‘Nigerians are impressively entrepreneurial’

Indians are not only good business managers, but also are imbued with entrepreneurial skills. What is the secret of this India’s business acumen? SIAKA MOMOH, BusinessDay’s Industry Editor, spoke exclusively with Mahesh Sachdev, High Commissioner of India in Nigeria, on the issue and reports. Excerpts

How has it been doing business in Nigeria?

I think it has been a win-win situation. I will give you the trade figures so that you can see for yourself. With $17.3 million trade volume annually, between India and Nigeria, these things cannot be contrived. There has to be something for both sides for volume to be this high. And I believe we have found the correct mix wherein, Nigeria and India can look for satisfying each other, traditional and non-traditional demands.

I found that one core area of your business relations with Nigeria is in textiles as well as plastics manufacturing, but particularly textiles. Why your interest in these areas?

I would like to correct you if I can. If you look at the second column of the document with you, it gives you the main items in terms of Indian exports to Nigeria. Textile does not occur there. But that is very close, if you have top 10, textile would be there. We are talking of about $140 million textile in trade from India to Nigeria. What I can say is that these are traditional demands and textile is an evolving sector because Nigeria’s tariff regime is being liberalised. There was for a long time total ban on textile export to Nigeria, so a lot of informal trade used to take place. And informal trade by definition does not produce any statistics, so we cannot quantify how much of it was coming from India.

Indians, whether they are in Nigeria corporately or as individual, are very good in food processing. Take a look at the Dangote Group for instance, you find out that the Indians hold the reins in the company’s food business. Why this pronounced Indian expertise in food processing business?

Recently, a young entrepreneur came to me and said he wanted a manager for his own manufacturing company. He said he had tried other countries and had had to change six production managers in the last 10 years. He said he became so frustrated that he had to shut down plant. The young entrepreneur said Aliko Dangote got to know about his problem and told him to get Indians who know how to run manufacturing plants of all kinds - that they are gentle with customers and fellow employees and are cost-effective. So, what you are saying has some bearing on someone who has more experience in this matter than you and I.

We have always had very robust professionals in Nigeria. Many of the senior citizens of Nigeria, people of my age, remember being taught by Indian teachers. That was when the professional interface between Nigeria and India was established. Though many of those teachers are not there again, new professionals have taken over. It may be an IT person, an accountant, a medical doctor, he may be a professional engineer, and these people are everywhere – in almost all parts of Nigeria including the food processing business that you mentioned. And they are creating value, partly because they are simply professionals. They are not engaged in other activities, they do not want to become entrepreneurs. This is so also because training in India is very vigourous.

How can Nigeria leverage on your IT expertise?

It is a fascinating area where you can easily deal with the problem of infrastructure defects and inadequacies. Make no mistakes, we may be exporting $75 billion worth of IT products every year, but Indian roads still have pot-holes, power supply is not perfect, because of a number of factors. First of all, IT does not involve infrastructure in a way that manufacturing involves. For manufacturing, you need raw materials, you need finished products to be exported from the factories, and you need to rely on power and other inputs. IT is software – it is a knowledge intensive part of the economy. You just work it on your PC, send it through satellite dish. So, it is to a great deal immune to infrastructure inadequacies. And this is where the beauty of IT lies.

You need three ingredients to launch an IT revolution: You need large population of English speaking people, you need software skill - training, and you need low wages. Nigeria has reasonable good combination of all the three factors. The youth population is large; the wages at base level of IT are even lower than in India; and English language is widely spoken. So Nigeria does have basic ingredients to launch IT revolution. I think the critical mass is slowly coming around, and you should be able to do well during this or next decade in the IT sector.

I think as wages in India rise, India itself might have to outsource some work at base level. And Nigeria stands a good chance of capturing it, provided your productivity versus cost matrix is favourable. And to have that kind of winning combination, you require some labour liberalisation, and that is where the requirement is for people to be able to, first of all, leverage on the productivity and then work for greater existence of clients, slow upward match as we have done in the past 20 years to reach a level where wages are high and you move up market.

What of the area of education – Nigerians going to Indian schools or going for some kind of apprenticeship training?

Much of that is happening. India trainers are training Nigerians in Nigeria. I am sure you have heard of NIIT and APtech. NIIT has 35 franchises all over Nigeria, and these are all Nigerian-owned. And through this franchising, every year, NIIT trains 19,000 Nigerians – boys and girls in IT and most of them are able to find jobs easily because the Nigerian economy is in short supply of IT-enabled workers. So, having a NIIT diploma is almost a guarantee to a good job.

How can Nigeria share from India’s expertise in entrepreneurship?

Nigerians are impressively entrepreneurial in nature. You are are absolutely right, there is innate creativity in Nigerians. I think what needs to be put together is to create an enabling atmosphere wherein it is easy for somebody to acquire such skills, not only the skills to run a machine, but how to run a small enterprise economically, technically, etc. Then you would need incubation. You cannot just train someone and leave him adrift. He requires hand-holding through the initial period when he cuts his teeth as it were, in the business and starts making profit, gains confidence and diversifies. I think you have a traditional system in some parts of Nigeria, wherein such type of entrepreneurs mentor the next generation of their own extended tribe. The Igbos have this kind of thing. A lot has to be said in that direction. But I think it has to be put in the most scientific form.

We send about 200 Nigerian professionals every year to Government of India Fellowship to train in India. Many of them are trained on entrepreneurship-related issues, how to manage small and medium enterprises, and how to help government functionaries to create such enabling atmosphere for small and medium business to thrive. You should also have an enabling import-export reach. If your people are struggling to make the small enterprise to produce something for the local market, and similar goods are being smuggled, then obviously, the small and medium enterprises will not have any chance of success because global branding, advertising, etc would chip in. So hand-holding has to go beyond the immediate concern of the company giving its capital. It has to also create a protective umbrella around such enterprise.

What challenges are Indian-owned companies facing in Nigeria other than the challenge of imported items?

I am not saying that protectionism is necessarily good for domestic industry. You have banned textile imports before; did it protect Nigerian textile industry? You may do other things in the agriculture sector, by banning something, the domestic production does not automatically rise. What needs to be done is to create a condition where informal or non-official market supply becomes non-remunerative. When you ban something, smugglers have a field day. But if you create a duty structure that is not prohibitive, it doesn’t put premium on smuggling, but it is just below the bar.

I am not recommending total protectionism or total liberalisation. It should be a dynamic method. I am not being prescriptive. Nigeria has all the wisdom it needs to decide what it is in Nigeria’s interest. I am very impressed by many of your senior decision makers. And we are always ready to collaborate.