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Federal Government Presidential Conditional Grant Scheme (PCGS) Rolls Out To Empower Nano Businesses Across Nigeria

The Federal Government has rolled out the Presidential Conditional Grant Scheme (PCGS) to empower Nano businesses as part of the Presidential Palliative Program.

Beginning on March 9, 2024, the scheme offers financial grants, without repayment obligations, to eligible small business owners operating in various sectors such as trading, food services, ICT, transportation, creatives, and artisans. The PCGS targets 70% women and youth, 10% people with disabilities, and 5% senior citizens, with the remaining 15% distributed to other demographics.

By focusing on the often overlooked group of business owners, the program seeks to unlock the potential of Nigeria’s burgeoning entrepreneurial ecosystem and drive sustainable economic development at the grassroots level.

The N50,000.00 (Fifty Thousand Naira) grant per beneficiary paid directly to beneficiaries’ accounts will reach one million small businesses in the 774 local government areas (LGAs) and the six council areas in the Federal Capital Territory (FCT). With a target of 1,000,000  beneficiaries in every LGA and the FCT, the program has the potential to impact communities nationwide significantly.

Beneficiaries of the initiative have been selected through a rigorous process that includes the verification of each business owner through their National Identification Number (NIN) and Bank Verification Number (BVN).

The successful applicants met specific criteria, including owning a small business with progressive economic potential, a willingness to grow, and engage at least one additional staff member when necessary. Applicants also provided proof of residential/business address and relevant personal and bank account information before the December 18, 2023 deadline.

The Presidential Conditional Grant Scheme underscores the government’s commitment to supporting small-scale entrepreneurs and driving inclusive economic growth. With a strong emphasis on inclusivity and empowerment, the PCGS is poised to make a tangible impact on the lives of small business owners and their communities across Nigeria.

The initiative is implemented by the Federal Ministry of Industry, Trade and Investment with the Bank of Industry as the Executing Agency.

For more information about the Presidential Conditional Grant Scheme (PCGS), please visit the official website [].

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The Federal Government of Nigeria through the Federal Ministry of Industry, Trade, and Investment (FMITI), has established three funds totaling N200,000,000,000 (Two Hundred Billion Naira) to support businesses across Nigeria: The Presidential Conditional Grant Scheme (PCGS); The FGN MSME Intervention Fund; and the FGN Manufacturing Sector Fund. The Bank of Industry (BOI) has been appointed as the executing agency of the funds, vested with the responsibility for its day-to-day administration.

The Presidential Conditional Grant Scheme (PCGS), is a N50,000,000,000 (Fifty Billion Naira) grant scheme to support eligible Nano Business owners. The Grant will be disbursed to a minimum of 1,000 beneficiaries (especially Women and Youths) per Local Government Area (LGA) in the 774 LGAs across the Nation and the 6 (six) Council Areas in the FCT. The target nano businesses include: Traders, Food Vendors, ICT businesses, Transporters, Artisans, Creatives, among others. This is the grant component of the initiative, as beneficiaries are not required to pay back. To be eligible, beneficiaries must own a nano business and be willing to register a business name as their business grows, and be willing to engage at least one additional staff member if the business turnover increases; They must also be willing to provide proof of residential/business address in their Local Government Area, provide relevant personal and bank account information, including but not limited to Bank Verification Number (BVN) and National Identification Number (NIN) for verification of identity. The beneficiary must meet the application submission deadline for the scheme.

The FGN MSME Intervention Fund, is a N75,000,000,000 (Seventy-Five Billion Naira) fund, for Micro, Small and Medium Enterprises (MSMEs) in Nigeria. The fund would be used to support eligible micro, small and medium enterprises and serve as a cushion against the high cost of production, marketing and distribution of products arising mainly from infrastructure deficiencies and other ancillary factors involving MSMEs in Nigeria. Each beneficiary would receive a maximum of N1,000,000 (One Million Naira). The fund would be disbursed at an interest rate of 9% all-inclusive per annum, with a tenor of 3 years for equipment and working capital.

The FGN Manufacturing Sector Fund is a N75,000,000,000 (Seventy-Five Billion Naira) fund, that would be used to support eligible manufacturing companies and help cushion against the high and rising costs of production, marketing and distribution of products arising from infrastructural deficiencies and other ancillary factors affecting the manufacturing sector in Nigeria. Beneficiaries would receive up to N1billion (One Billion Naira), disbursed at an interest rate of 9% all-inclusive per annum, with a tenor of 5 years for term loans, and 1 year for working capital.

The MD/CEO, Bank of Industry, Dr. Olasupo Olusi, reiterated BOI’s commitment to the development of MSMEs as the bedrock of the economy, which is in line with His Excellency, President Bola Ahmed Tinubu’s Renewed Hope Agenda.

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Design Thinking In Solving Organizational Problems

“Recognizing the need is the primary condition for design” – Charles Eames 

Design thinking (DT) originally came about as a way to teach engineers how to approach problems creatively, as designers do. Since then, it has been used effectively within a variety of industries, customising the process to their environment, challenges, and goals. Market leaders like IBM, Google, and Tesla also use design thinking as an innovative methodology to guide their product development. It helps them see the world through the eyes of their customers. 

