The frail baby reed in contrary winds: reflections on challenges facing SMEs in sub-Saharan Africa
(Being a talk delivered at the Leicester Castle Business School, De Montfort University -Center for Enterprise & Innovation, at the International Symposium on Entrepreneurial Resilience on 26th June 2018)
“Ninu ofi, ninu oola, l’omo pandoro n’dagba” — Yoruba proverb
(Frail baby reeds find extraordinary strength to grow and thrive as a consequence of being in the crosshairs of contrary winds)
Contemporary Africa is grappling with a lot of challenges. On the one hand, it’s coming to terms with the internal dynamics of identity and development. On the other, the continent is at odds to define its interests and place in the global system of things. This collision of systems, is producing oceans of tensions which individuals, governments and businesses must become more comfortable and resilient at navigating.
However, the idea of resilience has universal resonance beyond sub-Saharan African contexts. As Godfrey (1997) once said, “the natural state of things is chaos. This is the principle of entropy: Any process, no matter how orderly and well-designed, will degenerate to chaos unless we keep adding energy.”
In a world changing at such a rapid rate, the ability to develop an adaptive mind-set cannot be overemphasised. Resilient Individuals and organisations are, in effect, those who are able to respond to uncertainties and re-invent themselves as epochs come and go and uncertainties become the norm.
Resilience as an idea, has been understood as the ability to bend but not break, rebound from setbacks or even thrive in the face of adversity or life’s differing experiences. Whilst this is the general idea around the concept, it is important to note that it is a complex topic which could be look at from many diverse prisms.
As a psychological discourse, the American Psychological Association (APA) defines resilience as “the process of adapting well in the face of adversity, trauma, tragedy, threats or even significant sources of stress”.
Now, this could be at the individual, or the group level. Individuals might suddenly be thrown into the cycle of highs and lows of life within a relatively short period. For example, an individual might enjoy swift career rise which is then stunted or cut short by an illness, misfortune or redundancy, which could necessitate new realities and the need adaptations.
At the collective level, this might mean decisions affecting a whole nation. It might be the break out of hostilities or war with neighbours, economic downturn, natural disaster or geo-political events like Brexit. Whatever the circumstance, there would be difficult decisions to be made, plans realigned and adjustments which will demand a need to adapt.
As a neuroscience discourse, the response of individuals to extreme stress differs. Some are able to cope and withstand the pressures. Some fall apart. That difference, has been explained as ‘underlying neurobiological mechanisms’ relating to how our brains are wired by the genetic make up of each individual.
As an ecological discourse, resilience is the ability of the ecosystem to respond to disturbances to its normal rhythms by limiting damage and recovering quickly. And where the damage is overwhelming, to adapt to the new realities without losing its self-organising processes and structures.
It’s important to know therefore, that resilience can be viewed as a trait, a process or an outcome. As such, we’re able to see the big picture of the subject as a complex host of biological, psychological, social and cultural factors that interact with one another to determine how we perceive and respond to stressful experiences.
At this point, it would be pertinent to dwell a bit on the idea of the ecosystem and flesh out the idea that the interactions of different systems, at many differing intersections of engagement and overlap, produce tensions from which stresses arise, warranting the need for developing latent resilient capabilities.
From a simple definition in the 1930s by British botanists (Roy Harper and Sir Arthur Tansley) to describe units of diverse spatial scales in which organisms and the physical environment interact, the ecosystem refers to the patterns of interdependencies between the biotic (community of living organisms like plants and animals) and the abiotic (the non-living components of their environment — things like air, water and mineral soil).
The interactions between these biotic and abiotic systems are attained through the processes of predation, parasitism, competition and symbiosis. The species of the ecosystem, including bacteria, fungi, plants and animals, define the unique nature of interaction with the environment, which in turn facilitate the nutrient cycles and energy flows within that ecosystem.
Therefore, the health of any ecosystem is measured by the delicate balance which keeps the natural processes running and building up enough reserves of strength to adapt to natural and man-made stresses.
Maintaining this ‘balance’ is what I personally think resilience is all about — the capacity of a dynamic system to adapt successfully to challenges creatively.
