Nigeria’s economic growth, development depends on innovation, entrepreneurship necessary – Obi

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The Vice Presidential Candidate of the Peoples Democratic Party (PDP) in 2019 elections, Peter Obi, has said that the growth and development of Nigeria’s economy will, among other things, depend on progressive and innovative ideas and the rise of small and medium scale enterprises that will drive the economy forward.

Obi, who was the Guest Speaker at the 5th Convocation Ceremony of Alex Ekwueme Federal University, Ndufu Alike, Ebonyi State, outlined how important it is for young graduates to embrace entrepreneurship and come up with innovative ideas that will, not only, set them on the part of economic progress, but translate into positive economic turnaround for the nation.

Obi advised Nigerian youths to embrace entrepreneurship instead of jostling for few available job offers and waiting for the government to decide their future for them.

Encouraging young entrepreneurs not be afraid of taking the first step into entrepreneurship, Obi said there is nothing wrong in starting off small. He said that many of the known global brands of today, ranging from Microsoft, Apple, Amazon, Alphabet, Facebook, to Ali Baba etc, all started small, with the little available resources they had.

“Apple Inc, considered to be one of the most successful and valuable companies in the world, was founded by Steve Jobs, Steve Wozniak and Ronald Wayne in 1976 in Steve Job’s foster parents’ garage. Today, Apple is the largest company by market capitalization. As of October this year, it was valued at $2.1 trillion, with revenue of $274.5 billion as at Q3 of this year. Microsoft Inc was founded by two friends (Bill Gate and Paul Allen) in a small apartment in April, 1975. Microsoft is today the dominant software company with annual revenue in excess of $100 billion and market valuation of $1.6 trillion as at October this year.

“Amazon Inc was founded in July 1994 and operated from the garage at the house of the founder, Jeff Bezos. Today, Amazon is the dominant online sales company, with revenue of about $270 billion as at Q3 of this year and the company valued at $1.5 trillion. Jeff Bezos is the richest man on earth, with a net worth of over $180 billion.

“Google, now called Alphabet, was founded by Larry Page and Sergio Brian in September 1998. They began working from Page’s dormitory room at Stamford. Today, the company has an annual revenue in excess of $100 billion and with market capitalization of $1.2 trillion. Facebook, also was founded by Mack Zuckerberg in his school dormitory. Today, Facebook is the biggest social network in the world. Facebook is today a company with revenue in excess of $70 million and market capitalization of $708 billion,” Obi said.

Obi explained that beyond individual benefits, entrepreneurship holds invaluable profits to national economy in that it leads to employment creation, growth of GDP per capita, increase in federal revenue and overall growth of the economy.

He argued that the most prosperous global economies are private sector led, powered by small businesses founded by entrepreneurs. Citing China and Indonesia as examples, Obi said: “Small businesses in China, which constitute about 95% of Chinese firms, account for 60% of China’s GDP and contribute more than 65% of the import and export business in China. They also contribute about 50% of the overall tax revenue of government. Small businesses constitute about 95% of all enterprises in China. China’s GDP is today about $14 trillion, which means that the 60% contributed by small businesses translates to about $8.4 trillion – about 21 times the GDP of Nigeria. Small businesses account for over 60% of industrial output, and provide over 60% of the overall employment and 80% of urban employment in China.

“Talking about the growth of China’s small businesses, 10 years down the line from start-up, 60% of them have been shown to become large corporation when compared with Nigeria that 96% are still at the micro stage. China has about 840 million people employed (which is 60% of the population), and small businesses provide 60% of these employees, which is 500 million people. China, today, has an unemployment rate of only 3.7%.

“Small businesses are the backbone of the Indonesian economy. Small businesses in Indonesia are contributing about 65% of the GDP. So, with their GDP currently at about $1.120 trillion, the contribution of MSMEs is $720 billion (which is about twice Nigeria’s GDP), with MSMEs employing over 90% of the Indonesian workforce. Indonesia, with a population of 260 million, has about 150 million of its population as the workforce, and MSMEs employ over 90% of this workforce, which is about 135 million. Indonesia has an unemployment rate 4.5%. So we can see that while both countries have under-employment/unemployment rates of below 5%, ours is clearly above 40% owing to dearth of entrepreneurship, that gives birth to small businesses, in Nigeria.”

Obi however lamented that Nigerian government is not yet doing enough to support small businesses in Nigeria. He said what was more worrisome was that even the little funds mapped out for MSMEs, were not getting to the right people the funds were meant for due to high level of corruption in the country. He said that with the Covid-19 pandemic and its attendant economic disruptions, Nigeria should put in place fiscal and monetary policies that will help more entrepreneurs, strengthen the small business sector and boost Nigeria’s economy.

Obi explained that nations of comparable nature with Nigeria had done so much to boost their MSME sector and take their economies forward.

“India, with a population of about 1.4 billion people, has just provided a stimulus package of about $300 billion (approximately 10% of their $3 trillion GDP) for Covid-19 stimulus intervention. Indonesia, with a population of 264 million people, is coming out with a stimulus package of about $65 billion (approximately 6% of $1.112 trillion GDP).

“Vietnam, with a population of 95 million people, is releasing a stimulus package of $26 billion (approximately 10% of $262 billion GDP). Philippines, with a population of 110 million people, are releasing $20 billion as stimulus package (approximately 6% of $355 Billion GDP). South Africa, with a population of 55 million people, is giving out a stimulus package of $26 billion (approximately 8% of 320 billion GDP). Egypt, with a population of 99 million people, is releasing about $12 to $15 billion as its stimulus package (approximately 5% of $300 billion GDP). Bangladesh, with a population of 165 million people, is releasing $8 to $10 billion as stimulus package (approximately 3% of $350 billion GDP). Nigeria’s combined fiscal and monetary stimulus so far is about $5.5 billion or N2.3 trillion (about 1.3% of $400 billion GDP),” he stated.

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