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INNOVATION, DISRUPTION URGENTLY NEEDED TO ACCELERATE AFRICAN BUSINESS: A CASE FOR AFRICAN MICRO, SMALL, MEDIUM ENTERPRISES (MSMEs) AS STANDARD BEARERS – A PAPER PRESENTED AT THE ANNUAL CONFERENCE OF THE AFRICAN BAR ASSOCIATION (AFBA), PORT HARCOURT, NIGERIA.

AUGUST 6TH – 10TH, 2017

ANTONIA ASHIEDU (PhD)1

To begin with, we have pursued development with a confusion of purposes and interests and with policies full of ambiguities and contradictions. It is not that we could not find suitable notions of development or ways to apply them to our experience. Below the surface appearance of common concerns is a cacophony of voices talking different languages, swaying policies here and there and filling them with contradictions. In the meantime, the common man who is the raison d’etre of development remains silent, so that in the end nobody really speaks development and it never comes alive in practice2.

- Claude Ake

I like big Business but I love Small business; by small business I mean

Micro, Small and Medium Enterprises. I am an Apostle of growth that

is driven by MSMEs. I harness my devotion and anchor from the

experiences of the Asian Tigers – who within three and half decades

became the manufacturing Hub and one of the Industrial

Powerhouses of the World.

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Entrepreneurial Spirit is latent in Africans. We have the CAN DO

SPIRIT. What is required is the political-socio-economic sagacity to

hone these talents and bring this Spirit of Enterprise to fruition to the

benefit of the African Continent in particular and the World in

general.

This Spirit of Enterprise requires an enabling strategy committed to

Institutions of Civil Society like the African Bar Association (AFBA) and

partnership among various actors involved in the process in order to

curb serious lopsided policies and resources allocations, which go

against the interest of economic activities in Africa. There is a basic

consensus that restoring adequate rates of self-sustained growth

should be the primary objective of development in Africa. No

development can be sustained without restoring economic growth.

This is in recognition that growth is not an end in itself, its effects

must be widely distributed, if it is to be sustainable.

The Culture of Commerce and Trading has always been visible in

every African country. The fundamental issue is the lack of

synchronisation at Country level and Continental level. So many

impediments in infrastructure, monetary policies, laws and sadly

constant policy somersault. These aberrations constrain businesses;

distort economic plans/visions and create an albatross for African

Business in a 21st Century World driven by globalisation.

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However, Africa can borrow from the Template of the Asian Tigers.

What did the Asian Tigers essentially formulate on the roadmap to

transforming their Countries from basically Agrarian to Industrial

Giants? The Secret Menu can be captured in these Seven Critical

Elements:

1. Maintain political stability at all costs.

2. Focus on the grassroots, bottom-up reforms (starting in

Agriculture instead of the financial sector).

3. Promote rural industries despite their primitive technologies.

4. Use manufactured goods (instead of only natural resources)

to exchange for machinery.

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Source: UnleashAfricanTrade.com (J. Akhile Sr.) April 7, 2016

5. Provide enormous government support for infrastructure

build-up.

6. Follow a dual-track system of government/private ownership

instead of wholesale privatisation and;

7. Move up the Industrial ladder from light to heavy industries,

from labour to capital intensive production, from

manufacturing to financial capitalism, and from a high saving

State to Consumeristic Welfare State3.

Can we replicate this in Africa? Can Africa be the next destination for new World Industrial Base? I believe, without doubt, that Africa can DO IT. My Thesis, therefore, is based on the fact that Africa is endowed with the enormous Human Capital and Raw Materials that will serve as the springboard to launch herself to an all-embracing Business phenomenon.