Business as a network of ecosystems
The natural ecosystem, as a metaphor for the business networks and the increasingly connected world of commerce was made by business strategist James Moore when he wrote in a 1993 Harvard Business Review article:
Successful businesses are those that evolve rapidly and effectively. Yet innovative businesses can’t evolve in a vacuum. They must attract resources of all sorts, drawing in capital, partners, suppliers, and customers to create cooperative networks. . . . I suggest that a company be viewed not as a member of a single industry but as part of a business ecosystem that crosses a variety of industries. In a business ecosystem, companies co-evolve capabilities around a new innovation: They work cooperatively and competitively to support new products, satisfy customer needs, and eventually incorporate the next round of innovations.
Moore’s idea, proposed at a time when mobile phones were a novelty and the mesmerising technological advances we now have was at the nascent stage, found acceptance in the tech hubs in Silicon Valley and has presented us with the opportunity to see it in action.
For instance, we witnessed the rise of Apple Inc as a business which conceived it’s products and services as ecosystems which provided the customers with end-to-end experience; or Facebook deliberately investing massively in building its ‘developer ecosystem’.
Over the decades, as the global space shrunk as a result of digital technologies, connectivity and globalisation, the thinking among the players in the economy has shifted away from organisation of businesses around large, vertically integrated and ‘self-contained’ systems.
There is now an understanding that the opportunities of tomorrow reside in the spheres of horizontally dense and richer networks of connection, collaboration and interdependence as could be seen in the natural ecologies.
With this benefit of hindsight, we begin to see why self-absorbed organisations failed. Nokia would be a poster-corporation for the category. The CEO, Stephen Elop at the press conference to announce its sale to Microsoft mentioned that “We didn’t do anything wrong, but somehow, we lost”.
Of course, there were many things which was done wrong; thinking the smart phone was for the rich and tech savvy, concentrating on insular ‘self-contained’ operations when open innovation with developers as partners was the way forward, and failing to link the ‘smart’ mobile phone as the future platform of entertainment among others, point to how and why they did not imagine themselves as part of an ecosystem and were left behind.
In effect, the business ecosystem consists of a network of interlinked entities that dynamically interact with each other through competition and cooperation to grow and survive. An ecosystem will include suppliers, distributors, consumers, government, processes, products and competitors. When an ecosystem thrives, it means that the participants have developed patterns of behaviour that streamline the flow of ideas, talent and capital throughout that symbiotic space.
Increasingly, ‘streamlining’ these flows are becoming more complex and unpredictable. On the one hand, this has to do with the dizzying pace of technological advance which in turn changes the market dynamics and regulations, (GDPR is one example).
We have the naturally occurring stresses or ways by which the ecosystem stress-test itself. By choosing interventions which supresses these stresses, we sometimes change the structure of such ecosystems to our detriment or good, depending on our understanding of it. Wildfires for example, are a part of the natural management technique of the forest ecology. When we intervene without adequate knowledge, we make a bad case get worse. And when an intervention is done well, helps to bring about a balance which keeps that ecosystem ticking.
Timothy Ingalsbee, co-director of the Association for Fire Ecology in the US puts it better. “Livestock grazing, commercial logging, and systematic fire suppression has converted some frequent, low-severity fire regimes, such as the ponderosa pines in the interior west, into infrequent, high-severity fire regimes,”.
These natural stressor metaphors have been explained as it relates to economics, business management and innovation by scholars like Nassin Taleb (Antifragility: Things That Gain from Disorder) and Joseph Schumpeter (Capitalism, Socialism and Democracy).
Schumpeter of course, borrowed from Karl Marx’s idea in the Communist Manifesto. Marx viewed wars and economic crises as tools for destroying production, thereby enabling capitalism to create new streams and rounds of wealth for the owners. Therefore, he submitted that although capitalism could reinvent itself periodically, nevertheless it had a fatal flaw — a tendency to self-destruct ultimately.
Where Schumpeter differed, and in fact took Marx’s idea a notch forward, was that he envisioned the disruptions or destruction of the established economic players as an infinite way for a dynamic system to bring on new ideas and players in the place of the old ones.
In his words Schumpeter described this thought as ‘Gale of Creative Destruction’. Explained thus:
Capitalism […] is by nature a form or method of economic change and not only never is but never can be stationary. […] The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.