Addressing the needs of consumers is a powerful way to drive innovative thinking. In today’s rapidly changing world, it is becoming increasingly difficult to proffer a one-size-fits-all approach to customer expectations. This is due to advancements in technology, changing tastes and lifestyles, increasing purchasing power and so on. Organisations today have to address more complex problems. To address these problems, there is a need to better understand the consumers and what they expect to gain. 

Design thinking puts the consumer at the centre of problem-solving. To be able to proffer solutions to a problem, it is important that organisations understand the impact on the consumer. Design thinking encourages organisations and businesses to focus on the human point of view above all else, and to build this focus into each step of the product development cycle. This means designing products and services with people’s needs and preferences firmly in mind. For instance, a software company will prioritise design functionality, dependability and security which will allow consumers to transact in a clear, simple and intuitive way. 

Steps in Design Thinking

  • Empathize: Empathy helps to understand the problem of the consumer by setting aside assumptions. It is when you understand how a problem impacts a consumer that you can empathise. We can practice empathy through observation and interviewing. 
  • Define: The outcome of this step is a problem statement. It involves asking what problem we are trying to solve. It helps identify the features that are a priority in the solution. 
  • Ideate: This requires an exhaustive exploration and evaluation of possible solutions (i.e. brainstorming), in a bid to address the pain points of customers.
  • Prototype: It involves developing a quick representation of the solution i.e. a physical object, a drawing, or an experience map. It selects a handful of innovative proposals and turns them into prototypes. 
  • Test: Here, we test the prototype by gathering feedback to determine its effectiveness. It is an iterative process with opportunities for improvement.

Benefits of Design Thinking

  • Cost-effectiveness: DT enables the testing of ideas without committing resources i.e. companies are able to evaluate the effectiveness of a new product or service, without having to go through the entire process of developing the product. 
  • Non-linear problem solving: DT allows companies the flexibility to jump from step to step as needed. For example, if the prototyping step does not work, a company can re-start the ideation process.
  • Managing complexity: Complex problems can be solved by focusing on user needs and the limitations of existing products and services
  • Market discovery: DT opens up the opportunity for companies to discover entirely new markets. For example, the iPhone started with the question of how to avoid customers juggling multiple devices. By working on how to make things easier for people, Apple invented the smartphone, which opened up a whole new global market.
  • Tailored solutions: User experience (UX) is emphasised when capturing customers’ mindset during the design process. 

Leveraging Design Thinking in BOI

Despite monumental successes that the bank has achieved over the years, BOI is not immune to challenges and as such, adopting a design thinking framework could help in efficiently executing some of its strategic objectives. For instance, improving access to BOI loans by the youth segment can be further enhanced by leveraging the DT approach by dialoguing with the segment to understand their limitations. Brainstorm on potential solutions and jointly analyse possible solutions and thereafter test/pilot such solutions for effectiveness. 

Pitfalls to avoid in Design Thinking 

Design thinking often leads to comprehensive solutions. However, the framework may not work for all objectives. As such, it is important not to lose sight of other pragmatic approaches to executing corporate objectives. In addition, clear and simplified communication is key in the iterative development stage of problem definition. 

We conclude with a quote by Laura Ashley – “We don’t want to push our ideas onto customers, we simply want to make what they want.

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Economic Development and Industrialisation in Nigeria: The Role of the Bank of Industry

“Economic growth without investment in human development is unsustainable and unethical” – Amartya Sen

In the wake of the recent economic recession, the first since 1991, Nigeria released a new development plan – Economic Recovery and Growth Plan (ERGP) – that set out specific objectives for achieving economic growth of 7% by 2020. This release followed earlier plans such as Nigeria Industrial Revolution Plan (NIRP), National Economic Empowerment and Development Strategy (NEEDS), the 7- point agenda, and others that targeted both economic growth and development within a specified period.  The implementation of these plans has allowed Nigeria to record some measure of growth. However, the recent recession and its contributing factors (global oil price reduction, unavailability of Foreign Exchange etc.) have shown that Nigeria needs to develop sustainable sources of foreign exchange earnings to fund economic development, besides oil.

To ensure more sustainable growth, Nigeria has to prioritise economic development that produces long-term growth. Focusing on this will require a clear definition of what economic development means for Nigeria, how it can be attained, and the identification of key actors and roles in its attainment. 

Although GDP growth is essential for development, other metrics such as improved competitiveness and standards of living are also important to ensure economic development. The terms economic growth and economic development are often used interchangeably but they have quite distinct meanings; Economic growth is an increase in aggregate national output. This is usually of short-term benefit. Economic development involves the fundamental transformation of an economy, leading to long-term economic benefits. It is about positioning the economy on a higher growth trajectory while focusing on improving intrinsic development factors such as unemployment, literacy, life expectancy and poverty rates. This can be achieved by causing institutional changes, altering industrial structures, the educational and occupational characteristics of the population, and the entire social and cultural fabric of a nation. It is the product of long-term investment in generating new ideas, knowledge transfer, and infrastructure. Economic development requires quality improvements and innovation. As a result, a requirement for realising development is the presence of the innovative entrepreneur. These entrepreneurs usually focus on introducing goods with a higher value and can comfortably compete within and outside their country. 

Nigeria possesses an abundance of natural resources and comparative advantages that present a good starting point for the pursuit of sustainable economic development.

