A first-take analysis I did last year August when the full deregulation of the energy and power sectors was announced in Nigeria not only identified a new approach to doing business, the multiplier effects and global impact of the on-going Russian-Ukraine internecine has, again, lent credence to the itemized submissions. But lack of foresight and shortsighted leadership thinking (for decades) has kept Nigerians in the development incarceration. We are now confronted with the brutal reality where enterprises, mostly MSMEs, are confronted with rising and unimpeded costs of production and service provision and dwindling customer-base. From agribusiness to media houses and not leaving out street-corner traders, the astronomical cost of doing business is now an issue of concern.
While businesses were being prepared for graduated impacts of energy and power sector deregulation, no one was ready for sudden effects of total reliance on fuel importation where price increase climbs steeply. This current situation lends credence to and it shows where we really are as a nation whose leadership believes everything must be imported. Now that we are in it, should we continue to fold our hands and bemoan out fate sine die or we should think out of the box to respond appropriately?
As I earlier mentioned, where costs of production is increasing uncontrollably, it will reach a point where the market will not be able to absorb price increase. Rather than the customers accepting the increases in prices of products and services, what will happen is total rejection of such products and services. The resulting effects from such snapping will be dying businesses and increasing unemployment. To avoid this disastrous situation, businesses, especially micro and small enterprises (MSEs) will, of necessity, need to realign. The earlier they embrace this new reality, the better for the entrepreneurs to keep themselves in business. If you are going to continue doing business today the way it is being done hitherto, it is a recipe for failure. Since costs of production will go higher and profit margins eroded, the new business dispensation heaped upon Nigerians is going to rely much on scale and reverse strategy: backward integration. I have foreseen and written about this severally.
According to my postulation last August, with increasing costs of doing business, contemporary business is going to be about collaborations (as against individualism of the past). Because of intense competition, businesses, this moment onward, is going to be able about taking control – taking control of the production, taking control of the market, or taking control of the policy framework by exercising great influence on policy decisions. For this to happen, it means one must be able to play big in the sector of one’s choice by working through a well-structured entities that are strong enough to make things happen. This can also be referred to as ‘cooperative economy’.
Cooperative economy is a people-centred enterprising system which embraces people participation in business to enable them realise common economic, social, and cultural needs and aspirations instead of individualism that puts risks on the lap of a business owner. This system allows players to pool resources, which would have been insignificant and insufficient in individual’s hands, but becomes enormous when pooled to allow industrial scale production that will keep costs of production at basest level and increase margins in terms of returns on investment. This foresight led to my attempt to champion the establishment of a business group, an incorporated trustee in 2018.
My working with the international labour organisation as enterprise development practitioner and certified trainer somehow exposed me to start taking a deeper look in cooperative enterprise activities since 2014. With what cooperative enterprises are doing in the Europe, America and Asia, I could see Nigerians have not really seen the goldmine in cooperative economy. For instance a cooperative enterprise in France posted a revenue of $103.6 billion in a year. This enterprise own by a group of people is playing in banking and credit. If this area is for the bid guys, there is another cooperative enterprise in agriculture that posted $57 billion revenue in a year. This cooperative enterprise is based in Japan. In Spain, a workers cooperative enterprise, the Mondragon Corporation posted $23 billion revenue in a year. But what have we been witnessing in Nigeria? We have not been really exploring the opportunities that cooperative enterprises confer on the private sector economic activities. Rather we have been doing ‘me only’, and we are having our fingers get burnt seriously in the process. Perhaps we will change our approach with the present uncontrollable costs of doing business that deregulated energy and power sectors brought upon us.
Ola Emmanuel is a business planning and cooperative consultant
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