This means Schumpeter understood the business and economic ecosystem as an organic and dynamic process where equilibrium is not the end goal of the market process, but rather a scenario of many fluctuating equilibria, constantly remodelled or even supplanted by new dynamic innovation, collaboration and competition.
As in the natural ecological systems, there are always losers and winners in a process of renewal. Historically we have had many corresponding examples. The Ford ‘Assembly Line’ not only revolutionised the automobile and inventory systems, it forced many labourers out of work and displaced older market systems.
The Internet ‘dot.com’ rise in the 1990s redefined the social and economic order in our organisations and societies, forcing many workers who aren’t able to adapt out.
We are currently witnessing the strongest and most powerful ‘gale of creative destruction’ with the rise of AI, connected systems and robotics. These stressors are necessary if the ecosystem is to evolve from the old order to the new.
Taleb on his part, had a unique take on the subject of systems and resilience. He detailed this in the prologue of his book:
Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.
I said that Taleb’s take is ‘unique’ because it explains what we know about resilience in an unexpected way. For instance, he lets us know that ‘fragile’ things break under stress but to be ‘antifragile’ means to profit from it. For example, when a system is robust we tend to think it’s antifragile. But that could not be further from the truth. We heard of corporations which were ‘too big to fail’. It’s in fact that lack of routine stress tests or elimination of stressors which render them fragile. The bank failures, leading to the global economic crash of 2008 proved the assertion from Taleb.
We can also see Taleb’s idea at work in the way construction of buildings are made to withstand earthquakes in Japan. The buildings used to be made robust and solid. But they would break and shatter in earthquakes. When they started building stress points and flexible capabilities into the designs, the buildings were able to rock ‘back and forth’ in tandem with the elements and therefore able to withstand more pressure. That seeming ‘fragility’ in parts of the design is akin to the analogy of the reed plant mentioned in the prologue to this article and the tensile quality which allows it to lean in and out of pressures with remarkable success.
Again, for a system to be antifragile, most parts of it must be fragile — meaning that mistakes made at the decentralised levels are easily corrected before it puts whole system at the risk of collapse.
We understand from epidemiological studies, that large scale disease infestations are actually good for the human evolutionary development. We have been able to develop resilience in the areas of genetics, modern sanitation as well as lessons in future disease management we might not have had if the disaster never happened.
Professor Sharon Dewitte, a biological anthropologist highlighted the benefits of the Bubonic plague, which wiped out around 25 million people in Europe during the Middle Ages as:
The Black Death might serve as a prime example of Darwinian natural selection. The surviving population [may have] contained a higher proportion of people who had genetic variants that made them less susceptible.
…the surviving population might have had a smaller pool of genes than existed before the Black Death, leading to genetic drift: a radical change in the gene pool among a small population.
The submission of Dewitte seemed to confirm Taleb’s position that antifragile systems build extra capacities when put under stress.
When we go to the gym and work out with really heavy weights, we feel the burn, we push on and put more hours in to get to our target — that’s when growth happens. The fragile parts, the tissues in your muscles are broken down. This process is reported to the body as a system stress. In order to ensure future defence, the body now overcompensates for this shock, by building extra capacity to handle even bigger shocks better.
This is how we develop the capability and build capacity to become resilient, a process which is a continuum in itself.
Sub-Saharan Africa business ecosystems
When we therefore, view the economic and social configurations in Africa as an ecosystem, it becomes easier to piece together the puzzle. The current situation presents bittersweet realities of opportunities lost and some inspirational stories of resilience.
For the SMEs in Nigeria and in the UK Diaspora where I have some experience, we are increasingly beginning to find out that in the use of the PESTLE analysis — a framework or tool used by marketing professionals to analyse and monitor the macro-environmental (external marketing environment) factors that have an impact on an organisation — the Political part of it has become a negative stressor that it would normally be.
And this particularly means that the ‘stressors’ which are meant to be a creative turbulence, has become a choking cord holding businesses in the grip of death. In medical terms, it means the bad type of stress which produces toxicity instead of the good type which keeps us alert and prompting a change of course for the better. And this is the major difference between the challenges facing businesses in Africa/Nigeria and the other nations/continents of the world.