In addition to a favourable climate, Nigeria has vast amounts of natural resources and a large population. It has the 6th largest gas reserves and the 8th largest crude oil reserves in the world. It is also endowed in commercial quantities with about 44 solid mineral types and has a population of close to 200milliom. The existence of these advantages presents vast opportunities with which Nigeria can push for a trend of continuous economic development.

However, to fully utilise these advantages, we must encourage the notion of competition at both the micro and macro levels. This will see industries attach a premium to improving productivity. It will also see the Nigerian industries transition from a focus on the production of primary goods to the production of secondary goods with a higher value. Such transition is possible only through the mechanisation of the production process. This is argued to be a hallmark of industrialisation. As a result, a focus on the attainment of economic development in Nigeria is indicative of a focus on driving the process of industrialisation within the country. 

Where does the Bank of Industry come in? 

The Bank of Industry (“BOI”) is one of the public institutions tasked with the mandate of promoting industrialisation in Nigeria. The bank does this by providing both business and financial support to small, medium, and large-scale Nigerian enterprises. Such support provides enterprises with the financing needed to acquire equipment (machines) to improve the efficiency of the production process. We also provide them with business advisory services to ensure that they have the necessary capabilities and know-how needed to operate sustainably. BOI’s role in enabling industrialisation, and economic development, cannot be understated. The application of machinery enables enterprises to produce goods that are not only value-adding but can also compete locally and internationally.  

The ERGP and NIRP have placed industrialisation, entrepreneurship, and competition as being central to achieving their objectives. Due to its role as a financer of enterprises BOI is being depicted as probably the most important tool the government has to promote economic development in Nigeria. BOI will continue to strengthen collaborations for greater developmental impact and increase support for enterprises, leading to improved competition, innovation and economic development in Nigeria.

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Economic Development through the Nigerian Informal Sector: A BOI perspective

“Informal conversation is probably the oldest mechanism by which opinions on products are developed, expressed and spread” – Johann Arndt

2017 saw Nigeria record its first full year of growth after experiencing its first recession in 25 years. While this recovery brought an increase in business confidence, concerns remain as GDP growth was less than national population growth. These concerns persist even as the IMF projected 2.1% growth for 2018, which falls below the population growth forecast of 2.6%. Population growth, coupled with high underemployment and unemployment rates (a combined 40%), will result in an increase in the number of job seekers in 2018. It also translates to an increase in the number of people who look to the informal sector for economic survival. The Nigerian Informal Sector (IS) is a major contributor to the Nigerian economy, accounting for a significant portion of employment and national GDP. According to the IMF, the Nigerian informal sector accounted for ~65% of Nigeria’s 2017 GDP. 

So what is the informal sector?

The Informal Sector comprises any economic activity or source of income that is not fully regulated by the government and other public authorities. This includes enterprises that are not officially registered and do not maintain a complete set of accounts, and workers who hold jobs lacking basic social or legal protection and employment benefits. Examples of informal employment workers include street traders, subsistence farmers, small-scale manufacturers, service providers (e.g. hairdressers, private taxi drivers, and carpenters), etc. 

The sector currently accounts for over half of global employment and as much as 90% of employment in some of the poorer developing countries. Due to its flexible nature, the informal sector can easily adapt to difficulties such as the current global recession, providing some measure of support to those most in need. Despite its importance, the informal sector is often overlooked and misunderstood, with some viewing it as transient, and expected to be eventually absorbed into the formal economy. 

Today, there is no unanimous perspective on the informal economy. Some believe that the informal sector encourages fraudulent activities that result in the loss of revenue from taxes, weak unions, unfair competition, a loss of regulatory control, and disregard for health and safety standards, among others. However, a fast-growing view is that the informal economy offers significant job creation, income generation potential, and the capacity to meet the needs of poor consumers by providing cheaper and more accessible goods and services. With the significant contribution of the informal sector to the Nigerian economy, an undeniable truth is that any notion of economic development in the country is one that hugely depends on the state of affairs in the informal sector. Sustainable and inclusive economic development and job creation are unlikely to be achieved unless the potential and needs of the informal sector are adequately considered. Thus, efforts must be made to understand the dynamics of the sector and how best to tap the latent potential that lies within. 

If previous attempts at intervention were unsuccessful, what can be done to maximise the potential of the informal sector in Nigeria? 

Historically, stakeholder interventions in the informal sector have been focused on how to regulate businesses, and effectively integrate them into the formal economy. Limited emphasis has been given to identifying the drivers of growth in the various sub-sectors within, and the challenges experienced by participants. The Nigerian Informal sector players face a myriad of challenges including inadequacy of technology, education, markets, land and physical infrastructure, limited access to finance, and limited skills development. Policy interventions to support the sector must therefore be two-fold. Firstly, efforts should be made to create more formal jobs to draw workers out of the informal sector. Secondly, policies should be introduced to address identified challenges in the informal sector towards improving productivity and incomes of informal sector players

What role does the Bank of Industry play in supporting the Informal Sector for national development? 

Current BOI interventions in the informal sector include both training and financial support for market women, artisans, traders (through the FG’s “Government Economic Empowerment Programme “GEEP product”) and artisanal miners (through the Artisanal and Small-Scale Miners – “ASM Fund”). A critical look at these interventions shows BOI adopting a hybrid model that prioritises the attainment of both economic growth (GEEP) and development (ASM Fund). In the formal sector, BOI continues to provide funding and capacity building to enterprises, for business expansion,  inevitably leading to job creation.

