Building An Entrepreneurial Economy

By Oluwagbenga Oyebanji

Welfare state began in Germany in the 19th century, which is basis of most democracy in the present dispensation. Innovation is needed in the society as much as in the economy, in public-service institutions as much as in businesses. Government policies must create a conducive environment that sees change as normal and as opportunity.
Tax policy must not be seen as income generation, but a policy that requires capital formation. We need tax and policies that encourage entrepreneurship. The strength of an entrepreneurial economy is job, be it high-tech, middle-tech, low-tech or no-tech industry. Policies must be created by government using fiscal and monetary policy for job creation and job growth, the private sector can only thrive when there is a viable environment. Anywhere investment flows there is job creation, the democratic emergence in Nigeria has brought huge investment into education, telecommunication, manufacturing, real-estate, retail, service, transportation, agriculture, financial services and entertainment. Out of all these industries, non creates more jobs than the informal sector of the economy, which is the reason Nigeria is still developing at a crawling rate. There has been major improvement in the economy in proportion to the demography.
The baby boom of America came after second world war, but Nigeria’s population boom came after Biafra war of 1970. 80% of our population was given birth to between 1970 and 2015. The challenge for policy makers is building an economy that transits from informal to formal and also to provide a conducive environment for entrepreneurs to be successful. One of the greatest impediments to building an entrepreneurial economy is policy rigidity.
Commodity revenue generating style of the economy is the reason the Naira is weeping. The economy can’t compete based on innovation, that is the major reason for the high uncertainty and low investors’ confidence. To build an entrepreneur economy, the policy makers must focus their energies on four verticals: revenue, expenditure, debt and investment. The first consideration into increasing our revenue proceeds is to focus on what lays the golden egg. Nigerians are the first considerations and not crude-oil price and sales. This is the path to understanding where to start. How do we make Nigerians entrepreneurially minded? The word entrepreneur was coined by a French economist, J.B. Say around 1800, which means “shifting economic resources out of an area of lower into an area of higher productivity and greater yields.” The largest concentration of Nigeria’s economic resources is in the informal sector of the economy, transport, commerce, agriculture, fashion, information technology, manufacturing, education, power, and media. All these accounts for most of our economic resources and non of the companies operating in these sectors can compete with largest 500 companies in the world called “Fortune 500.”
America has 127 companies, China has 98, Japan 54, France 31, Britain 29, Germany 28, South Korea 17, Netherlands 13, Switzerland 12, Canada 11. The Global 500 companies are represented by 36 countries, no Nigerian company is in the list. This speaks volume of the high uncertainty and policy rigidity entrepreneurs are facing in the economy. The informal sector is filled with subsistence business owners that are struggling to pay their bills and finding ways to reduce their social challenges. Increasing tax on the informal sector of the economy is like telling a crawling child to run a marathon. The question is, how do we transform the informal sector to formal sector of the economy? The federal government and the central bank should create a bank called “Entrepreneur bank.” The responsibility is to cater and train business owners on how to navigate through management challenges. The financial house is not a santa claus to empower political allies but should be seen as a business capacity building establishment. People’s Bank of Nigeria (PBN) failed in the 90s because it was seen as “ATM machine”. The framework for this bank must have technical, skill, financial and managerial capacity, it must also meet international standards for it to be able to compete and attract the best brains in the Diaspora.
Expenditure should be the foundation of development and growth of the economy. Capital expenditure should be the largest allocation of resources in the budget or any government spending, doing this will position the economy on the path of development and sustainable growth. Debt profile of Nigeria has grown in 10 years to over $100 billion between 2007 and 2016, the analysis of this debt is high financial ignorance because its largely a debt-based on consumption which is recurrent expenditure .
Investment is the greatest tool economies will use to compete in the 21st century, human and physical infrastructure should attract investment form both private and government. Infrastructure should be built to meet the aspirations of 21st economy, transport, telecommunication, health, power and education. Nigeria has to start investing in education, primary, secondary, technical and tertiary institutions. The education industry should be overhauled to meet the realities of 21st century knowledge workers demand which is the secret of developed nations and the largest economies in the world. Research and development should be given priority in the budget. At least 1% of budget for 10 years, which is 60 billion Naira FY 2016’s budget.
This is the time to tell the Nigerian success story by building an entrepreneur economy. The Chinese did it in the70s by a man called Deng Xiaoping. That started China’s economic reform in 1978. Lee Kuan Yew did it with Singapore. She got her independence 5 years after Nigeria got hers from Britain in 1965 from Malaysia. Singapore is an entrepreneur economy, Nigeria can do better. Nigeria has to see the cup half full, not half empty. Perception is the best way to be innovative. We can do it, it is not as hard as we think.
“The labour of our heroes past shall never be in vain.” God bless Nigeria.
—Oyebanji is an entrepreneurship consultant/ Editor-in- chief of SuccessPoint Magazine. Tel: 07035458475; E-mail: [email protected] Twitter: @oluwagbenga6