Perhaps a better way of making the point is this. Turbulence, or stressors could be argued to be present at the beginning of the Big Bang. So, you could say it required a combination of elements to induce the greatest ‘turbulence’ of all time. The result was an initial shock, and then a Schumpeterian ‘gale of creative destruction’ from which we have the galaxies and the beautiful earth in which we live.
But imagine if we keep having a Big Bang every now and then instead of the evolutionary process? That’s the picture of the operating environment in most parts of Africa versus other developing and developed climes.
Whilst you might have uncertainty with the economic crash, Brexit and mass immigration in the UK, the systems hold together. The concept in interdependence fostered through competition, collaboration and sympathetic regulation means that the delicate balance required is achieved. Unless except in radical disruptive situations like the economic crash of 2008 — something no government could really prevent. An SME in the UK will have access to lines of credit, quality and accessible infrastructure (broadband, transportation, storage, industrial parks, information) and planned budgetary/fiscal discipline.
The stable democratic process in the UK adds in no small way to the antifragility/resilience of the economic ecosystem. The election rituals starring the two dominant parties, the strong voice of the smaller ones, all represents stressors to the ecosystem. These distributed stresses, as can be seen in a decentralised system of management, but towards a common goal actually does much to help the system build a reserve of strength to use when there is a pressing need to adapt.
When you contrast this to the realities of life in the Nigerian socio-economic space, the entrepreneur is faced with a barrage of intractable problems which should have been sorted aeons ago.
One of the problems is systemic. ‘Balance’ and ‘Interdependence’ are the key words when measuring the viability or health of any ecosystem. In the Nigerian state — and I guess in other African countries — the ecosystem is populated with predators at the expense of the hapless preys. We all know this type of configuration breeds imbalance (anti-competition) which ultimately becomes the death of such ecosystems.
What I mean by this is that the big industry players are given a wide berth at controlling the economic space, an unfair advantage which comes at the detriment of the little stressors (new business ideas & little players) which could shake up the system and provide new creative dimensions for growth.
Unlike in the UK where the government took deliberate steps to engender the rise of new small players in the energy industry away from the Big Six behemoths, we have a situation where the Nigerian energy space is dominated by non-performers which are also protected from punishment as they collect fees from the customers regardless of the level of service.
The result of that antifragility idea the UK government introduced in the energy sector has sparked a whole new scale of competition and collaboration which has led to co-creation among the players in the ecosystem. This has opened up experimentation with new technologies adoption and new value-addition proposition opportunities.
The Nigerian DISCOS (Name for the energy oligopolies) are still grappling with the basics, therefore the dominant thinking within those organisations will tend towards fire-fighting instead of strategic management and foresight. The steps that the UK players have taken to include AI, visualisation, integrated home security systems, green technologies and the fundamental question about addressing the eco-friendly aspects of their businesses will not even enter the conversation in the foreseeable future of the Nigerian players. That’s just one disadvantage of encouraging oligopolies instead of a diverse and multi-player environment — players aren’t stressed into striving for excellence and being rewarded as a result. They are already rewarded for failure and therefore see no reason to pursue innovation as a matter of competitive strategy.
I will now attempt to categorise a few of these challenges common in the sub-Saharan Africa and relate to how they might limit the ability to build reserves of strength with which to adapt to even intensifying local and global stressors.
Centralisation or over-centralisation — Centralised systems, according to Taleb, are robust systems and do not have the ability to be antifragile. Most African political and economic systems are designed around central control. What this means is that risk, failure and innovation which should be evenly spread into all the component parts of the system are nullified. So, when the centralised system experiences adverse risk outcomes, or outright failure, the whole system takes the hit and would reel collectively from the repercussions.
For instance, the local councils, critical to the functioning of the Small and Medium Scale enterprises in Nigeria cannot help entrepreneurs with basic infrastructural requirements to provide the base for little players to emerge and flourish.
That disconnect between the government arms lead to more obstacles for those who brave the odds.
Multiple taxation — The lack of concerted synergy between government levels and the lack of automated systems for record keeping means that new businesses are faced with an even steeper ascent into business viability. They are slapped with all manners of taxes they never build enough cash reserves to think about innovation and continue to struggle to make ends meet.
