Small is Beautiful

By Asoka Ranaweera,

The writer is a managing partner of a company based in Washington DC that advises investors on structuring investments and developing projects in Sub Saharan Africa (SSA).

When it comes to attracting foreign investment most countries in Africa go for the big bang approach, which is to target large well known multinationals. 

Whether a country wants to attract an agricultural power house or a manufacturer the idea is to find a global brand name which brings with it foreign currency, jobs and managerial know how.

Let's face it, although this strategy results in occasional success the headlines associated with large investments plus the promise of a many jobs being created can be hard to ignore.

The problem with this approach is that it's laborious, time consuming and extremely competitive.

Not only are you up against your regional or continental peers you are in competition internationally. 

 
As the incoming Buhari Administration thinks about ways in which it wants to promote investments into Nigeria it might want to consider some alternatives strategies.

One option is to focus resources on attracting small and medium sized foreign companies.

In the last few years I have personally observed dozens of such companies wanting to enter the Nigeria and African markets from all around the world.

As we all know the backbone of economies are a country's small and medium size enterprises (SMEs).

These companies are at the forefront of innovation, create jobs much more rapidly and are more risk tolerant.

The last five years in particular on a global basis has seen a paradigm change in the way we communicate and interact eroding physical borders more than ever before.

This has enabled SMEs to better assess international opportunities, lower transaction costs and enter markets that were once the exclusive domain of large multinationals.

The Buhari Administration should seize this opportunity to determine ways in which it can help translate SME interest in Nigeria into actual investments and of course trade.

Here are some practical suggestions based on my own experience.

To begin with SME's are the least sought after companies in general so it's important to set up both physical and digital infrastructure to help draw and maintain their interest in Nigeria.

The Administration should work with the Nigerian private sector to create a public private partnership in part resourced by the Federal government but staffed by private employees to promote SME engagement.

This organization should work with its counterparts in Asia, Latin America, the Middle East, Europe and the U.S., to create direct linkages between SME's globally and Nigeria.

Meanwhile - the organization should create a robust digital web based outreach strategy focused on marketing opportunities to do business in Nigeria.

At the core of this strategy is to provide answers to questions many SMEs ask such as;

1   (1) What sector specific opportunities are available in Nigeria?

2   (2) Why Nigeria?

3   (3) If I am interested in working in Nigeria whom should I contact locally?

4   (4) What incentives and assistance is available locally to SMEs?

5   (5) How can I find reliable local partners relevant to an SME?

Nigeria is front and center of the 'Africa Rising' narrative that is creating a lot of interest in the country.

With the country's reliance on the volatile price of oil as a major foreign exchange earner it's time to think about many different alternatives.

Attracting foreign SME's is an option to consider and in doing so the Buhari Administration may come to realize that in fact there is truth in the saying 'Small is Beautiful'.