Sustainability has been identified as the most important aspect of business growth in Africa. Contrary to belief that lack of funding may be the biggest challenge faced by small and medium size enterprises (SMEs), Elo Umeh, chief executive officer, Terragon Group, leading data and marketing technology company says that businesses must take a long term view when investing and evolve by disrupting within their categories and industries.
Umeh who spoke to BusinessDay at the TechPoint build conference and exhibition in Lagos, shared principles for businesses to survive in the digital age.
Citing Terragon’s sustained growth, he said the company started at a broad level as a digital media platform but has evolved into a mobile advertising network with its own proprietary programmatic platform. ‘Today, we are leveraging the data analytics and artificial intelligence to bring more value to our customers,’ Umeh said.
“Doing business in Nigeria is extremely difficult. However, the opportunity exists and so, we must have a lot of commitment around people and consider the nuances of the environment – including lack of power, traffic etc. There are companies in this market that make losses for 10 years and still stay. It is not good for the eco-system that some companies come, try and leave because their business is not sustainable,” he said.
Solving for local relevance was also a key principle highlighted. Oftentimes, imported solutions do not take cognisance of cultural nuances and peculiarities which makes adoption difficult. It is important for businesses to customise solutions to local needs, rather than attempt to customise imported solutions for local problems. This approach immediately guarantees a ready market for such customised solutions.
In addressing the issue of funding, Umeh advised businesses to consider equity as a last resort. On debt, he advises caution due to high interest rates and recommends that businesses explore interest free money such as grants and crowd-sourced lending options with fair interest rates. He reiterated that having a strong financial base give companies better leverage when negotiating for equity in the future.
Lastly, he mentioned the importance of attracting, retaining and building qualified human resource and partnerships. This, he said, will determine how far businesses go. The Terragon CEO recommends that businesses should embrace the mentorship approach in building talents which should begin, if possible, at tertiary levels. This way, there is a pool of qualified personnel to onboard into the business.
Reacting to the seeming withdrawal of businesses from Nigeria, owing to difficult operating environment, Elo says both government and the private sector have a role to play. He notes that “The private sector can only thrive as far as the public sector permits it to”. He also called the attention of businesses not to get carried away with Nigeria’s population of 180 million people, but to find out the actual economics of Nigeria’s population. There’s the top echelon which forms about 5 percent of the population with high purchasing power. There’s the growing 30 percent which is the middle class, but where you’ll find significant growth is in the 70 percent bottom of the pyramid.
Umeh says businesses often make the error of building their core structures looking at 180 million but this isn’t the right approach. It is important to consider the actual addressable market inherent in a population and build businesses around this market.