Looking at the way the world works, I find it very absurd to hear the whole world chanting the mantra 'small business is what grows the economy'.
When you really look at the way things work everywhere in the world, nothing could be further from the truth. Sure there is small business but . . . which growth are they providing?

In fact, it is only big corporations that can unlock big markets. Like the US, like China, like even Nigeria. Small businesses can never solve infrastructure problems, can never grow without injection of massive capital. And we are seeing it every day in Naija. Retail, telecoms, banking, energy. Even nature's resources can never be unlocked without massive capital. Without big money, how will you drill for oil? How will you refine it, and produce all the by-products for human consumption?

Ironically, the US is the biggest perpetrator of this small-business lie. Americans preach that mantra to all and sundry, yet they spent billions bailing out their big corporations when they failed. Which shows they're not stupid.

I think we need to have mega-corporations in Nigeria invest in farming, manufacturing, energy, infrastructure, etc. For me, that is the only way the economy can be stimulated. That's the only way wealth can trickle down.

Comments anyone?

No comments?
Maybe I need to start a thread on MLM or frog farming

I think the big corporations hold the industries but the small businesses and contractors creates the middle class which is usually a sign of economic boom.


Nigerian economy needs Shell/Agip + say GE or EDF to power this country. The energy will drive businesses like welding, small scale manufacturing (shoes, note books, textile, pens, processed food) etc. These smaller businesses wil absorb the graduates because Shell/Agip/GE can only employ a handful.

AjanleKoko: Looking at the way the world works, I find it very absurd to hear the whole world chanting the mantra 'small business is what grows the economy'.
When you really look at the way things work everywhere in the world, nothing could be further from the truth. Sure there is small business but . . . which growth are they providing?

In fact, it is only big corporations that can unlock big markets. Like the US, like China, like even Nigeria. Small businesses can never solve infrastructure problems, can never grow without injection of massive capital. And we are seeing it every day in Naija. Retail, telecoms, banking, energy. Even nature's resources can never be unlocked without massive capital. Without big money, how will you drill for oil? How will you refine it, and produce all the by-products for human consumption?

Ironically, the US is the biggest perpetrator of this small-business lie. Americans preach that mantra to all and sundry, yet they spent billions bailing out their big corporations when they failed. Which shows they're not stupid.

I think we need to have mega-corporations in Nigeria invest in farming, manufacturing, energy, infrastructure, etc. For me, that is the only way the economy can be stimulated. That's the only way wealth can trickle down. Comments anyone?

Well, it’s not exactly that clear cut!

How do you define a small business? In the US, a small business in manufacturing is a business with less than 500 employees and less than $7 million in annual receipts. Small businesses account for half of the US GDP and more than half of the employment. The top job providers are companies with less than 10 employees.

The US government recognizes the fact that small businesses provide the muscle needed to drive the economy, which is why they preach the same.

However, just like you said, you need big businesses for more complex problems but that’s not to say that small businesses cannot solve infrastructural problems.

For example, let’s take a look at the power sector. There are 11 power distribution companies spread across the country. If the power distribution companies are further subdivided into smaller companies that mainly consists of local governments, a small business will be more than adequate to serve that local need. The big businesses can focus on power generation while the federal government deals with power transmission.

My point is, we need both small and big businesses to be successful!

^^
Okay I changed the topic.
Of course we need both, I agree. But without big business, we can't have small business, is all I'm saying. Nigeria needs more mega-corporations, not Mom and Pops at this time. Case in point PIB: I can see a lot of briefcase operators lining up to grab OPLs. They won't really unlock the petroleum sector, they will just cut their own little slice of profits. That's what I mean.

In the name of 'indigenization' small local operations with little or no experience have routinely taken over big contracts, only to totally screw them up, or take the money and run. It's appalling that only Julius Berger do construction work of any serious quality in Nigeria. Big business will even produce much more skilled manpower through training, which will ultimately lead to more productive and efficient small business. The major reason why 90% of Nigeria's natural wealth remains untapped is because the big mining corporations are not in Nigeria.

Both of them are important to the economy as they provide complementary service to one another.

The big firms needs the smaller firms to manage their non-core professional areas, provide local raw materials items for production and in some cases manage their distribution network as well as the smaller firms need the big ones businesses to survive.

