Nigeria’s ambition to build a $1 trillion economy will depend largely on its ability to transform small businesses into large enterprises capable of creating jobs attracting investment and competing in international markets.
Minister of Finance and Coordinating Minister of the Economy Taiwo Oyedele said small and medium-sized enterprises (SMEs) remained central to the country’s economic development because they sustain millions of livelihoods provide employment and support activities across different sectors.
Oyedele spoke in Abuja at the weekend at the fourth edition of the Nigeria Sovereign Investment Authority (NSIA) Prize for Innovation.
He said the country must create an environment in which small businesses could grow into medium-sized enterprises medium-sized businesses could become large companies and Nigerian firms could compete across Africa and the world.
He said: ‘Our mission to build a trillion-dollar economy will depend in no small measure on our ability to help small businesses become medium-sized enterprises medium-sized enterprises become large companies and Nigerian companies become competitive players across Africa and the world.’
He said that although investment in infrastructure industrialisation and fiscal stability remained important government priorities the strength of the economy ultimately depended on businesses that produced goods provided services employed people and created opportunities.
Oyedele who was represented by his Special Adviser on Investments Marie Ukpere described SMEs as the backbone of the economy adding that their capacity to innovate increase production and reach new markets would be critical to Nigeria’s long-term growth.
He said the government recognised that many promising businesses struggled to expand because they could not obtain the financing skills and institutional support needed to grow.
He outlined several government interventions intended to address the challenges including the Development Bank of Nigeria the National Credit Guarantee Company (NCGC) and the Nigerian Consumer Credit Corporation (CrediCorp).
According to him the NCGC is designed to reduce the risks faced by lenders and encourage financial institutions to provide more credit to small businesses and manufacturers.
CrediCorp he said was working to expand access to responsible consumer credit strengthen purchasing power and support domestic demand.
He also cited the Investment in Digital and Creative Enterprises programme described in his speech as a $618 million intervention to provide businesses in Nigeria’s technology and creative sectors with access to finance skills development and business support.
He said the NSIA had played an important role in establishing the Development Bank of Nigeria and the NCGC.
Beyond these interventions the government is looking to expand access to investment capital for businesses with strong growth potential.
Oyedele said the NSIA was anchoring venture capital funds to mobilise institutional investment into promising Nigerian enterprises.
He also disclosed that the authority was developing an impact innovation fund in partnership with the Japan International Cooperation Agency (JICA) with British International Investment expressing interest in participating.
The proposed fund is expected to support commercially viable businesses addressing important economic and development challenges.
He said entrepreneurs often required more than conventional loans to expand their businesses noting that patient capital experienced investment partners and access to networks were also necessary for companies seeking to enter new markets.
He described the NSIA Prize for Innovation as an important platform for preparing businesses for growth by allowing entrepreneurs to test their ideas demonstrate commercial viability and engage with experienced investors.
Oyedele noted that the programme’s focus on viable businesses was particularly important for young Nigerians seeking opportunities to build enterprises rather than depend solely on available jobs.
He said government had a responsibility to create conditions that would allow young people to establish businesses develop new industries and employ others.
He stated that the programme placed commercial viability and the ability to execute business plans at the centre of its selection process.
‘The real measure of your success will not be the prize you receive today. It will be the businesses you go on to do afterwards’ Oyedele said.
He expressed the hope that some of the businesses represented at the event would grow into major companies employing thousands of Nigerians attracting significant investment and developing solutions for markets across Africa.
He urged the entrepreneurs to remain ambitious disciplined and committed to building their businesses regardless of the competition’s outcome.
Managing Director Nigeria Sovereign Investment Authority (NSIA) Aminu Umar-Sadiq said supporting small businesses was a fundamental part of the authority’s investment strategy alongside its investments in infrastructure.
He said the authority had supported SME development through initiatives including the Fund for Agricultural Finance in Nigeria the Development Bank of Nigeria and the NSIA Prize for Innovation.
