Rewarding imitation

During the early stage of their economic development, Japanese and Korean companies did not originate ideas for new products and services. It was easier and cheaper to imitate – or adapt technologies and products to suit their markets.

A case can be made for imitation. Foreign direct investment coupled with technology transfer may be difficult to attract because of the perception gap about doing business in Nigeria. Two other options are to lure back more Nigerians in diaspora or send Nigerians abroad on scholarship. Hopefully, they’ll return. Japan, Korea, China and India sent their best and brightest overseas. The Sawmers, three German brothers behind Rocket Internet, an incubator for start-ups, are known as the kings of cloning. Their strategy: read the e-commerce zeitgeist, execute (build not innovate), replicate and rapidly deploy in populous markets with high entry barriers. Jumia, dubbed “Africa’s Amazon”, is a fast-growing online retailer in Nigeria. Rocket Internet founded Jumia. Investors in Jumia include Kinnevik, Summit Partners and JP Morgan. Giving a spin to the saying “innovate or die”, Nigerian start-ups must imitate or fall hopelessly behind. Nigerian start-ups can master the art of tropicalising innovative ideas. Konga, a Nigerian online retailer, has done well enough to attract Naspers, a South Africa multimedia company. Kalahari and Mocality, Naspers’ two earlier e-commerce initiatives in Nigeria, have closed shop. Otigba, Africa’s largest computer market, served as an incubator for businesses. The annual average rate of export between 2000 and 2006 in Otigba was more than the national average. As a knowledge-based cluster, most of Otigba’s entrepreneurs are graduates. As at 2005, 10,000 people were employed in 5,000 small- to medium-sized enterprises in Otigba. Technical and financial collaboration is one reason Otigba has thrived. Credit, obtained on mutual trust, is available for businesses to buy equipment and parts. In addition, warehouse space is shared as well as technical support. A report by Monitor, a consultancy, says Otigba’s success is beyond technological innovation. Entrepreneurs in the “Computer Village” transfer business skills, e.g., when to buy, sell clear inventories, identify gaps in the market to exploit, and find an appropriate price point. But to find a price point, businesses must discover markets. Online or brick and mortar businesses in Nigeria face a common challenge: infrastructure. Poor transportation and slow internet hinders the chances of SMEs competing globally. In terms of quality of infrastructure, the ease of trade clearance procedures, time, cost and reliability of import and export supply chains, Nigeria is doing poorly. In a 2012 report, Connecting to Compete, Nigeria was ranked 121 out of 155 countries on the logistics Performance Index. Policies, to scale infrastructure, in particular, matter. (Benin Republic moved 22 positions within 5 years because of the national single window system in the Port of Cotonou.) DHL, the global courier, reckons that Nigeria is improving, in terms of connectedness, i.e., the depth and breadth of trade. Nigeria’s global rank on the 2012 Global Connectedness Index was 49 out of 140 countries and 3 out of 15 sub-Saharan African countries.