For Nigerian economy I believe the small business provide more in terms of jobs when we look at the employment index (Not too sure of the stats at the moment).

The big firms contribute more in terms of taxes to the government due to their organized structures while the small firms pay taxes also but a lot of their taxes paid do not get to government coffers.

About size of small firms in Nigeria, I think it's as low as one staff set up unlike the US with bigger economy where there are different levels.

Though I believe the size status might likely change with time as the orientation is now gradually shifting from paper qualifications to skilled work and entrepreneurship due to the high level of unemployment/job cuts which is forcing more people to be creative to survive.

This i think will be good for the economy in the long run though it's really us now.

Both of them are important to the economy as they provide complementary service to one another.

The big firms needs the smaller firms to manage their non-core professional areas, provide local raw materials items for production and in some cases manage their distribution network as well as the smaller firms need the big ones businesses to survive.

For Nigerian economy I believe the small business provide more in terms of jobs when we look at the employment index (Not too sure of the stats at the moment).

The big firms contribute more in terms of taxes to the government due to their organized structures while the small firms pay taxes also but a lot of their taxes paid do not get to government coffers.

About size of small firms in Nigeria, I think it's as low as one staff set up unlike the US with bigger economy where there are different levels.

Though I believe the size status might likely change with time as the orientation is now gradually shifting from paper qualifications to skilled work and entrepreneurship due to the high level of unemployment/job cuts which is forcing more people to be creative to survive.

This i think will be good for the economy in the long run though it's really hurting us now.

the small businesses are currently more vital to the Nigerian economy as it is potentially the largest employer of labour. in advanced countries like the USA & UK the SME are huge factor in the growth of their economies.

I believe most of you are speaking theory, based on perception, and what you have been reading.
But it is not really true. Yes, small businesses directly employ more people than big businesses. However, without big business, small businesses cannot exist. Can big business exist without small business? Yes, they can, though as they get bigger, they usually farm out work to smaller business, who are little better than employees themselves, as they live for the business thrown their way by the big companies.

In many sectors in Nigeria (e.g. agriculture, retail, logistics, transportation), there has been a distinct absence of big players. The end result has been a lack of quality in service delivery, no price competitiveness, inability to scale, etc. These small businesses also dodge tax, and are very difficult to regulate.
Nowadays in Nigeria, there are big retail franchises in consumer electronics. For example there are LG outlets in a number of cities in Nigeria, unlike in the past where everybody had to go to Alaba. Now, even the Alaba chaps are benefitting from LG being in Nigeria.

I think we need more of big business in Nigeria to unlock more vertical sectors of the economy. We have too few MNCs, and we need more big companies to compete, innovate, and drive down costs as we have seen in telecom. Imagine if in 2012, we still depended strictly on Multilinks, Intercellular, and Starcomms, to provide wireless telephony in Nigeria. Teledensity and internet penetration would still be under 2 million, and a lot less people would be employed in the sector.

In fact, I'd say that part of the reason why the climate in Nigeria is very hostile to business, is because there are not enough big businesses. I have seen so many people start businesses, only to pack up and return to paid employment. Take Computer Village. As soon as GSM started in Nigeria, a lot of businesses (like Slot) abandoned the PC market and focused on mobile phones.

A clear example of where small business hasn't done well is in the healthcare sector.
Hospitals like St Nicholas, Lagoon, Premier Specialists, etc, have not really changed much in the 20-odd years they have been in existence.
Rather than growing into mega-hospitals, they have remained as premium consulting clinics, catering to the upper tier of the society.
The NHIS act has improved access to healthcare a bit, but the providers are yet to improve. Doctors are poorly paid, zero research is carried out, and we all continue to blame government for the healthcare malaise.

Do big businesses start out big? No. They grow to that size either through acquisitions or the old fashioned way, doing things right over several decades.

I think what you’re highlighting is the lack of capable business leaders that can grow a mom & pop operation into a MNC. This is the same reason almost all Nigerian businesses do not survive post founder’s life! Actually, most Nigerians that are rich are only rich for a short period of time and eventually go broke before their death! How many kids of the super wealthy are richer than their father?

This is truly a case of “shirt sleeves to shirt sleeves in three generations” except that we don’t even last one generation! The adage used to be that the father buys, son builds and grandson sells. However, in Nigeria, the father buys though whatever means and ends up walking around in his former glory before his death only to tell tales! Even Abiola was perceived to be richer than he actually was, at least by me (no disrespect intended to Abiola)!