‘Without SMEs you have no job creation. Without SMEs you are unable to actually grow economically’ Umar-Sadiq said.
He explained that the innovation prize was designed to give Nigerian entrepreneurs the education equity funding and exposure required to develop their ideas into sustainable businesses.
The programme’s fourth edition featured 12 finalists whose businesses were selected following a competitive process. The entrepreneurs were expected to present their innovations to judges and demonstrate how their businesses could address economic and social challenges while building commercially viable enterprises.
He said the programme’s support went beyond the financial rewards available to the finalists.
He put the equity support at about $350000 and said entrepreneurs had access to accelerator programmes designed to strengthen their ideas and business models.
According to him the support process began with the top 200 applicants who were given opportunities to participate in accelerator programmes before the selection narrowed to the finalists.
He said the top 12 would also undertake a six-week learning programme at Lagos Business School after the demo day.
Strategic partners including Wema Bank Pula and Cascador had also provided additional prizes and support for selected entrepreneurs.
Umar-Sadiq described the programme’s approach as ‘education equity and exposure’ saying the combination was intended to prepare businesses for expansion and help them attract further investment.
He said the programme had developed over four years with increased participation by strategic partners and a stronger focus on reaching more entrepreneurs.
The NSIA chief added that the authority would continue to work with businesses after providing investment to improve their operations and prospects for growth.
He said the authority worked with the management teams of supported companies to strengthen their business propositions improve governance and expand demand for their products.
‘This is really the beginning of the journey’ he said adding that the process of creating value in the businesses could eventually produce future unicorns or companies valued at $1 billion or more.
He cited Money Africa and Sycamore among previous beneficiaries whose businesses had continued to perform well.
However he cautioned that the success of such programmes should not be judged only by results recorded within one or two years.
He said a medium- to long-term view including a period of about five years was needed to assess whether businesses had achieved the scale expected of them.
Meanwhile Dr Abdu Mukhtar National coordinator of the Presidential Initiative for Unlocking the Healthcare Value Chain (PVAC) said Nigeria’s healthcare sector offered substantial opportunities for entrepreneurs and investors.
He estimated the addressable market across the healthcare value chain at about $20 billion and cited International Finance Corporation figures indicating that approximately 250000 SMEs were already operating in the sector.
Mukhtar said opportunities existed beyond hospitals covering pharmaceuticals clinical research medical devices telemedicine digital health and healthcare logistics.
The PVAC boss urged entrepreneurs to develop businesses that could generate profits while helping to improve healthcare delivery and access to affordable services.
He said the sector’s impact should be measured not only by financial returns but also by the lives saved diseases prevented maternal deaths reduced children brought out of malnutrition and jobs created.
Mukhtar added that the healthcare initiative was ready to work with entrepreneurs to make the sector more attractive to investment and support innovative solutions to the country’s healthcare challenges.
The founder and Chief Executive Officer of ReelFruit Affiong Williams who served as lead judge urged the finalists to build businesses around customers’ needs rather than concentrating only on the novelty of their products.
Drawing on her 14 years of experience building the dried-fruit manufacturing business she said entrepreneurs must understand what customers want and what they are willing to pay for.
She explained that it was easier to expand a business offering products that people wanted than to develop a product and then struggle to persuade customers to buy it.
Williams also advised entrepreneurs to build strong reputations demonstrate commitment and prepare their businesses to meet investors’ expectations.
The ReelFruit founder said she had raised more than $7 million over the years from individuals and institutions attributing her fundraising experience to preparation resilience a strong track record and the relationships she had built.
She urged entrepreneurs to develop networks of investors advisers and business leaders who could help them improve their businesses and identify opportunities for expansion.
Affiong Williams also advised them to remain resilient in the face of economic pressures currency movements policy changes and other challenges associated with operating in Nigeria.
Recalling her own experience she said she had faced rejection when seeking business support but continued pursuing other opportunities until she achieved success.
She urged the finalists not to regard the competition as their only opportunity to secure support describing their selection as an important step in their entrepreneurial journey.