country, that is, the prosperity of its citizens or residents, and the value creation of the companies in the countries, and then examine the Global Competitiveness Index of the World Economic Forum (WEF), one will get a better understanding of where Nigeria is relative to other nations. The WEF’s Global Competitiveness Index looks at about twelve pillars of productivity in four broad categories. The first category describes transforming enabling environments, which address the kind of institutions that you have, the infrastructure, technology adoption, stability of the macroeconomics (interest rates, inflation rate, exchange rate) and so on.

The second pillar examines market efficiency and addresses the efficiency of your labour market, the financial systems, products markets and of course, market size. The third category is about human capital; education, skills, talent, health. And the fourth is about the innovation ecosystem, innovation capabilities and entrepreneurial culture. In its 2019 report, pre-COVID-19, the World Economic Forum ranked Nigeria 116 out of 141 countries, which means that we are not as competitive, especially when we look at the enabling environment, the efficiency of markets, human capital issues and innovation ecosystem.

Read also: Nigeria’s problem was beyond inflation in 2021

Now the other dimension of competitiveness, beyond value creation by companies, is about the prosperity of the citizens or residents. A key metric to look at is the Human Development Index (HDI) of the UNDP that looks at health, education, food, water supply, etc. Nigeria is ranked 161 out of 189 countries in terms of the HDI. The leading country in Africa is Mauritius at 66. When you juxtapose the two accepted indices; the Global Competitiveness Index of the World Economic Forum and the Human Development Index of the UNDP, you see that Nigeria is ranked poorly. And that, I think, is the way to see the competitiveness or non-competitiveness of the country.

So, can this competitiveness be improved? Of course, yes. The first place to start is to focus on education and health, then food and creating an enabling environment. When you have an educational system that develops human capacity with skills that are fit for purpose, and a healthcare system that provides quality health care that allows people to function optimally, stay healthy and enjoy good well-being and lifestyle; food especially consuming enough calories per head, so they can have strength; and an enabling environment, with the right infrastructure, security and appropriate macroeconomics, you will tremendously improve your competitiveness.

How can technology help in building competitiveness for Nigerian companies?

Technology provides an opportunity for Nigerian companies to improve their competitiveness. When you reflect on how Africans and Nigerians have leapfrogged, in terms of moving from landlines to mobile phones, you will agree we have come a long way. Mobile phone penetration or teledensity in Nigeria is about 100 percent, which means hundreds of us in any area at a given time will have a cell phone. We see the way mobile payments have caught on in Kenya with M-Pesa. Technology has shown that it’s possible for us to start late and to still leapfrog and to move ahead and be doing wonderful things. Companies can leverage technology to improve competitiveness as we have seen with Safaricom and its M-Pesa in East Africa, which is using technology to drive micropayments and fintech like Flutterwave in Nigeria that are using technology to drive innovation.

Technology can also be used to drive efficiency, reduce costs, and allow you to grow at scale, and effectively. If you have a technology platform, that platform can be accessed 24/7 from anywhere in the world.

Technology also allows you to be agile and to be resilient so that as a business, you can respond to market dynamics and bounce back from failures faster. So that a crisis in one location will not stop you from operations because the technology is in the cloud and can be accessible and operational from anywhere. For instance, during the COVID-19 lockdown, most staff were able to work remotely; companies were able to provide services virtually to clients, all because of technology.

The companies that were able to quickly adapt to the changing times using technology were those that not only survived the lockdown, but they also thrived. So, technology is a tool that companies can use to improve their competitiveness, but more importantly, to reignite growth and capture new markets and new customers, with new products and new technology-driven services.

How can Nigeria accelerate its path to reigniting sustainable growth? What lessons can it learn from other markets?

I will quickly recap the lens I mentioned; the human development indicator which looks at the prosperity of people; and the Global Competitiveness Index, which looks at the value creation of companies and enterprises. There are a few areas to focus on, first is security, as, without security, there cannot be peace, and without peace, individuals and companies would be able to function or operate optimally. So we need to provide security and create a secure environment that fosters enterprise and productivity. A major challenge in Nigeria is limited productivity. We are productive within 14-16 hours and the remaining eight hours of the day is in darkness or with restrictions.

To be fully productive, we need to have a 24/7 economy and that requires the right infrastructure, security, electricity, energy, transportation, etc. And then you need education and healthcare, as I mentioned earlier. There’s no reason why we should not have universal health care using the NHIS model, which covers every citizen and resident of the country. Less than 10 percent of Nigeria’s population is covered in the health insurance scheme today and many people still spend so much out of pocket. Making Universal health insurance available will help. Education is equally important, albeit meaningful education which is tied to the needs of the business community, to ensure we do not produce graduates or students that will not be useful in the marketplace. I will paraphrase Chief Obafemi Awolowo’s quote ‘Any people that are starved of education, especially the right type of education, will suffer intellectual malnutrition, stagnation, and atrophy’. Education must be tied to the needs of the industry and produce talent that has practical or relevant skills.

Thirdly, we must provide an environment that nurtures innovation and encourages entrepreneurs to start businesses, fail quickly, learn their lessons, and move on to the next idea. Today, our environment is harsh and does not encourage risk and experimentation. Entrepreneurial environments require a high level of risk and experimentation, plus a high level of capital and investment in R&D for innovation to thrive. We need to have markets that are efficient and private sector-driven, where institutional voids are minimized, and rules are followed. And lastly, for macroeconomic stability, interest and inflation rates need to be lower. The FX exchange rate needs to be stable so that the investors bringing money in would know that after a while, they can take that money out and it would not have lost value. Those are a few things that Nigeria can do to create sustainable growth.