‘British business wants to be part of the Nigerian growth agenda’

Q:What is the reason for the trade mission; after a 21-year absence?

It is fantastic to be back. I was very pleased to be invited by the London Chamber of Commerce and Industry (LCCI) and the UK Trade and Investment (UKTI) to lead the mission. The headline reason for the trip is to be absolutely clear that British business wants to be part of the Nigerian growth agenda.

Nigeria, in my view, is an economy powering the renaissance of Africa at the moment. And for it to reach its full potential, there are a number of things that need to be addressed and developed.

At the same time, the UK is looking to diversify its economy and grow the amount that it is exporting. From what I know, from what people tell me, there is a lot the UK can do to help drive Nigeria’s growth. The primary purpose of the mission is to make that happen by fostering strong relations between the businesses on the mission and their Nigerian counterparts in the private sector, so they can do business together.

One of the encouraging things is that before I touched down at Murtala Mohammed Airport, one of the delegates was already doing business.

Are these businesses new or have they been doing business in Nigeria?

It’s a mixture of old hands that have been coming to Nigeria for many years and have established relationships and are looking to oil the wheels of those relationships and create new ones in addition to some start-ups and others who have been trading but not with Nigeria and want to expand into this market.

There is a mixture of businesses in terms of the age of the business in addition to a mixture of businesses from different sectors.

Can you give an idea of the sectors?

For example, there is a business which refashions tractors and produces a top quality product but at much lower prices – obviously agriculture is a major part of the Nigerian economy and needs further development. The business has already sold a number of tractors to the market this year but wants to sell more.

Another company present in Nigeria is a recruitment company; whether it is in the creative industry or infrastructure development, one of the things I’ve been told is that you don’t quite have the skills in terms of project management. In order to search and find the right people a recruitment firm could offer a lot.

Then, of course, there is healthcare. The development of a robust, comprehensive healthcare system is still in its infancy in Nigeria. We have several businesses that operate in that sector. There is something all these businesses can offer something here [to the Nigerian market].

One of the reasons the LCCI and UKTI were keen that I lead the mission was not only to increase the profile but to promote British businesses more generally.

Let’s not beat around the bush: there is a perception that the UK has taken its eye off the ball over the years in Nigeria. Whilst you’ve seen the Chinese come in, for example, the UK doesn’t seem to be in the vanguard of investment like it did in times past. There are

a number of reasons for that, but we have to overcome them. In many respects, you may disagree with me, but many [Nigerian] businesses tell me UK is their preferred partner. [Because it is] reliable, [offers] good quality [and] integrity; [Nigerians] know what they’re getting and that it will be of good standard. I am here to do anything to promote that; to promote business between the two countries.

How different is the UK’s trade mission to Nigeria from the Chinese, who came here when it wasn’t fashionable, and from, say, a trade mission from Sweden or Poland? 

There are two reasons. Obviously British businesses have a history of doing business in Nigeria. There was a time when Nigeria wasn’t what it is now, when many got their hands burnt. The history and their experience have at times put them off. Secondly, governance and transparency issues have attached themselves to Nigeria [and] have given birth to a stereotype of what the Nigerian or Nigeria is like. That needs to be overcome. And I think it’s fair to say – when I was last here 21 years – those perceptions were in part borne out in reality. Now the situation is very different.

That is not say Nigeria is still not a challenging place to do business and doesn’t have its challenges. But I think there are enough companies here from other countries that are successfully mitigating the risks involved in doing business and overcoming. We realise the benefits. There is a strong argument for UK companies to do the same.

One fact, which is often missed, is that whilst there is a lot of enthusiasm and positive talk about doing business with India – which is a good thing, I think we have to increase our exports to India. What people don’t realise is that in the World Bank’s Ease of Doing Business rankings, Nigeria and, say, Ghana rank above India as easier places to do business. That is not borne out in the media narrative on Nigeria in Europe and the British press in particular. And we need to change that.

How much of a roadblock is this perception about doing business in Nigeria? 

Undoubtedly, it operates as a barrier, [but] those perceptions are somewhat anachronistic now. There’s work for policymakers and leaders who wish for stronger ties between Nigeria and the UK. We have to say what we see and explain to our business community alongside business leaders who are enthusiastic about trade with Nigeria to explain and describe the reality of what is in Nigeria now and to distinguish [the present] from 20 years ago.

But I also think it is incumbent on Nigeria itself and its policymakers to address those perceptions too. Ultimately, the way policymakers can do that is to continue and go further, faster with the excellent reforms that President Jonathan and the Co-ordinating minister Okonjo-Iweala have been pressing ahead with. They must press on with that.

I also think a challenge, somewhat, has to do with the media. The media are often the ones who broadcast a view of Nigeria which does not always marry well to the reality. In terms of marketing the brand Nigeria, there is still a lot of work to be done in that front.

In a speech on the financial sector in the UK you pushed for more competition and innovation to encourage lending to small businesses. What’s the experience, what can be done to make it happen?

There are two major issues we have in the UK in that respect, particularly in relation to small businesses. First, there isn’t enough competition in banking. Essentially, we have five high street banks that have the lion’s share of the small business lending market to 5 million businesses. The lack of competition obviously impacts on the service they receive and the treatment they get from banks. Frankly, we need to have more banks in the market.

Second, we actually need more competition to banking by which I mean other forms of finance. This is difficult for us. Our small businesses, in part, are often reluctant to seek equity funding because they don’t want to cede ownership of their companies. We need to grow our venture capital space – at the moment it’s rather focused on medium and large sized businesses. We need venture capital to help small businesses. We have got a growing body of alternative finance institutions like peer-to-peer lenders. Perhaps, the best known in Britain is Funding Circle. We need to grow that space as well.

Third, we are the only G8 country without a state-backed investment institution to plug the gap between financial intermediaries and small businesses. Countries like Germany and the US have state-backed investment institutions that do that. That is one of the reasons why we (Labour) have said if we were elected in 2015 we will set up a British investment bank to plug the gap, alongside a network of regional banking institutions modelled on the German Sparkassen. That is, a system of local banks to transmit the schemes and funds provided by the central investment bank to local businesses.

What is your message to Nigerian businesses looking to partner UK companies?

There are three principal ways and areas where we can really add value – this is not exhaustive list; but the ones that immediately come to mind. Firstly, following my discussions with Nigerian and British businesses on this trip is [Nigeria’s] big infrastructure need (am told it is $12 billion a year for the next five years). In terms of the investment needed for that, the City of London is the preeminent place to seek funding. Nigeria’s massive appetite for funding growth won’t always be met domestically; the City continues to [provide capital] and stands ready to assist in that regard.

In addition, you need project managers, engineers and technicians to develop your infrastructure. We have good experience in this area – in London, where I have my constituency, we have one of Europe’s largest infrastructure project at the moment: the Crossrail, a rail route across London which is being established at the moment.

Thirdly, one of our sectors, which we don’t promote enough on an international level, is our creative industries. Nollywood, here, is booming, and alongside Bollywood, is one of the fastest growing and largest film and TV production markets in the world. I know there are challenges with the technology, the skill set have to be further developed as Nollywood reaches a level production akin to that in the US or the UK. We have a sector which is ready 

 

TAYO FAGBULE, Editorial Board Chairman