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How MSMEs Can Re-invent Themselves to Thrive Post COVID-19

“A crisis is a terrible thing to waste”- Paul Romer

The COVID-19 pandemic has caused unprecedented disruptions for Nigerian MSMEs. This has led to a myriad of strategies and recommendations on how MSMEs can survive. As these are being implemented by MSMEs, a new normal and the probability of an economic recession have forced MSMEs to focus on thriving and not just surviving. To do this, MSMEs have to be proactive to face the ‘new normal’ by reshaping their business models to recognize and adapt to changing customer demands. To describe how MSMEs can thrive, we adopt a business model approach that describes how a business creates and delivers value propositions to its customers. Through this approach, we can assess how the pandemic affects MSME customers, value proposition, financial viability and infrastructure (channels, partnerships and key activities). 

A critical review of the Impact of COVID-19 on MSMEs in Nigeria 

A critical approach to analysing the impact of the COVID-19 crisis on MSMEs can be done on two levels. 

The first level of analysis is to focus on the immediate impact of the lockdown on MSMEs. According to research carried out by the Pan Atlantic University-Enterprise Development Centre (PAU-EDC), most MSMEs (~93%) reported a decline in income due to the lockdown, with 88% of them re-thinking their business models. The study revealed that some of the biggest challenges most MSMEs faced were associated with their sales, cash flow position, production activities and logistics.

The second level looks at the post-lockdown impact. Existing evidence from preliminary research on the impact of COVID-19 on customer demand revealed that the potential increase in job losses and reduced wages have affected people’s finances. As a result, a good number of people may have lesser income available to cater to their needs. This will result in most customers limiting their consumption to essentials (e.g. food and medicine). Thus, MSMEs that predominantly offer non-essential goods and services may face diminished patronage which could have long-term negative effects.

As regards value propositions, evidence from existing research on the impact of a crisis on value propositions showed that, due to tighter finances, a vast majority of customers become more price-conscious and look for offerings that represent the best value for money. Thus, MSMEs with brands or value offerings that are quality focused (e.g. premium brands) may struggle more than MSMEs with value-centric brands.

Concerning financial viability, evidence from a study by Deloitte showed that MSMEs with huge variable costs are more likely to be negatively affected, primarily as anticipated reduction of demand lowers revenue. In addition to this, MSMEs with a single revenue stream may face challenges as customer demand changes or reduces. 

Re-inventing MSMEs to thrive not survive during a crisis 

To thrive during a crisis, MSMEs must look to introduce strategies and pathways to mitigate the impact of changes that emerge during such a crisis. Recommendations of action plans that can be implemented to ensure this include: 

  • Identify and Retain key customer segments: MSMEs are defined by their customers. This statement is as true during good times as it is during a crisis. MSMEs must ensure that they have a steady stream of customers. Most MSMEs tend to cater to multiple customer segments. However, there is always one segment that contributes the most to revenue. MSMEs must be able to identify what that key customer segment is! It is essential to assess how this segment has been affected by the crisis and how such an effect may influence their consumption patterns. Being able to address the changing consumption/demand patterns of this particular segment represents the first step toward a thriving MSME. 
  • Amend value proposition to align with changing demands of key customer segment: As consumption patterns of the key customer segment change, the previous value propositions of most MSMEs are unsuitable to consider as competitive advantage. Even in situations where there is a slight/negligible change in demand, customers may be tempted to look elsewhere due to other MSMEs providing a more attractive value proposition. As a result, MSMEs must be willing and proactive enough to make it difficult for their key customers to switch over to other competitors. Recommended strategies include increasing value-based offerings (such as discount or bundle packages for price-conscious customer segments), introducing convenience options (such as domestic delivery options for existing customers), etc.
  • Review and Re-strategize on activities and customer channels to improve customer satisfaction: If an MSME wants to improve their customer satisfaction during this period, they can improve the efficiency of their key production activities, localise their partnerships to reduce the risk of disruption to supply chains and create new channels that enable them to reach their customers easily. Some strategies that have been proposed to achieve these include: leveraging digital channels to reach customers faster, introducing process improvements (such as reducing the number of human hand-offs in their business processes), and increasing the number of local suppliers
  • Create additional revenue streams to harness potential opportunities that may arise as a result of the crisis: While the previous points focused on key customer segments, it is equally important for MSMEs to be aware of the new opportunities that may emerge due to the crisis. As a result, MSMEs must continuously scan for new opportunities worth exploring to enable them to create a new product that can serve as an additional revenue source. 

To conclude, the concept of a new normal is frightening for all stakeholders but history has shown that every crisis brings forth opportunities. The most successful companies are the ones that recognize those opportunities and act upon them. 

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How to Address the Missing Middle of Entrepreneurship in Nigeria

“Conformity is the jailer of freedom and the enemy of growth – John F. Kennedy”

In 2019, the Nigerian Bureau of Statistics (NBS) released the third edition of its Nationwide survey of MSMEs in Nigeria. The report revealed that there are about 41.5 million enterprises in Nigeria, a 12% increase from the figure reported in the previous survey in 2013. The survey however revealed that the number of medium-sized enterprises (businesses that employ between 50 – 199 people and have assets over ₦1 billion) reduced in the years between the 2nd and 3rd editions of the survey. 

