A few days ago, I placed an order for supply from South Carolina, United States. The goods were shipped and the international courier company had them delivered to Lagos, Nigeria within thirty-six hours. Covering some ten thousand kilometers, likely through at least two airports and two processing centres, within that time was quite impressive. As the delivery address I had given was in Abuja, less than a thousand kilometers from Lagos, and with frequent flights between the airports of the two cities, I was positively expecting that my consignment will get to me within the following twenty-four hours. ‘Trouble’ started, however, when the consignment was received by the local subsidiary of the courier company in Lagos. At the end, it took over seventy-two hours to get to me in Abuja after several follow-ups and visits to the courier company’s Abuja office. Their explanation that the goods were going through Customs clearance was an annoying and unintelligent excuse as the consignment was duty-exempt and all appropriate documentation was in place. The delay was costly to us and had knock-on effects as others had relied on us to deliver based on a schedule that we, fairly, thought was completely realistic.
Entrepreneurs all over Africa suffer tremendous costs as a result of lack of sufficient infrastructure and staff attitude to work. Whilst these twin factors are not enough to stop the very resilient ones, they make everything more difficult and more expensive for the entrepreneur, their clients and the rest of the society. We will discuss the infrastructure situation here and the employee attitude to work later.
What infrastructure are we talking about?
What are the negative effects on businesses as a result of their insufficiency?
How does the entrepreneur address the challenges posed?
Business infrastructure: A business organization needs both internal and external infrastructure to manufacture and deliver its products to its markets. Internally, a business needs factory equipment for production, as well as computers, vehicles etc. for support operations. Obviously, as most factory equipment are foreign-made, African entrepreneurs suffer additional costs to have them imported, cleared at the ports, delivered to sites, installed and commissioned. Similarly, staff training, equipment depreciation and maintenance costs get comparatively higher. Then comes delivery of the final products to the market. This will involve transportation by road, air, railways and waterways which are all less than developed.
The provision of internal infrastructure, such as factory equipment, local power generating plants and company-owned distribution vehicles, is to a large extent within your control. It is your responsibility to establish what you specifically need to enable you to produce and compete effectively. You have to work out how you raise the resources you need to acquire, run and maintain these internal resources.
On the other hand, you have only a little leeway on the development of the external infrastructure that you use to produce and deliver your goods to the market. The roads, railway services, power, etc. are to a large extent out of your control. Nevertheless, how you use whatever is available of the external infrastructure to achieve your objective is completely under your control. Remember that whatever is the terrible situation of the infrastructure is a common denominator to you and your competition. None of you has an edge over the other except on how you respond to what is not available. So how do you make the best use of these limited but key external assets to your advantage? Before we attempt to resolve that, let us understand some of the costs of undeveloped infrastructure.
What are the negative effects of the lack of developed infrastructure? The dearth of infrastructure has several negative effects on individuals, businesses, its customers, the economy and the government. To the individual, it is strenuous having to continuously contend with issues that should ordinarily be taken as settled. An appropriate mindset is necessary to ensure that this does not build any toxicity in you. Taking care of yourself, physically and mentally, will go a long away in keeping you healthy, sane and other things in proper perspective. To a business, the dearth of infrastructure increases overall start-up costs (as you may have to procure power generating sets, distribution vehicles etc.) as well as operational costs (such as fueling, supply chain extension, extra staffing requirements, higher insurance premium and other needs) are increased. Increases in each of the costs may decrease the competitive positioning of the enterprise and stunt its growth or even lead to failure.
As to the implications of poor infrastructure base in an economy, it is ironic that many public officials do not seem to appreciate the costs to the various tiers of government. These may include loss of revenues due to decreased productivity; higher unemployment rates, etc. Similarly, accidents on roads increases healthcare costs as well as losses to productivity due to time off places of work and even permanent disabilities and loss of lives. It is a cycle that an economy must break and remain out of if sustainable development is to be ensured.
Facing the challenge: The first stage to addressing any challenge is to understand and put it in its appropriate perspective. The ‘good news’, to the entrepreneur, about the infrastructure situation in African economies is that it is common to all businesses operating in the same environment. That means you and your competition are all operating from the same starting point. To create the difference that will set you ahead, you need to ask questions and provide intelligent answers and solutions.
- What are the bottlenecks to your internal and external operations due to poor infrastructural base?
- Identify the challenges in each sector: Is it power, distribution, communication, etc.
- What are others doing to address each challenge? Can you do much better than they are doing?
- How do you do the things better than your competitors in terms of efficiency and effectiveness?
- Do you purchase or lease the physical assets that you require or do you just engage service providers that have those assets?
- Come up with specific strategy for each issue.
- What resources do you need to implement your strategy?
- Supply chain management is a particular challenge in environments without adequate infrastructure. How do you keep your inputs coming in and your products going out without disruptions and at minimum costs? Developing beneficial and understanding relationships with suppliers, service providers and customers is key to this effort. Customer service strategies, to attract and retain customers is particularly important in a setting prone to disappointments from even ‘reliable’partners. Similarly, cost management arising from equipment damages, vehicle maintenance, seasonal fluctuations etc. are challenges that must be specifically addressed as well.
- Risks of financial losses arising from delays and accidents should be assessed and planed against.
Execution: I started this write-up by narrating my experience with the international courier company and its Nigerian subsidiary. What is instructive is that the international operation, which delivered superbly, not only enjoyed superior infrastructure but equally importantly enjoys superior execution, most probably derived from staff attitude to work. And this brings us to a very important factor in entrepreneurial success in Nigeria and Africa: Recruiting your staff deliberately and purposefully and training them sufficiently to ensure that they are highly biased for action is an absolute must. Developing an organizational culture for solving problems on the go is necessary to overcoming the inefficiencies caused by lack of infrastructure. At managerial level, you have to encourage and reward creativity, initiative and performance. As the saying goes, a chain is only as strong as its weakest link. Nothing will set your business apart and ahead like the extent to which you and your people take actions. While your creative solutions can easily be duplicated by your competitors, your execution capacity should be a core area you can always use to set your business differently from others.
Two final words,
First, while as an entrepreneur you have to always have to contend with what is on ground to keep your business successful, you also should both engage the government to address the problems whilst also help solve some of the problems within the framework of corporate social responsibility and to the extent you could reasonably afford to. Fora with other businesses and government agencies and healthy discussions there within can go along a way in helping solve the challenges over time.
Second, the state of most infrastructure in our economies leaves much to be desired. However, they are exactly the reason why some local entrepreneurs succeed more than others. Dangote Group doesn’t waste time complaining about lack or railway services or insufficient commercial trucks. It invests heavily in its fleet of distribution vehicles and that sets it apart from other competitors that do not go, at least, as far as they do. The moral is while doing what you need to do to succeed and also address the challenges in the long run, don’t stress yourself complaining about the state of infrastructure. That can only take away motivation, creativity and precious time that you are better off committing elsewhere.
Relevant posts: http://melyakub.com/creativity-in-business/
and http://melyakub.com/creativity-in-business-ii/
