Getting Nigeria’s elephants to the dancing floor -Part 1

“Who Says Elephants Can’t Dance?” This is the title of Louis V. Gerstner memoir, the “miracle-manager with a magic wand” who midwifed IBM’s historic turnaround that begot IBM 2.0 in the 1990s. By 1993, before Louis’ appointment as the new CEO, IBM, the company that revolutionised the technology world, was on its way to extinction. It was projected to lose over $16 billion that year alone. IBM’s fate of dissolving into a confederation of autonomous corporations was signed and sealed but not yet delivered. This situation was similar to Nigeria’s fate on the eve of May 29, 2023, when President Bola Tinubu collected the leadership baton.

IBM, which was incorporated on June 16, 1911, three years before Nigeria’s amalgamation in January 1914, was a victim of its lumbering size, an insular corporate culture, and insensitivity to modernisation, even in the face of the irreversible wind of change blowing over the PC market it had helped invent. The birth of IBM 2.0 was not an accident or luck; its extraordinary second coming was a byproduct of audacious, hairy visioning and strong political will.

Louis paid the full price through the strength of his character for the prize he later won as one of the greatest turnaround CEOs and heroes of the 21st century. He carried out wholesale restructuring of IBM, rebuilt the leadership team, and gave the workforce a renewed sense of purpose. He led by example, ran a lean management, and made accountability, prudence, and innovation his priorities.

Promptly, IBM’s dry bones heard the word of Louis; new breath entered into IBM, and the dry bones became whole. It roared back to life, became stronger, bigger, and better. Louis streamlined the company’s product portfolio and carefully defined the kind of parties IBM would attend, which were only those where IBM had both comparative and competitive advantages. On May 1, 2006, IBM sold off the hen that laid the golden eggs, i.e., IBM’s PC hardware business units (equivalent to Nigeria’s NNPC), to Lenovo, a Chinese company, because the hen had since become barren in IBM’s cage. The PC business had become commoditised and, like NNPC, was burning money for IBM rather than making money.

IBM and Nigeria share several things in common. Aside from being age mates, both are “ELEPHANTS”, in their own right, two conspicuously consequential entities with untold potentials. IBM is to the global corporate world what Nigeria is to the Black race. However, while IBM 2.0 has turned the corner since the 1990s, Nigeria has remained static in the same corner for 40 years as a spectator in a sorry state, a fragile, fractured, fragmenting, federation, always failing and fumbling at the edge of every fundamental turning point, perpetually on the brink with no voice, no vote, no veto, no victory!

The best-run countries in the world operate like the Global 500 corporations. They are target-driven, sharply focused on the bottom line, which for corporations, means profit, and for nations, means people. Similarly, smart nations feature only in a few parties where they have natural endowments, skills, and resources to out-compete other nations.

Norway is one of the smartest nations on earth. With only 7.5 billion barrels of oil reserves, she is accountable for over 2 per cent of global oil consumption. Norway has sharpened her skills in oil business management. Conversely, Nigeria’s oil numbers don’t add up: with over 30 billion barrels, she is accountable for a mere 0.4 per cent of global oil consumption, sitting in the 37th position despite having the 10th largest oil reserves globally. NNPC has made a profit only twice in 40 years, according to its GMD, whereas Norway’s savings of $1.62 trillion is the world’s largest sovereign wealth asset, built from her oil profit, holding on average 1.5 per cent of all the world’s listed companies’ stocks. This translates to over $295,000 per Norwegian citizen. Nigeria has a comparative advantage in crude oil reserves but has zero competitive advantage in production and oil business management.

South Korea is another smart nation, focusing on dominating steel manufacturing (POSCO being the world’s 7th largest steelmaker), car manufacturing, shipbuilding (Hyundai is the global number one shipbuilder), and electronics. South Korea is the world’s second-largest producer of semiconductors, which represents her main export and textile. Just in five areas of focus.

The question is: where does Nigeria have both competitive and comparative advantages vis-à-vis other nations? Or, put differently, which five problems are we solving or can we solve for the world, better than any other nations?

Nigerians knew things were bad on May 29, 2023, when President Buhari handed over to President Tinubu.