The number of medium-sized enterprises declined by 62% to 1,793 enterprises in relation to the figures reported in the previous MSME survey. According to the report, not only did most formal small enterprises fail to scale up in the last 4 years, but also many medium-sized enterprises contracted in size. Interestingly, recent research shows that micro and small enterprises are no more being considered primary drivers of employment. Medium-sized enterprises are increasingly considered the primary creators of better-paying jobs and increased productivity in a growing society. Given these current realities, this article seeks to discuss the existence of a “missing middle of medium-sized enterprises in Nigeria”, and proffers possible solutions to this developing issue.

What is the missing middle and why is it important to discuss it?

The concept of the missing middle has existed for a while. In Nigeria, it means the absence/reduction of vibrant medium-sized companies that can bring dynamic and competitive pressure to expand the number of productive and well-paying jobs in the country. Given the necessity of their products and services, having a large population of medium-sized enterprises is crucial to building an economy’s self-sufficiency and reducing the dependence on costly imports. Medium-sized enterprises also create a significant demand for products produced by small enterprises, utilising them as inputs into their production activities. Additionally, they also stimulate the development of a middle-class population who drive consumer purchases and local demand

Why is there a missing middle of enterprises in Nigeria? 

There are various reasons why the missing middle currently exists in Nigeria. One reason, which will resonate with many policymakers, has to do with the negative impact that the recent economic recession had on the Nigerian economy. The slowdown in economic activity and unemployment rates that accompanied the recession made it difficult for many medium-sized enterprises to thrive. Another identified reason relates to the constraints on doing business in Nigeria. Challenges such as the difficulty in accessing finance, an unfavourable business and regulatory environment, and infrastructural issues are typical reasons why some medium and small-sized enterprises may experience decline or lack of growth respectively.

A third reason may simply be linked to the type of entrepreneurs that are present in Nigeria. Evidence from available research shows that entrepreneurs in developing countries (such as Nigeria) usually produce and sell products or services similar to their peers with no distinct value proposition to differentiate them. This stifles competition and makes growth difficult. In developed countries, entrepreneurs place a premium on their businesses by having a unique value proposition as a way to grow the business. 

How then do we address the challenge of the missing middle in Nigeria? 

Realistic efforts to address this challenge in Nigeria must recognise the long-standing issues (e.g. infrastructure, and access to finance) that plague the Nigerian business environment. In an increasingly competitive environment, entrepreneurs must begin to place a premium on selling differentiated products and services and focus on value addition. This is important as enterprises with a unique value proposition (e.g. quality, efficiency, speed, and customer service) are better equipped to compete both locally and internationally. These types of enterprises are also less susceptible to the effect of external shocks and thus, thrive better. 

Secondly, entrepreneurs must start to develop innovative solutions not limited by traditional business models. One solution worth considering is the adoption of business model innovation (BMI) by enterprises. Introducing new business models that limit the influence of constraints faced by entrepreneurs, whilst also accentuating their ability to achieve their goals, has been argued as a practical way for enterprises to thrive in difficult environments.

Within this context, small enterprises may look to target previously underserved segments of the market. These segments can provide an opportunity for small enterprises to acquire the scale and cost advantages needed to scale up. It can also provide medium enterprises with the advantages needed to thrive. 

To address these difficulties, stakeholders (both public and private institutions) have begun to introduce initiatives that address some of the challenges faced by small and medium-sized businesses. 

From the provision of physical interventions such as industrial parks to ease some of the infrastructural challenges; to incubation centres and tech hubs where start-ups can access subject-matter expertise on technology trends, knowledge transfer, strategic innovation management, and industry-specific insights. 

Lastly, several institutions now sponsor SME business and technical skills workshops, SME trade fairs, etc. which also enable these businesses to network and market their goods and services as well as exchange ideas. It is hoped that these initiatives will ease some of these challenges and grow the missing middle-sized enterprises in the country.

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Potentials, Possibilities & Realities of AfCFTA to Nigeria: A Critical Narrative

“While I believe firmly in open markets and free trade, I also believe an open market needs a level playing field.” – Philip Hammond 

On 21st March 2018, 44 African Heads of State gathered in Kigali, Rwanda, to sign the African Continental Free Trade Agreement (AfCFTA), a landmark treaty whose primary aim is to liberalise trade across Africa. AfCFTA is the African Union’s (AU’s) first step in implementing Agenda 2063, its vision for an integrated, prosperous, and peaceful Africa. 11 countries, however, did not sign the agreement, Nigeria was one of the more conspicuous holdouts. President Buhari cited the need for further consultations before committing Nigeria to an agreement that would have significant ramifications for its economy. 

The President’s last-minute withdrawal followed vocal opposition from trade union groups and private sector organisations to creating a single market over fears of job losses following trade liberalisation. Critics of the AfCFTA note that Nigeria’s infrastructural deficits and the uncertainty that characterises the country’s business environment already hinder Nigerian manufacturers, who cannot compete on even terms with manufacturers in other countries. A continent-wide consolidated market would make Nigeria a prime candidate for dumping goods.

The AfCFTA is expected to lead to the unification of the African community; following in the steps of the European Union, the AU aims to create a single continental market for goods and services by reducing (or possibly eliminating) trade barriers like tariffs and import duties. 