Dangote, Adenuga and probably a few more seem to by trying to buck that trend by diversifying and taking their companies public but only time will tell!

It depends, no business is small. Whether we like it or not all businesses small or big contribute to the economy of Nigeria. So in my opinion, all valuable business, I mean any business that is adding value to peoples life and creating more employment is important to our economy in Nigeria. You only need to see the GDP and you will be shocked at what the so called small businesses are contributing.

Wallie: Do big businesses start out big? No. They grow to that size either through acquisitions or the old fashioned way, doing things right over several decades.

I think what you’re highlighting is the lack of capable business leaders that can grow a mom & pop operation into a MNC. This is the same reason almost all Nigerian businesses do not survive post founder’s life! Actually, most Nigerians that are rich are only rich for a short period of time and eventually go broke before their death! How many kids of the super wealthy are richer than their father?

This is truly a case of “shirt sleeves to shirt sleeves in three generations” except that we don’t even last one generation! The adage used to be that the father buys, son builds and grandson sells. However, in Nigeria, the father buys though whatever means and ends up walking around in his former glory before his death only to tell tales! Even Abiola was perceived to be richer than he actually was, at least by me (no disrespect intended to Abiola)!

Dangote, Adenuga and probably a few more seem to by trying to buck that trend by diversifying and taking their companies public but only time will tell!

I think you got my point. I was talking about the Nigerian context.
As far as I can see, Nigerian entrepreneurs have had their chances, and only a few have managed to grow their businesses beyond their egos. As you rightly pointed out, only Dangote seems to be taking his business to the next level.

My take is, we need to invite more multinationals to open up the various sectors which the government or their proxies have put on virtual lockdown. That at least would create opportunities for smaller players to take advantage of.

Wallie: Do big businesses start out big? No. They grow to that size either through acquisitions or the old fashioned way, doing things right over several decades.

I think what you’re highlighting is the lack of capable business leaders that can grow a mom & pop operation into a MNC. This is the same reason almost all Nigerian businesses do not survive post founder’s life! Actually, most Nigerians that are rich are only rich for a short period of time and eventually go broke before their death! How many kids of the super wealthy are richer than their father?

This is truly a case of “shirt sleeves to shirt sleeves in three generations” except that we don’t even last one generation! The adage used to be that the father buys, son builds and grandson sells. However, in Nigeria, the father buys though whatever means and ends up walking around in his former glory before his death only to tell tales! Even Abiola was perceived to be richer than he actually was, at least by me (no disrespect intended to Abiola)!

Dangote, Adenuga and probably a few more seem to by trying to buck that trend by diversifying and taking their companies public but only time will tell!

I think you got my point. I was talking about the Nigerian context.
As far as I can see, Nigerian entrepreneurs have had their chances, and only a few have managed to grow their businesses beyond their egos. As you rightly pointed out, only Dangote seems to be taking his business to the next level.

My take is, we need to invite more multinationals to open up the various sectors which the government or their proxies have put on virtual lockdown. That at least would create opportunities for smaller players to take advantage of.

AjanleKoko:

I think you got my point. I was talking about the Nigerian context.
As far as I can see, Nigerian entrepreneurs have had their chances, and only a few have managed to grow their businesses beyond their egos. As you rightly pointed out, only Dangote seems to be taking his business to the next level.

My take is, we need to invite more multinationals to open up the various sectors which the government or their proxies have put on virtual lockdown. That at least would create opportunities for smaller players to take advantage of.

Agreed.

If structured correctly, it will also allow local businesses to leap frog the normal process of acquiring business know-how and trade secrets that a business needs to function at a high level.

However, my fear is that people in power seem to lose sight of that fact and think that MNCs are only there revive a sector! No, it is a symbiotic relationship! They make a profit off the relationship and we get the know-how!

We hope that small businesses have enough capital and capacity to become big businesses ---- but most small businesses in places like Nigeria remain small and do not hire more than two people at a time....


They are both equally important but all small businesses started small and have grown into multinationals/international conglomerates...

is it true that every1 should switch off and switch on by 12:30 am to 3:30 am ?before i coment.......

I agree with Ajanlekoko, that small businesses can be part of the supply chain.

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