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PRESENT CHALLENGES

Many African Countries are bedevilled by weak Infrastructures that

are catalysts for economic development. These critical

infrastructures are good roads, solid power supply, good rail and

river transportation facilities. Information and Communication

Infrastructures have improved over the years but in many African

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Source: CDAE 266 Decision Making for community Entrepreneurship Fall 2007

Countries they are still in dire straits. We still have in many African

Countries ambiguous and inadequate assistance to businesses,

especially small businesses. An example is Nigeria’s Small and

Medium Enterprises Development Agency of Nigeria (SMEDAN),

which is a good concept but is limited in out-reach. When juxtaposed

with the Unites States Small Business Administration (SBA) the

glaring difference is overwhelming. The SBA assists Small Business to

start, develop and grow, through a well co-ordinated extensive

network of field offices and partnerships with both public and private

sectors. SBA counsels, does needs assessment, builds capacity,

protects the interests of small businesses and preserve free

competitive enterprise. SBA achieves this onerous task by giving soft

loans, loan guarantees, Contracts, et.c.4

An SBA office of Advocacy-funded data and research shows that in 2010, American small businesses accounted for:

� 99.7% of U.S employer firms � 64% of net private-sector jobs � 49.2% of private-sector employment and � 42.9% of private sector payroll.

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MSMEs Contribution to National GDP, 2013

Indeed small businesses accounted for 64% of the net new jobs

created between 1993 and 2011 (or 11.8 million of the 18.5 million

net new jobs).5

According to a survey by SMEDAN and National Bureau of Statistics (NBS) in 2013:

The total number of persons employed by the MSME sector as at December, 2013 stood as 59,741,211, representing 84.02% of the total Labour force.6

These figures may look impressive, but as a Practitioner in this field, I

dare say that most of the businesses are still at a rudimentary Level

and they are really businesses with very start-ups that lack depths.

Source: SMEDAN & NBS COLLABORATIVE SURVEY: SELECTED FINDINGS, 2013

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African MSME Businesses suffer also from self-inflicted/external

problems of limiting the sale of their products in their home markets

or in adjacent Countries that belong to the same economic bloc.

Again there is also the vexed issue of multiple Laws and regulations

at the local, state, regional, Country and Continental levels. Any

discerning Investor wants to be assured of the safety of his

Investment and the application of the rule of Law where necessary.

Situations where these basic principles of Fair Trade and Best

Practices are lacking, leaves much to be desired. These are intrinsic

challenges of being players in the global supply-chain. External

problems of non-patronage of African products are often anchored

on these issues.

THE PRISM AND DYNAMISM OF THE FOURTH INDUSTRIAL REVOLUTION

However, I am an optimist and I believe the future is there waiting

for Africa to OWN IT. The world is at the brink of an exponential

Fourth Industrial Revolution. The first Industrial Revolution made use

of water and steam power to mechanize production. Electricity was

the Key element of the second Industrial revolution to create mass

production. The third Industrial revolution essentially used

electronics and information technology to automate production. The

dynamic fourth Industrial revolution is moving in seamlessly on the

third Industrial revolution that has been taking place since the middle

of the last century. The fourth revolution is bound with the third

Industrial revolution and is characterised by a fusion of technologies

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in manner between the physical, digital and biological spheres. This

fourth Industrial revolution is moving in with velocity, scope and

systems impact. The world is witnessing and will still witness more

and more breakthroughs in areas of Artificial Intelligence (AI),

nanotechnology, biotechnology, material science, energy storage and

quantum computing.7

Imagine for a moment what the global economy will be when the 4th

Industrial revolution fully comes into fruition. Africa cannot afford to

make excuses for not being part of the 4th Industrial revolution. Now

is the time for action. Now is the time to harness our continental

energy in every endowment this continent has been bestowed with.

Some of these endowments abound in Human Capital, Raw

Materials, good weather – YES! Good weather and of course the

untapped synergy in the different regions and Countries.

- Can Africa take advantage of the Fourth Industrial Revolution?

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Africa needs to disrupt and innovate Business models that will leap-

frog this continent. I have had the privilege and opportunity of

working with some of the Research Institutes in Nigeria. There are so

many innovations in the Research Institutes waiting to be deployed

into Small businesses, especially in some of the areas I have already

enumerated. These MSME innovations can actually be the standard

bearers that will illuminate a new dawn for African businesses.8

Africa cannot shy away from globalisation. The period of complete

dependence on sales in domestic market is over. African

Entrepreneurs should be bold to take-on the International market

from inception of the company. Africa should adopt a unique

Business model – what I call the 4Cs business model. The core of this

model is the thesis that embodies COMPETITION, COMPLIANCE,

CONNECTION and COLLABORATION.9

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In this model, we MUST Compete with anybody, anywhere in the

world, we MUST Comply, there MUST be no room for cutting

corners, We MUST add value and finish our products to International

standards. We MUST abide by the rules, laws and regulations of

Regulatory bodies nationally, continentally and globally. We MUST

Connect to the market nationally, continentally and globally. We

MUST Collaborate with one another – sharing business information

at peer group, community, country, regional and continental levels,

to enable us understand and assimilate the dynamics of business

cultures, challenges, innovations and failures.