As a flagship Agenda 2063 project, the AfCFTA will administer a market economy of 1.2 billion people across 55 member states, with a combined GDP of $2.5 trillion. the treaty aims to boost regional business, integration, and growth by creating a “Single Africa Air Transport Market”. This involves a common currency, and free movement of goods, services, and people between member states. Businesses currently face higher tariffs (averaging 6.1%) for exports within Africa than for exports outside the continent. To facilitate continental trade for African businesses, the treaty will progressively eliminate tariffs on 90% of goods (with the last 10% of “sensitive items” to be accommodated later), thereby minimising delays at borders and liberalising trade. Proponents of implementing the AfCFTA cite important benefits, including boosting industrial exports and SME growth, driving income generation, and promoting job creation, especially for youth.  Assessing the impact of the AfCFTA on any one nation, however, is dependent on an understanding of the economic realities of that nation. 

Consequently, any analysis of the AfCFTA’s impact on Nigeria must consider how it aids the achievement of goals defined in the country’s Economic Recovery and Growth Plan (ERGP). In theory, the shared focus of the AfCFTA and ERGP on promoting industrialisation, encouraging export orientation, and fostering economic competitiveness demonstrates harmony between both plans. However, this congruence is not seamless in practice and requires certain conditions for Nigeria to fully maximise the benefits of ratifying the AfCFTA. Nigeria has seen historical success in fuel export and primary agricultural production; However, the nation’s path to becoming a continental trading power has been hindered by gaping infrastructural deficits, an unpredictable business environment, weak institutional mechanisms, etc. This has contributed to high production costs and limited competitiveness of national exports. While implementation of the AfCFTA would lead to cheaper inputs for enterprises that would otherwise pay import duties and taxes on these inputs, it would also lead to unfettered competition from imported cheaper finished goods. This would certainly weaken local value-adding sectors.  Hence, while the implementation of the AfCFTA has its advantages, it must be tempered with careful strategies and initiatives that guarantee that Nigeria’s developmental objectives are not lost in a sea of trade receipts. 

To ensure that a positive balance of payments translates to a more competitive economy, strategies that cater to the current realities of the Nigerian environment, as well as its future possibilities, must accompany and complement AfCFTA implementation.

Important strategies that will help safeguard Nigeria’s achievement of AfCFTA objectives include the clear operationalisation of short and long-term growth and developmental targets, a short-term trade approach that allows the country to leverage its comparative advantages, and a long-term trade strategy that is dependent on the conversion of such comparative advantages into competitive advantages. By implementing these strategies alongside concerted efforts to improve institutional and business environments and infrastructure, Nigeria may succeed in levelling the playing field for local enterprises.

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Services, Productivity and Economic Transformation in Nigeria

“The globalisation of services provides alternative opportunities for developing countries to find niches beyond manufacturing where they can specialise, scale up and achieve explosive growth” – Ejaz Ghani 

We live in an era where globalisation, increasing customer sophistication, and advanced factor advantages are critical determinants to attaining global competitive advantage and economic Transformation. This makes it necessary for countries to take a critical look at their developmental plans and assess how it helps them map out a path to Economic Development. 

Economic transformation in Nigeria is placed upon the Nigerian Industrial Revolution Plan (NIRP) and the Economic Recovery and Growth Plan (ERGP), which identify the competition and the manufacturing sector as the key drivers of development in the country. These plans leveraged largely on the manufacturing-centric economic transformation framework used by China and other developed economies.

Ever since the industrial revolution, manufacturing has been the key driver of rapid economic transformation. The countries that caught up with and eventually surpassed Britain, such as Germany and the USA did so by building up their manufacturing industries. China, which has emerged as the archetype of this growth strategy since the 1970s, travelled a similar path.

In Africa, the success of the manufacturing sector in driving improved competition has been gradual. A new realisation has begun to emerge that developing countries will need to keep reviewing and updating their development model, to continuously reflect emerging economic realities and opportunities. Despite the long-established notion and emphasis on industrialisation as the main driver for structural change in the economy, recent evidence suggests the services sector’s ever-increasing role in economic transformation and development. Services currently account for more than 70% of yearly outputs in advanced economies and more than half in most developing countries.

Manufacturing today is not what it used to be.  It has become much more capital-intensive & skill-intensive, with greatly diminished potential to absorb large amounts of unskilled & semiskilled labour.  Consequently, this has affected job and productivity growth, especially in developing countries. It has also led to these countries looking elsewhere for ways to drive job growth, reduce poverty and ensure economic transformation. Recently, a case has been made for the service industry as a key driver of economic transformation in developing countries. Buoyed by the success of the industry playing a huge role in driving economic transformation in South Asian countries (e.g. India, Nepal, etc.), there is a developing argument that the adoption of a service-centric model may also be successful in Africa.

Given the current realities of the Nigerian environment, is there a role for the services sector to play in the Economic transformation narrative?

The services sector in Nigeria ─ includes areas such as ICT, Trade, Financial Services etc. ─ has been tagged as the engine for future economic growth. It is the largest sector in the economy, with its contribution to Gross Domestic Product (GDP) hovering around 50% on average. 

