To grow companies with revenues over $1 billion 

The recent revelation by the Presidential Enabling Business Environment Council (PEBEC), in its 2024 Outlook document that, of 345 companies in Africa with yearly turnover revenue of $1 billion, only 23 are in Nigeria, is quite troubling. These details, which form part of the PEBEC Secretariat’s work plan for 2024 indicates that Nigerian companies constitute less than one per cent of this category. This is an indictment of the operating environment for firms in an economy which is reputed to be the largest on the African continent. This is not the type of report expected from an economy as large as Nigeria’s. This issue needs to be further interrogated in relation to how government policy will need to be designed to ensure that the economy is not performing below its potential. First, the government needs to critically evaluate its effort in the enhancement of the ease of doing business in Nigeria.

Expectedly, the Special Adviser to the President on Ease of Doing Business, Jumoke Oduwole has outlined the government’s readiness to roll out interventions in 2024 to make businesses more viable. But talk is cheap, as is often said and Nigerians may not be too impressed by public pronouncements by government officials given that many of such pronouncements in the past have not been fulfilled or implemented. The good thing however is that at least the government is aware that something needs to be done aside from merely celebrating the little gains the country has been making in the global ranking on the Ease of Doing Business index.

A critical question policy makers need to ask is why the companies with turnovers of over $1billion are few in Nigeria. The key issue is the poor environment in which firms operate in Nigeria. It is very unfriendly for business. A business climate where firms have to provide their own security, electricity, water, access roads is not good for business. In addition, the unfavourable macroeconomic environment where the exchange rate is currently over N1000 to one United States dollar is not good for business especially where the firms would have to procure imported inputs to generate production. Is it any wonder that most of the manufacturing firms are closing shop in Nigeria? Even the multinationals are leaving the country in droves and relocating to smaller economies such as Ghana, among others where they can have better business operating environments.

Some of the factories and warehouses in the Ikeja industrial estate as well as those in Aba, Ibadan and Kaduna have remained empty over the past years. How then would the country grow large firms that can generate revenue or turnover up to $1 billion? It is refreshing though that Jumoke Oduwole has recognised this problem and indicated that the government will need to have a new approach to move faster to grow the economy in these turbulent times.

The identification of the 23 companies in Nigeria within these 345 high performance companies on the continent, by government has been done, surprisingly though, for the purposes of tax contribution, job creation and export proceeds. In other words, what the government is looking for primarily is “what is in it for me?” in line with the popular Nigerian stance. By this, the government wants to tax these companies, make them create jobs and then ensure that they are exporting to the outside world. These are companies that have ensured their survival by dint of hard work with little or no assistance by the government. Government can do better than that.

Nonetheless the plan by the government to launch the PEBEC Business Champions Programme targeted at large and medium scale businesses, as part of its five strategic pillars of PEBEC is quite commendable. The plan which is programmed to have a pilot cohort of 25 companies should be made representative across the six geopolitical zones of the country. It should not just be based on the selected criteria set by PEBEC based on size of revenue, tax contribution, job creation, sector of operation and extent of export proceeds. It should be spread across the entire country, especially in areas that had functional industrial zones prior to the deindustrialisation of the economy and the decline in the fortunes of the many firms. Secondly, the plan by PEBEC to review legislations bordering on the operation of firms in the country is good and should be facilitated, especially that of the 2022 Omnibus bill which comprises about 21 business laws in the country.

Nigeria can do better than is currently the case as regards the growth and performance of business firms in the country. The need for a concerted effort between the Central Bank of Nigeria, Small and Medium Enterprises Development Agency of Nigeria, the Development Bank of Nigeria and the PEBEC as well as other relevant government organisation is becoming inevitable if there will ever be a progressive transitioning of forms across the country, with micro-sized firms becoming small-sized, small-sized firms becoming medium-sized and medium-sized firms becoming large-sized. All hands need to be on deck to ensure that the number of firms in Nigeria earning $1 billion or more will not just be a paltry 23 out of as many as 345 on the continent. The country can do better than this.