On the flip side of this are a number of the big economic players who do not pay their fair share of taxes. As such, when the interest of the political establishment is to protect the big players at the expense of a diverse set of players which could keep it dynamic, an unbalanced ecosystem is privileged and inexorably lead a weak ecosystem.
Budgetary Indiscipline — In the last ten years I cannot remember when the budget was signed and put into operation before the first month of the year. In fact, this year, 2018, the Nigerian budget was signed into law this only last week around the sixteenth day of the sixth month of the year. Now I don’t care if you’re the Einstein of economics, that is going to present you with a long list of major challenges.
Especially in a centralised economy where spending projections by businesses and individuals fashioned in relation to the expected budgetary allocation, it’s a Herculean task for small businesses to plan. They simply have no capacity to function beyond existing. Add the fact that the budget performance is directly linked to the scale of corruption within the system — a situation where government operatives corner the juicy business opportunities by proxy companies — you have a double whammy for any planner.
Critical Infrastructural Development Deficit — This is probably the most daunting of all the challenges in the sub-Saharan political-economic system. One could argue that the transportation infrastructure is improving, but it’s still a far cry from what is required to make entry into business easier. The south of Nigeria is bordered by a stretch of the Atlantic, rich in natural resources. Unlike Scotland where fishing plays a major role in the economy and provides a platform for building ancillary businesses, the Bayelsa, Rivers, Cross River and Akwa Ibom states cannot take advantage of that abundant marine resources to provide a base for entrepreneurs who will can bring their products to the major markets within 48 hours as a result of lack of transportation infrastructure.
Access to cheap and effective Broadband has been declared a human rights requirement by the United Nations. This is so because the economy of the future is digital. Already the term ‘death of the shopping mall’ is making the rounds in the US and the UK. The High Street shops are struggling under the pressure of online shopping. Most people will not make a purchase if it took too long to close a transaction. The snail-speed pace of broadband infrastructure development in Nigeria remains a barrier preventing many entrepreneurs from making inroads into areas of opportunity in the digital economy. The other option open to them is dependence on the expensive brick-and-mortar operations with all the associated bills.
Thankfully the platform sites — social media — are providing outlets for connecting with customers and facilitating business. But with cheap, affordable and reliable broadband available, most SME’s in Nigeria will have a new oomph for the next level.
Where people could cope with the expensive and slow broadband, there is also the issue of base offline infrastructure on which digital business runs. All online purchases of physical goods are delivered by the good old-fashioned logistics in the shape of post and delivery services.
One would expect that an economically poor country would invest heavily in these types of infrastructure to speed up business development. NIPOST (Nigerian Postal Service), back when it was even well funded took days to deliver post. That’s because lacks the adequate number of offices and strategic partnerships to deliver an efficient service. And most of the times, the poor house numbering system (post code) lets it down badly. In a world where speed and timeliness are the core requirements for digital business, most entrepreneurs who could use their spare rooms as their offices and pop their goods in the post to close a sale find that simple act, taken for granted in other countries, rocket science still.
Common Language and Skillsets — A lot of the times, the quality of staffing in the civil service constitute a barrier to building a diverse, symbiotic and resilient diversity in their operations. The public investiture of powers in government operatives is used arbitrarily in often self-destructive ways. One example is the ban on motorcyclists in Lagos without an understanding of the role they played and the unintended consequences of such ban on the city ecosystem.
A lot of the unemployed youths and young adults turn to the motorcycle-taxi business to survive. That’s how they paid school fees for their kids and taxes to the government.
As in every major global megacity, motorcycles taxis are a high-risk job in which nasty accidents happen and operators known to have a high reputation for nuisance value. It takes a delicate balancing act to integrate them into an ecosystem which is circular. Outright bans on their operations on the excuse that they constitute nuisance shows a lack of grasp of the long-tail nature of the issues about crime, employment, security and the happiness of citizens by government.
Jakarta in Indonesia had the same problem. What the government officials did was to engage with innovation managers who used design thinking process, systems thinking to map the economic and social roles within the ecosystem taxi-bikes might fulfil, especially to help grow the SME business within the cities.
