Driving the Ubuntu Spirit in the Nigerian MSME Ecosystem - The Nigeria Enterprise Support Organizations (ESOs) Collaborative

“Umuntu ngumuntu ngabantu” is a phrase many do not know...” I am because you are” is the interpretation that many are coming to identify with as the “ Ubuntu Philosophy”. Ubuntu is the South Africa now Global expression that encompasses what many now see as a new dawn of focusing on the common good and collective interests for all! This is the basis on which for the past few months Impact Investors Foundation (IIF) has been able to build a collective of service providers in the Micro, Small and Medium-sized businesses (MSME) space comprising of Management Consultants, Financial Advisors, Legal Firms, Business Development Experts, among others, who are all providing support services in their different capacities. The word “Collaborative” speaks to two or more working together for a purpose. We have gone beyond just building partnerships to leveraging each other's strengths to bridge the gaps in the MSME sector!

The Nigerian ESO Collaborative’s goal is to ensure long-term success in supporting member organisations and stakeholders. This is through our network of enterprise support organizations including incubators, accelerators, innovation hubs, consulting firms and other organizations that provide services to enterprises particularly Micro, Small and Medium-sized businesses (MSMEs) and startups under a network. These MSMEs play a pivotal role in driving economic development, fostering innovation, and generating employment opportunities within the country. Enterprise Support Organizations (ESOs) provide essential resources like access to capital and other forms of enterprise technical assistance/support that contribute to MSMEs’ profitability and sustainability. Hence, improving the coordination, quality and quantity of enterprise support is crucial to building an enabling environment for sustainable businesses to thrive in Nigeria. The IIF is contributing significantly to the development of a viable and cohesive ecosystem for enterprise support in Nigeria.The Collaborative recognizes the critical importance of collaboration in achieving organizational objectives, delivering exceptional support services and developing the ecosystem. By leveraging the strengths and resources of each enterprise support organization within its network, the Nigerian ESO collaborative is creating a more effective and holistic support ecosystem for businesses.

The landscape of business support and technological advancements has evolved  as the MSME sector is facing one of the most challenging seasons known in recent history; struggling to survive worsening economic challenges triggered by high inflation, increasing cost of living etc. This is the best time to leverage on partnerships and the “ spirit of togetherness” as PwC’s recent MSME Survey 2024 put it “ collaborative Eco-systems are important to enhance collaboration and networks. The shared resources and knowledge exchange that the Nigerian ESO Collaborative has been able to curate has been very valuable to strengthening synergies, mobilise and optimise resources, and elevate satisfaction across the Nigeria enterprise development landscape.

Our ESOs serve as catalysts for entrepreneurship and business sustainability, providing critical resources, mentorship, networking opportunities, investment-readiness and invariably, access to funding to empower enterprises at all stages of their growth journey. Entrepreneurial Support Organizations (ESOs) are also helping bridge gaps by offering guidelines on investor expectations and providing capacity-building support in the investment landscape. The obvious disconnect does exist; between investors and entrepreneurs in attracting investment-ready enterprises that have the business structure to take on investments, thrive and return back  ESOs in adopting this “ Ubuntu” Philosophy are leveraging on their network to share knowledge and best practices, improve their organizational performance and support services, build stronger networks, mitigate mutual risks, present a unified voice for advocacy, and reach a larger audience. Ultimately, these partnerships lead to more efficient use of resources and more significant, sustainable valued outcomes for all stakeholders.

WHY MSMES MATTER!

Recently, the Central Bank of Nigeria (CBN) raised the Interest rates again as the Monetary Policy Rate (MPR) went up to 50 basis points at 27.25 per cent from the previous 26.75 per cent announced at the 297th meeting of the MPC in September 2024. This action will further increase the cost of borrowing and doing businesses especially for Micro Small Medium Enterprises (MSMEs) who are already burdened by high interest rate, too many requirements to take on debt and strict conditions for repayment in an economy with still reducing purchasing power. Indeed, MSMEs are still grappling with the devaluation of the Naira and increasing prices of energy. The astronomical cost of goods and services, high foreign exchange rates, poor implementation of ease of doing business reforms etc. have made Enterpreneurship in Nigeria almost an effort in futility. However, if the country’s GDP average growth rate has to average 7% per annum in order to achieve a $1 trillion GDP in next eight years; MSMEs must be given priority intervention. President Bola Ahmed Tinubu’s 8year target towards the economic transformation of Nigeria is expected to be achieved through; ● Doubling the economy to $1Trillion ● Lifting 100m people out of poverty ● Creating the enabling environment to generate over 50 million jobs ● Deliver sustainable inclusive growth Sadly, one year afterwards.....this may not be a reality with inflating rates peaking at 33.4% in July 2024. Why Do MSMEs matter so much in driving the economy of any Nation? Micro Small and Medium Enterprises (MSMEs) have been identified as the engine room of any developing economy. With 36.9 million MSMEs, comprising 96.7% of all businesses in Nigeria; 67% of these businesses are youth-owned. According to the Ministry of Industry, Trade, and Investment, MSME enterprises in Nigeria also account for about 48.5 percent of the Gross Domestic Product (GDP) as well as about 7.27% of goods and services exported out of the country. The Nigerian Government must take steps to ease doing business and enable a more conducive regulatory policy and implementation reform that would favour MSMEs. Creating an enabling environment also includes improving security, curbing rising inflation and stabilizing the economy to reduce unemployment rates. These actions must be done immediately so that there will be accelerated inclusive growth and job creation across Nigeria; a key role MSMEs play as a sustainable framework to develop the critical mass of skills, promote linkages to other sectors of the economy and drive Nigeria’s economic transformation.