Source: https://www.emerging-360.com/smes/needs

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Some People may argue that the hubris of economic populism that is

haunting Europe and America sprang from the perceptions of

unemployment and inequality arising from businesses deployed by

technology in the last few decades. On the other hand, when

technology is embedded with a sound economic model, it is a win-

win situation. As earlier stated, the Asian Tigers were able to achieve

Industrial success because primary attention was paid to small

businesses and cottage Industries. Therefore, when you talk of Hong

Kong, Singapore, South Korea and Taiwan and their roles in

transforming Asia to a universal giant, you are simply talking of the

role of MSMEs in the activation and elevation of Asian economies.

There was a bridge between the big businesses which served as off

takers and the small producers. This vital linkage is a big void in

African business today. Often times, there is always a market gap left

by the big companies. This is where the small business can create a

disruption and innovation, by fine tuning their products to capture

that market that has been overlooked.

In my experience as an Advocate and a Mentor of MSMEs, the

bottom of the pyramid is still hugely untapped and the potentials are

enormous. It is gratifying to note that African MSMEs when

reasonably mentored have the capacity to create appropriate,

sustainable, functional and cost effective solutions. I always feel

proud when I go to Shoprite stores anywhere in Africa and I see a

product which my team mentored, displayed besides other products

prominently.

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This product is made from African Spices and was very popular when

we showcased it at a Business exhibition in Guildford, Surrey, United

Kingdom, in 2012.

How Do You Achieve and Maximize Innovation?

According to Forbes Magazine of March 2013,…

Harvard Business School, Professor and disruption guru, Clayton Christensen, says that a disruption displaces an existing market, industry, or technology and produces something new and more efficient and worthwhile. It is at once destructive and creative.10

All over the world, many Industries are being disrupted and

innovations are taking place. This is not a phenomenon that should

be viewed negatively but this is a new dawn, especially for young

African graduates. A creative dawn which Africans can leverage on,

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given the scope of the growth in mobile telephone technology. I

agree with the school of thought that you start in simple and

uncomplicated ways which, according to Robert J. Calvin, may

include:

1. Different packing and packaging 2. Colour identification 3. Unusual sizing 4. Adapting from a related market 5. Reviving an old idea 6. Finding new markets and uses for existing products or

service.11

Today, there are huge concerns on youth unemployment in Africa.

Again, this is where Africa can seize the moment, sharpen the grey

areas and capitalise on globalisation by bidding and securing

contracts for outsourcing jobs by Companies all over the world. Asian

Countries are players in this field. Some African countries are players

also albeit not significantly. These out-sourcing jobs ultimately create

employment.

A good example of out-sourcing is Sun Dew Solutions of India, which

started Business in 2007, and went through difficult times, but they

persevered. Today, they have over 160 clients across over 18

countries. They started business with $1,100 (USD) in 2007, as at

2017 they are striving to meet 2019 target of $2million (USD). They

bid for jobs comprising websites, E-Commerce Portals, Business

Automation Applications, Mobile Applications and various other

products.

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The Role of African Bar Association (AFBA) in Innovating African MSME Business

This is the time to be innovative, resourceful, practical and

opportunistic. This is the time for CAN-DO THINKERS, who must not

allow themselves to be frustrated by DON’T-DO, CAN’T-DO and

WON’T-DO people.12 This is the time for us to embrace the Spirit of

enterprise fully for a higher goal.