According to research by PwC, the sector is also purported to account for the largest proportion of employment at 57.4%. These values only tell part of the story as a huge part of the sector’s contribution to employment & GDP comes from less productive sub-sectors, such as transport and trade, rather than higher productive ones, such as financial services, real estate & professional services. The sector has been a key contributor to Nigeria’s growth but its influence on the development and transformation narrative has not been emphasized as much. However, with obvious challenges attributed to the slow pace of economic transformation in the manufacturing sector, and an increasingly growing youth population that is more inclined to service provision than goods production, an argument can be made that the reality for Nigeria’s transformation and development may rest on an increased focus on services.

Given these current realities, there is an urgent need for collective action by all stakeholders of development in Nigeria ─ Government, developmental agencies (including the Bank of Industry) and the private sector ─ to enhance key enablers for the service sector to thrive. The development of high-quality and efficient services can support productivity growth and competitiveness in other sectors, while also having important direct effects on growth, job creation and revenue generation. 

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The Fourth Industrial Revolution: What Lies Ahead for Nigeria?

“ In many cases, jobs that used to be done by people are going to be able to be done through automation. I don’t have an answer to that. That’s one of the more perplexing problems of society”- John Sculley

In our almost 60-year history, the call for Nigeria’s industrialisation has never been stronger than there is today. Indeed, Industrialisation is one of the current administration’s priorities given its acknowledged ability to bring prosperity, new jobs and better incomes for all. How can Nigeria transform from an import-led economy that also relies on imported manufactured goods, to a producer and exporter of finished goods and services? Historically, industrialisation has been relatively slow, taking centuries to evolve. 

The first industrial revolution began in the early 19th Century when the power of steam and water dramatically increased the productivity of human (physical) labour. 

The second revolution started almost 100 years later with electricity as its key driver. Mass industrial production led to productivity gains and opened the way for mass consumption. 

The third revolution followed 70 years after with information technology: the use of computing in industry and the development of PCs. 

Today, we are witnessing the rise of the Fourth Industrial Revolution.

What is the Fourth Industrial Revolution?

Also known as the digital revolution, the Fourth Industrial Revolution (4IR) combines technological and human capacities in an unprecedented way through self-learning algorithms, self-driving cars, human-machine interconnection, and big-data analytics. According to World Economic Forum (WEF), 4IR is characterised by the fusion of technologies that is blurring the lines between physical, digital and biological spheres collectively referred to as cyber-physical systems. But 4IR is more than technology, as it gradually shapes how we live and work (and even play). It also ushers in a revolution of experience. Contrary to the depiction of 4IR in popular movies such as The Terminator and I Robot, 4IR is expected to be largely positive. 

It will generate ideas never before considered and proffer solutions to problems that do not yet exist. From consumers to manufacturers to cities, 4IR advancements are more accessible and less costly than just a few years ago.

What are the Opportunities and Threats?

According to PwC, global GDP could increase by 14% in 2030 as a result of Artificial Intelligence (AI) which is an additional $15.7 trillion. The 4IR is rapidly disrupting by providing digital platforms for research, development, marketing, sales and distribution. These platforms could drive efficiency and productivity while also reducing logistics and communication costs. It is already creating new global supply chain channels. Yet, one opposing argument is that the 4IR can yield greater inequality to the economy as talent, not capital, will become the new factor of production. This will inevitably give rise to a job market that is segregated into ‘low-skill/ low-pay versus ‘high-skill/ high-pay. It will be crucial for workers to acquire new skills. Another area of concern by some is the loss of jobs as automation begins to replace the unskilled and semi-skilled workforce. The good news is that while new technology may cause the creative destruction of some jobs, it will also create many new jobs, some of which we can’t even imagine today. History shows that technology will always create more jobs than it wipes out.

How does Nigeria become 4IR-ready?

For Nigeria to fully harness the benefits of 4IR, we must boost the country’s digital development. A “Future Agenda” which promotes digital transformation, and addresses necessary policies relating to Education, Entrepreneurship, E-commerce and Infrastructure must be fully implemented. The educational curriculum must change rapidly in response to the increasing need for technical and “STEM” skills (science, technology, engineering, and mathematics). They are necessary for the jobs of tomorrow. The Nigerian entrepreneur will no longer compete just locally but against unknown entities in other parts of the world. Consequently, 4IR-compatible policies that promote entrepreneurial experimentation are essential to support the survival of technologically driven enterprises.

Opportunities for BOI in the 4IR.

Leveraging the opportunities of the 4IR will require a strategic and staged approach. This has a two-fold implication: redefining the service we provide and enhancing our staff and structure. As a DFI, BOI would lead the way in providing long-term finance to procure the equipment of the future as well as offering capacity-building programmes to equip entrepreneurs with the skills required to establish businesses that will thrive in the 4IR. Additionally, the bank would develop innovative methods of collecting and analysing data that will better understand patterns of consumer behaviour and needs to effectively inform product development and service offerings. 

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The Rising Influx Of Agritech For Smallholder Farming

“Science and Technology coupled with improved human capital have been powerful drivers of positive change in the performance and evolution of smallholder systems” – Food and Agriculture Organisation (FAO) 

Agriculture remains one of the most important economic sectors in Africa, accounting for 15% of GDP: more than $100 billion in revenue annually (McKinsey) and 52% of the continent’s workforce (Microsoft). Not only does the sector provide food for the continent’s large and growing population, but it also serves as an economic lifeline (through exports) for many African countries that are rich in agricultural resources. 

