Nigeria’s weak industrial ecosystems, infrastructure gaps and shortage of skilled manpower are slowing the expansion of businesses, making it difficult for companies with viable products and business models to grow into large national and international enterprises, Abubakar Suleiman, the managing director of Sterling Bank, has said.
Suleiman stated this at the Nigerian Economic Summit, NES32, in Abuja on Tuesday.
He said Nigerian businesses often have to develop critical support systems themselves, unlike their counterparts in countries such as the United States and China, where established industrial ecosystems allow entrepreneurs to concentrate on their core competencies.
The Sterling Bank MD said businesses in developed ecosystems could scale faster because the suppliers, skilled workers, logistics providers and other essential components needed for expansion were readily available.
“If you start a business that is a problem-solving business in the US today, within nine months, you would have a business that’s worth a billion dollars. It’s because they’re in a scaled ecosystem. The reason China has become increasingly competitive today is if you walk into any of the ecosystem in China, you can think of any idea. Somewhere down the street from you, at best five kilometers away from you, is someone who will produce that thing that you need. So you only need to be good at what you have come to do.
“The challenge with Nigeria is that you may build the world’s most sophisticated refinery, but you still have to buy a truck and run it. In other words, none of the other components that you need to scale. You wanted to build a refinery, you need to go find the 30,000 workers that work in the refinery. So the ability to hire and manage 30,000 Indian and Filipino workers becomes a capability you must have.
“The ability to run 4,000 CNG truck from a capability you must have. The ability to run the stations where this truck will be managed is a safety issue. So you are either in a place where your idea is rich and the ecosystem supports your ability to scale, or you must build team to scale.
“Those who do it in between, you will find that it takes a lot of time. Things that ought to scale in six months will scale in six years. And most people don’t have six years”, he said.
The Sterling Bank MD argued that Nigerian businesses must either operate within an established ecosystem or develop the capabilities to build and manage one themselves, warning that companies caught between the two approaches risk spending years trying to achieve growth that should otherwise take months.
“Things that ought to scale in six months will scale in six years. And most people don’t have six years,” he said.
He attributed this challenge partly to limited entrepreneurial patience and insufficient funding, noting that business owners and investors may abandon expansion plans before the underlying operational challenges are resolved.
He said investors often expect returns within a reasonable period, making it difficult for businesses to sustain long-term expansion efforts when structural bottlenecks delay growth.
Beyond infrastructure and financing, he identified human capital and the difficulty of replicating successful business models across multiple locations as major constraints to enterprise expansion.
According to him, some businesses appear highly profitable because their founders personally supervise operations and contribute exceptional skills and labour without adequately accounting for the value of their own work.
Such businesses, he said, may struggle to reproduce their success when they open additional branches because the performance of the original outlet depends heavily on the founder’s direct involvement.
He called on business leaders to explore ways of creating stronger industrial ecosystems, either individually or through collaboration with other companies.
He proposed that businesses form coalitions in which complementary enterprises develop their capacities and standards together, allowing each participant to expand while strengthening the wider value chain.
“For instance, if I want to become a developer, can I find someone who is also going to advance block production at the scale and standard that I want so that the person is growing at the same time that I’m growing?” he asked.
He said such partnerships could enable businesses to address shared operational constraints and build the networks required to support expansion.
He said the priority was to establish a pathway through which Nigerian companies with strong products, ideas and processes could overcome structural limitations and grow into sustainable enterprises operating across multiple locations and markets.
Also speaking at the event, Ayodeji Balogun, group ceo of AFEX said that focus must be shifted from just scaling a business to scaling the business ‘excellently’. This he said would require engaging and getting the buy-ins of commited partners at the pilot stage of the a business.
“If you must scale a business excellently, you mudt have the will power to build workers to become leaders, you must have the wealth power, that is to raise long standing capital and you must have the stay power, to stay on course even when things fall apart.
“Every business owner must understand the ecosystem in which his business operate,” he said.
In her remark, Molade Adeniyi, CEO, Teach for Nigeria, said that in scaling, business owners must shift focus from measuring increase in sizes to measuring level of impact.
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