AFBA can champion a generation of African Entrepreneurs. You can

create an inclusive Cosmic Concept of the African Diaspora. You have

the opportunity to treat this Forum as a dynamic African Ecosystem

which can be used to imbibe the Spirit of Entrepreneurship. AFBA has

a Key role to play and I believe that AFBA can be a catalyst and a

spring board for creating the framework for a new Business Model in

Africa. AFBA stands in good stead to synchronise, guide and mentor

businesses on the rules, laws and regulations of e-commerce13

especially for Africa’s nascent Entrepreneurs. At the moment there is

a lacuna. AFBA can champion this course, because we have a lot of

small businesses in Africa that can thrive globally on the e-commerce

platform.14 You may be surprised to hear that some African

businesses rely on third parties outside Africa to guide them on the

norms of digital/Internet business. I recommend though that this

service should NOT BE PRO BONO.

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AFBA DIGITAL ONE-STOP SHOP FOR BUSINESS

AFBA may consider establishing a digital One-Stop Shop for African

business where the primary aim will be to provide an integrated eco-

system that will deliver much needed information on what it takes to

do business in Africa and above all, what Africans also require to

know on national, continental and global Trade. This One-Stop Shop

will be a pivotal axis for interactive innovation that will launch new

Entrepreneurs and already established Entrepreneurs into having a

premium competitive edge.

In conclusion, Africa has the ability to re-engineer and join the fourth

Industrial revolution which has the potential to raise income levels.

African MSMEs if given the leverage, have the capacity to be the

innovative standard bearers. Globalisation of Markets and Products

is a phenomenon that will not go away soon, and I make bold to say

that certainly not in this Century. Africa should be poised to be the

Niche Market with well-defined value propositions. Customer

acquisition should not be complicated.15 It should be achievable.

African Governments should devise policies and regulations that

encourage small manufacturers to export. We should be bold to

approach Lenders, venture Capitalists and Angel investors. Above all,

resolve that you will, at the end of this Conference, be the anchor for

new and resounding Innovations for African Business.

- Je vous remercie de votre aimable attention.

- I thank you for your kind attention.

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Notes 1. Antonia Ashiedu (PhD) is a Development Consultant and a Social Entrepreneur.

2. Claude, Ake: The Political Economy of Crises and Under Development in Africa, edited by Julius Ihonvbere, JAD Publishers Limited, Lagos, Nigeria, 1989, p.49

3. Wien, Yi: The Making of an Economic Superpower: Unlocking China’s Secret of Rapid Industrialisation, Federal Reserve Bank of St. Louis, June 2015.

4. Robert, Longley: How Small Business Drives US Economy, published in Thoughtco, updated September 8, 2016.

5. Chan, Kim W & Renie, Mauborgne: Blue Ocean Strategy, Harvard Business Review Press 2015.

6. SMEDAN AND NATIONAL BUREAU OF STATISTICS COLLABORATIVE SURVEY SELECTED FINDINGS (2013).

7. Klaus, Schwab: The Fourth Industrial Revolution, World Economic Forum. https://www.weforum.org

8. Eric, Ries: The Lean Start-Up: How Constant Innovation Creates Radically Successful Businesses, published by Penquin group, 2011.

9. Antonia, Ashiedu: Imbibing the Spirit of Enterprise…the future belongs to Entrepreneurs, A Paper presented at the AFRI-ONE YOUTH FORUM, Accra, Ghana. 18th February, 2016.

10. Caroline, Howard: Disruption vs Innovation: What’s the Difference?, www.forbes.com.sites.2013

11. Robert, J. Calvin: Entrepreneurial Management, The McGraw Hill Executive MBA Series, 2002.

12. John, Elkington & Pamela, Hartigan: The Power of Unreasonable People, Harvard Business Review Press, 2008.

13. Daniel, Rowles: Digital Branding, published in Great Britain and United States by Kogan Page Limited, 2015.

14. Dave, Chaffey & Smith, PR: E-Marketing Excellence – Planning and Optimising your Digital Marketing, published by Rouledge, 2 Park Square, Milton Park, Abingdon, Oxon, OX 14 4RN. 2013

15. Bill, Aulet: Disciplined Entrepreneurship, published by John Wiley & Sons, Inc, Hoboken, New Jersey, 2013.

� Please see page 15 of this paper on the Feature Story of Sun Dew Solutions: Driving Innovation in Business. http://insightssuccess.in/sun-dew-solutions-driving-innovation-in-business/