In the last decade, the African agricultural sector has evolved as traditional farming methods have been replaced by modern technology and equipment. According to a recent study by Microsoft, Africa’s agricultural sector is poised for exponential growth in the coming decade, with a projected value of US$1 trillion by 2030, driven by agritech. With a 44% year-on-year growth rate between 2016 and 2019, Africa is fast becoming a leader in the global agritech space which is currently estimated to be a $7.8 trillion industry (AgTech). 

We now live in an era where technology is disrupting old ways of doing things and driving a revolution across all sectors, including agriculture. This has created opportunities for entrepreneurs and innovators to solve problems related to food production and the preservation of natural resources. The adoption of agritech has the potential to address many structural challenges, as well as improve efficiency and profitability across the agricultural value chain.

What is Agritech and why it is the new wave of the Agricultural Revolution?

In recent years, technology has proven to be capable of addressing challenges that affect smallholder farmers (SHF) and their ability to improve farm output. With the recent wave of the Agricultural Revolution, also known as Agriculture 4.0, the deployment of technological innovations requires agripreneurs to own internet-enabled mobile devices, use smart applications and develop skills to make informed decisions. This is essential for their overall productivity and efficiency from end to end. An example of agritech in action is the use of a soil sensor to measure the current soil moisture and for a holistic view of the quality of the soil. Sensors have also been integrated into various farm irrigation systems to efficiently schedule, supply and distribute water. As a result, agritech all over the world, particularly in Sub-Saharan Africa (SSA), has recognised an opportunity to adopt and design digital solutions aimed at reducing the challenges that affect smallholder farmers such as access to feeds and fertilizers, market linkages, funding, storage facilities, information on climate changes, etc. 

Prospects and Challenges of Agritech in SSA

Agritech plays an essential role in creating solutions that improve farm output and the livelihood of SHF. One of the promising prospects is access to real-time information, intelligence on high-quality seedlings and fertilizers, planting periods, information sharing on weather trends, access to market, transportation and storage of farm produce, and end-to-end insurance services. All of these will reduce input costs, boost harvest yield as well as reduce post-harvest losses. Agritech can also help improve access to financial support by connecting farmers with agro-investors. Since SHF are mostly situated in rural areas with little or no access to adequate funding, agritech can also be used to reach out to farmers to enable them to access funding without having to go through arduous loan documentation processes. In terms of information delivery, agritech can be used to store data to improve SHF’s efficiency, profitability, and long-term viability of its agricultural operations.

Despite these benefits, SSA still faces several challenges with integration, including a lack of technological infrastructure, financial resources, education, and digital skills. This is because the majority of SHF live in underserved areas with limited internet access. Because of the high-risk perception associated with start-up businesses, agritech entrepreneurs may be unable to obtain financing, particularly from local financial institutions. As a result, investors or financial institutions would prefer to invest in the marketing and distribution aspects of the value chain rather than core farming to reduce the risk of potential investment losses. Lack of education and digital skills will slow the adoption of agritech, particularly in rural farming communities, as they will find it difficult to use digital solutions.

How Agritech has improved Smallholder Farming in Africa

Many African start-ups led by youths are pioneering innovative solutions that have significantly increased agricultural investment. These innovations provide real-time information and advisory services to SHF through radio, text messages, and interactive voice messages in local languages delivered by designated leaders in farming communities. This enables farmers to obtain granular details about their crops, soil, pest control, farming equipment, or livestock, allowing them to devise effective farming strategies. 

One of the recent technological breakthroughs in agriculture was the use of drones to assist farmers in capturing images of crops, soil, and weeds for effective farm management. In Ghana, drones are being used to apply pest control and fertilizers, assess crop fertility, plan irrigation systems as well as address plant protection practices. This reduces labour hours and direct contact with pesticides. Farmers are also being trained on how to map their farms early in the planting season and how to help them identify problem areas and target them with the appropriate amounts of fertilizers and pesticides. 

In terms of finance, crowdfunding platforms have assisted SHF in raising funds to grow their businesses, as well as providing people with the opportunity to invest in agriculture without going through the stock market. This has helped to somewhat de-risk the agricultural sector, which does not enjoy adequate access to traditional financial institutions. Besides providing finance, these crowdfunding platforms also provide farm advisory support as well as linkages with off-takers, to facilitate economies of scale along the value chain. 

These agritech solutions have the potential to become a more attractive and viable employment option for youths in the coming years. It is estimated that over 330 million new entrants will join the labour force in Africa over the next 20 years, and about 70% of them will be engaged in SHF (World Bank, 2019). 

Way Forward 

Accelerating an agritech future requires increased investment in road infrastructure, network coverage, inputs, storage facilities, irrigation infrastructure and training in literacy and digital skills which Sub-Saharan African nations must actively participate in. SHF should also be involved in the development of policies and digital innovations in the sector for inclusivity.

In conclusion, a strong collaborative effort between SHF, agritech companies, investors, and the government is critical for moving this sector from its nascent stage to maturity. It is also needed to ensure that resources are efficiently deployed to support plans in the Agricultural Transformation Agenda and to contribute to the United Nation’s effort to end poverty and hunger in Africa.