What they came up with was a Uber-like motorcycle taxi model. The operators were restricted to defined local operation areas for control and security reasons. This way, customers are able to call for motorcycle transport on demand, and small businesses can have hot food and goods delivered to people who needed it within minutes. The tax base of the government also went up, just by designing a simple value-based model which works.
In contrast, the Lagos government’s narrow view of the problem only needed, in their own minds, a ban. In doing that, they limited the opportunity to think creatively by integrating the motorcycle taxis into the city ecosystem — insurance, logistics, transport, traffic management and a new tax base.
The quality of human talent a government has and engage with actually determines the reserve of institutional intelligence it has. Planning could become easier if the government uses tools like strategic foresight, scenario-planning, design thinking and trends forecast to design and evaluate present and future actions, making them open for collaboration with other stakeholders.
Open access to information simply means inviting the people to co-design the future of their own living space. There’s so much opacity around the strategic planning activities of governments in Nigeria and Africa for people to tap into the opportunities and stress test current plans.
Different kind of stressors (Megatrends Issues)
There is the layer of challenges presented in the local political and economic spaces. And there are those imposed unto the system from the outside. These have been classed as –
· Rapid Urbanisation
· Climate Change & Resource Scarcity
· Shift in Global Economic Power
· Demographic and Social Change
· Technological Breakthroughs
PWC (PriceWaterhouseCoopers) describes this reality as:
Today, more than half the world’s population live in urban areas and almost all of the new growth will take place in lesser known medium-sized cities of developing countries.
How cities evolve will be determined by the collective actions of city governments, people and businesses. What is critical, is to focus interventions not just on the ‘smart city’, but on the smart town and the smart village, enabling an interdependent ecosystem that counters rapid organisation to the mega city.
These present big challenges as well as radically fantastic opportunities for building resilient national and local business ecosystems. But this will require that Nigerian cities and governments design the processes of control, talent acquisition and the unleashing of the collective intelligence by a diverse group of stakeholders (healthy biodiversity) by building sustainable social and economic platforms which privilege co-sharing of space and knowledge and technological enhancement.
Guinness Nigeria, as an example of a big player on the Nigerian economic scene, for the first time in 30 years, in 2017 declared a 2billion Naira loss. It was hit by a troika of factors — Foreign exchange illiquidity, currency weakness and elevated domestic grain prices.
The FX situation was a result of many factors. The political management of a mono-resource and a bizarrely ambiguous monetary policy which made industries heavily dependent on it to struggle when external pressures pile on.
The high grain prices were down in part to climate change and the food security situation linked to the decimation of the Middle Belt area by the Fulani Herdsmen terrorists. Information we can access now reveal that Guinness Nigeria had to bring in a seasoned Agricultural Economist with hands-on farm management experience to the management in order to look at strategic partnerships and direct production involvement to spread its risks.
So we can infer that if the players at the top of the Nigerian economic food chain have to engage in strategic somersaults to cope with the uncertainties and risks in the system, being a small player is certainly a game of existential survival.
It’s not all gloom and doom though. Although it’s good to highlight what the operating environment should and could look like, there are many businesses in Nigeria and sub-Saharan Africa thriving by digging deep into cultural reserves and showing resilient capabilities like the reed plant.
They might not be able to count on the established ways and means available to entrepreneurs in the West, but they are adapting, even if extremely difficult, to the unique circumstances within that ecosystem. For example, I know a Fashion business which has realised that making and selling apparels alone will not grow the brand sufficiently. So, the knowledge aspect of the proprietor has been developed to teach classes to clients who want that knowledge. And this is being delivered via limited physical classes for professional students and virtual platforms for casual learners. She’s been able to extend the scope of the business by turning her knowledge into a product on its own.
Resilience comes from failure and risk taking as well. I have consulted for a few agro-food business here in the UK. Some of them failed at the business which is laden with stringent regulatory labyrinths, requires financial intelligence nous and fairly complex logistic challenges. We are trying to convince some of them that their failure is a learning process which could be used to provide consultancies for entrepreneurs from Nigeria who might be interested in breaking into the UK Diaspora food market. We project that as the farming revolution matures in Nigeria in the next few years, there would be a need for end-to-end consultancy service opportunities for those with the right experience.