Nigerians knew that the treasury was emptied by President Buhari’s administration, which was why the mind-boggling revelations that came out from the CBN audit report by Jim Obasi did not come as a surprise to many. (By the way, where is the report and what is the government going to do with Obasi’s findings and recommendations?) Nigerians knew President Buhari and his men soiled the chairs before leaving Aso Rock.

But things are getting worse. The hurt, hunger, and haemorrhaging are on an astronomical ascendancy. On May 29, 2015, Nigerians voted for “Change” because the pieces of meat on their plates, which used to be five under President Obasanjo, had earlier reduced to four under President Yar’Adua. By the time Jonathan handed over to Buhari, only two pieces of meat were left on the plate. However, under President Buhari’s watch, the “change agents” left people with an empty plate. Sadly enough, in one year of Tinbunomics, the empty “plate” broke! The plate of hope broke under the unbearable weight of the cost-of-living crisis, multitude of taxes, sundry levies and fees, subsidies removal, and seven other demons.

Leaders need to act cautiously whenever despondency descends on a nation because, when hope is lost, the people become as wild and dangerous as a pride of hungry lions. Leaders should not assume that loudness means being strong and quietness means being weak. It is the lion’s silence that signals danger, not its roar. The seven demons wearing new ranks of a 4-star general each today are devaluation, stagflation, financialisation, de-industrialisation, dehumanisation, insecurity, and corruption. Call it a perfect storm, you are right! A situation where food inflation is now in excess by 40 per cent, currency devaluation is in excess by 100 per cent in an import-dependent economy, unemployment is going through the roof, there is 300 per cent increase in electricity in “Band A” where manufacturers belong, there is a bank interest rate on loans of about 40 per cent, surging insecurity with random kidnapping for ransom is rampant, there is financialisation with banks being the only ones declaring profits at a time of massive factory closures, coupled with unbridled corruption, is nothing short of a perfect storm.

There seems to be seismic sea waves blowing over the real sector, arising from the imbalanced gravitational pull of government’s macro-economic policies, leading to the ongoing de-industrialisation of corporations. The pattern is worrisome: the Western corporations that are rule-based and process-driven are the ones exiting Nigeria with their know-how.

In 2023 alone, according to the Manufacturers Association of Nigeria (MAN), 767 manufacturing companies collapsed while 335 became distressed. The exit of multinational giants in a row, GSK, P&G, PZ, etc coupled with the waves of divestment and downsizing of operations by almost all the MNCs, e.g., Unilever, PepsiCo, Mobil, Shell, and Chevron signals danger for the economy. These are corporations that have operated in Nigeria for over 100 years, providing quality jobs and adding value to the communities. What do they know that we don’t know?

The pockets of Chinese companies coming to set up factories in Nigeria cannot fill the gaps being created by the departing Western corporations. The companies from the East hardly transfer technology and know-how. Besides, corporate values, business etiquette, transparency, accountability, and deliberate staff training and international exposure are alien to Asian employers.

Attracting FDIs: Once the grass is green, the sheep will graze
Since the day he took over power, President Tinubu has been globe-trotting, marketing Nigeria. But where are the foreign investors with their dollars?

Money has no religion, race, tribe or emotion; it goes to smart nations where business can be done with ease. In 2023, Nigeria was ranked number 131 globally among 190 countries regarding ease of doing business (EoDB) by the World Bank, scoring 5.69 on a 10-point scale.  Worse still, Nigeria is not even among the top ten in EoDB in Africa. Nigeria is number 18, Rwanda is number one, while Ghana is 10.

The reasons are obvious, without confronting the following ten business limiters, no genuine investors will come: epileptic and high cost of energy supply, poor infrastructure, government policy somersault, low consumer purchasing power, complicated legal system (it takes on average 164 days for a standardised commercial dispute to be resolved in Singapore, while in Nigeria, “go to court” means a death sentence, high cost of funds, naira volatility, absence of reliable data making business forecasts difficult, unacceptable bribery level (Nigeria ranks 150 in the corruption perception index-CPI) globally, political  instability, unending insecurity and JAPA, leading to acute shortage of good skills.

To be continued.

Akano is President, One Africa Initiatives. He can be reached via: [email protected]