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Interviews

Africa Will Remain Poor Except…

Dr. Harbhajan Batth is the Group Chief Information Officer of Challerams Plc, though a Canadian by birth but his knowledge of the Nigerian business environment is undisputable after managing several business interests for about 20 years in Nigeria. In this interview with Enterprise Africa crew, he shares his views on the challenges facing Small Medium Enterprise growth in Africa’s largest economy.

 

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Small and Medium Enterprises in many countries are usually the engine of economic growth, but in Nigeria, almost 70% of them fail even before their third year in business, why do you think this happens
Let me just rightly say this, that 70% of SMEs die within the span of two to three years of existence and that is not only peculiar to SMEs in Nigeria. In fact, I like you to look at the landscape of Africa and you find out it is a blessed continent, full of minerals, oil, and precious metals and much more yet most of the resources remain untapped for the full benefits of the people. How do you explain why 19 countries are extremely poor out of the 53 in Africa? It’s simply because have very weak institutions. Let me tell you, what we need are strong institutions such as the Ministries, Departments and Agencies. Besides, we lack good corporate governance at nearly all levels
In the Nigerian contest, our institutional weakness gives room to fraud and business malpractices hence what we witness everyday is one scam upon the other. It therefore means the regulatory bodies are so weak such that genuine entrepreneur have their reservations about investments in the economy, in some instances, there is no protection that allows for business survivability, there’s large scale corruption and key elements of cost of doing business, ease of doing business is very high. In terms of the ease of doing business meanwhile, most times there are avoidable processes. For instance how many licenses does one need to obtain, how many business partners should one engaged, how many agencies does one need to approach to ensure that as an entrepreneur his/her SMEs within the shortest possible time will find stability with the least expensive cost of doing business. There are no infrastructures to support SMEs yet there are unorganised groups that even the authorities recognize as Area Boys so all these scenarios I have painted tell on the survival and growth of our SMEs.

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From your experience what exactly do you think is required most to properly set up and manage SMEs? Would you say its money, skills or idea?
I always say that there are three important things for entrepreneurs or SMES to startup. One is breakthrough technology. In this era of technology, if you have a breakthrough technology, the sky is the limit. Then if you are not a technology driven but have a breakthrough ideas then you may just be the next big thing but the problem is that most people are just going into business without a clear generic idea. Where there is no generic idea that will work, then you should have a breakthrough technology or a passion. Passion is also equally important to ensure that the SME which you are going to start works so well.

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Why are the SMEs unable to sustain growth where the technology or idea comes good? Could it be down to policies, lack of skills or management issues?
First and foremost what is the government role in providing enabling environment, when the environment is not conducive naturally what happens to business becomes that of policy. If you look at the under developed nations and developed economies, the difference is simply down to the fact that government create conducive environment for business processes to function. By this, you have the entire infrastructure too. Let’s have the example of a simple logistics environment, the road ways, the railways, airways are perfectly fine. In this country, we do not have good roads, the railways don’t even exist yet railways are by far the cheapest mode of transportation for cargo but we do not have this. More so, the extortive nature of the regulators, I don’t want to name any regulator, but they are just too extortive of any kind of money from entrepreneurs and they leave the poor SMEs struggling for life. Most times there the SMEs have no money left to plough back. Take for example I have a small shop and I put a signage, you will be shocked how much Lagos State Signage and Advertising Agency will bill you yet you need their approval. The kind of charges and other monies paid by so start ups in Nigeria is so exorbitant in this country and sometimes the multiplication is alarming just have a company incorporated. In some instances you have to have a business licenses and then another version from other local government licenses. How can you register once your vehicle and once it’s on the road, you have to have the permit of different states instead of one national dept rather than different local government officials requesting for local government permits.
There’s actually the Small Medium Enterprise Development Agency of Nigeria (SMEDAN) saddled to assist SMEs overcome some of these challenges, yet it doesn’t seem much progress has been made. How do you think the agencies can assist better to grow SME sector
Let me tell you, there shouldn’t be one agency to take care the SMEs. Like it is done in Canada where I come from, each state have their own agency which is ready to support you, hold your hands, when I say hold your hands, it means there is availability of soft loans, if you have a breakthrough idea and technology, that agency ensures that you get a good amount of soft loan at your requirement but here, if a poor SME decides to go the bank, first and foremost it’s a pity, the first answer will be a “no” but if the idea is brilliant, sorry to say again, “the bank is going to steal the idea” give it to somebody else. I am not saying something which is not known to the system. So where do you want this man to end up? If he’s lucky enough to get the loan, then the loan is going to be at most likely a rate he cannot the business cannot bear?
From your experience, to what extent is customer service an hindrance to a growth of SMEs
You know customer service is not only important for the SMEs; good customer service helps any business to survive. It is one of the key success factors for any business to sustainability. We are today in an era where everybody wants to be treated like a king. Everybody wants a wow such that a customer today is looking beyond satisfaction. However, to get a customer’s satisfaction some skills are very important, it is also something related to building the human resources skills. This is one of the key success factors for even companies like us who are marking ninety three years old in this country, we feel that the better the customer service, the more the product and services are going to be acceptable in the market.

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To what extent is policy deficiency hampering the growth and sustainability of businesses in Nigeria
You see we are discussing about the policy deficiencies, where are the policies? With due respect to everybody, we have very fine policies on the paper. The problem here is the execution of the policies. Our policies are good and well intended by the policy makers, but implementation and the execution is where we are feeling. For instance, the first line of the our SME policy says they must get access of loan, how many of them have the access to soft loan? The African Development Bank and other multi lateral agencies that are coming up with soft loans is often taken by the big industries. There’s nothing left for the SMEs. The question boils down to lack of discipline in our agencies. They should have a kind of key responsible areas to ensure that out of a hundred SMEs coming on board, ninety percent of them should be able to survive.

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