In have also witnessed many home run businesses tapping into the power of faith groups and ethnic associations, to grow their businesses, combining it with part-time work. I know people who invest in credible network marketing businesses like AVON and are punching above their weight.
Social Capital is Key
The sub-Saharan Africa economic ecosystem is rich in natural resources which is underutilised or poorly managed, but the most underestimated factor not used is the social capital. This is the social relationship that allows individuals to claim access to resources possessed by their community associates.
The key to unlocking the power of social capital is to build the quality and quantity of the resources available within the community.
There have been studies which showed the Gujarati ethnic tribe of India building great prosperity across different nations by developing an ecosystem of communal resources and support systems which allow them to bypass the conventional international business requirements like bank loans by setting up alternative credit sources.
We might need to learn a thing or two from the examples of groups which have used their common heritage to empower themselves and link these pockets of influence across different global geographical areas.
For instance, we know from research that over 85% of the food Africans consume in the UK and the US are funnelled via Asian entrepreneurs. That isn’t a hard thing to figure out. The generations of Asian families who came to Africa in the colonial period established businesses and when they moved to the West, built a network of other businesses they have now connected across continents.
Asian companies operating out of Africa would ship goods into Africa and use the same logistic channels to bring in food and raw materials out of Africa into Europe, serving what is essentially the African market. And they have also built the financial and talent reserve needed for long term survival.
This type of organisation is needed among Nigerians and Africans by extension.
One of my clients who is an Antwerp trained gemmologist wanted to diversify her business into Nigeria. She saw that the raw stones and gems from Nigeria could actually be cut and refined to accepted global standards in Nigeria, adding value to it to benefit the Nigerian and the global markets. Her plan was to help build a network of stakeholders — cutters, polishers, negotiators and knowledgeable people the big-ticket miners could employ.
She also wanted to help develop an assay office. Having the finished articles graded, stamped and documented would not only create standardisation, it would create jobs and add immediate present and future value to the products made from Nigerian precious stones.
We got the relevant developmental documents from the Ministry of Mines and submitted presentations as asked. Ultimately my client didn’t get to see the Minister and the opportunity was lost. That was an opportunity for the government to work with the stakeholders to engineer a better ecosystem in which the big-ticket miners who just ship the raw gems out of the country would be paired with an army of downstream technical workers who can process those gems right in the country.
I do believe, personally that it has to do with the mindset of the people in government. They are comfortable with issuing the big tickets to miners who take the raw materials out of the country. They are not concerned about the ecosystem of players and stakeholders who could become valuable to the value chain. Even when mining stops or we run out of natural resource, the skills acquired could become the new exportable services to other countries.
We need to develop open access to information and government operations. Of course, that would be a stressor. But these will be stressors which build antifragility capabilities to make us stronger.
Adaptive mindsets come out of that. Adapting to different situational demands mean that we embrace experimentation. We will fail or face uncertainties but we do know that experimentation breeds innovation.
I will conclude this by sharing my own definition of resilience. I’d say it’s building reserves of strength to be used creatively in adapting to new realities. Like the reed plant, we must develop the agility to lean in and out of complexities and use the contrary winds to build ambidexterity in our mindset and actions.
See Godfrey, B. (1997) Quality Management. Available
at: http://www.qualitydigest.com/june97/html/qmanage.html (Accessed: 28 January 2016).
James F. Moore, “Predators and prey: A new ecology of competition,” Harvard Business Review, May 1993, https://hbr.org/1993/05/predators-and-prey-a-new-ecology-of-competition/ar/1, accessed March 17, 2015.
Michael deAgonia, Preston Gralla, and JR Raphael, “Battle of the media ecosystems: Amazon, Apple, Google and Microsoft,” ComputerWorld, August 2, 2013, http://www.computerworld.com/article/2483616/personal-technology/battle-of-the-media-ecosystems--amazon--apple--google-and-microsoft.html, accessed March 17, 2015; Business ecosystems come of age is an independent publication and has not been authorized, sponsored, or otherwise approved by Apple Inc.
Joseph Schumpeter, ‘Capitalism, Socialism and Democracy‘ (1942)