‘In this interview with BusinessDay’s PATRICK ATUANYA, OBINNA IGWEBUIKE, co-Founder and Managing Partner, Sawubona Advisory Services Limited, a Research, Advisory and Venture Management company, highlights some critical factors needed for businesses in Nigeria to succeed. He also articulates his views on emerging businesses opportunities in Nigeria.
You seem to be a new consultancy firm, although you have been around in some form since 2007. Tell us about Sawubona and what expertise you bring to the table for businesses.
Sawubona essentially started in 2007 as SMARTLab Consulting and at the time, the business was essentially about consulting for friends, aspiring entrepreneurs and early stage start-ups, who had business ideas and wanted to take these ideas to the market or grow small businesses. Since the relationships with these clients were maintained from the idea stage to market stage, SMARTLab Consulting naturally progressed to an SME Consulting firm. At some point, SMARTLab evolved to what is now Sawubona Advisory Services, a research, advisory and venture-management Company. We no longer primarily see ourselves as SME consultants, but of course given our history and the path of our evolution, we have a very strong SME advisory unit.
In terms of what we bring to the table, we have developed significant competence and experience in understanding the Nigerian market and the factors that drive market success. We have successfully worked with clients in sectors like manufacturing, agriculture, oil and gas, technology, healthcare, fashion, entertainment, education, transport infrastructure and international development. This is quite some industry exposure and we have been able to leverage these experiences across different client engagements.
Closely tied to this is the diverse experience of our Board of Directors and Consultants. We have quite a diversified skill set in terms of functional and industry exposure, so we bring very tangible consulting value to the table. Our brand promise is to deliver enduring results to businesses we have relationships with. We leverage our assets, which essentially are our organisational knowledge gained from many years of practical experience, our people and our consulting and administrative systems and processes, to ensure that we constantly deliver on this promise.
Tell us more about your proprietary research department. How do you get data for your work and who are the major users of your research?
To a large extent, consulting without research is like medical practice without diagnostics. Companies need to know what they are surrounded with and it is this understanding that led to the creation of the Sawubona Research and Intelligence Unit. We really try to make sense of market and industry situations. In terms of data collection, we have an active data collection system and we aim to always have data collection at every point in time for one research project or the other. We design our research for organisations that need understanding of their industries and markets to take decisions.
Now there is a need to also put this in context. Research does not take decisions, but ensures more effective decision making. So you can say that with research, decisions are put in proper perspective. I believe a great management consulting firm is one that is able to carry out effective research and then has the people, systems and processes to deploy this research effectively to solve clients’ problems and take advantage of value opportunities in their environments. This is what we try to achieve as consultants when we work on client engagements.
What major factors from your vantage point determine a successful business in the Nigerian environment irrespective of industry?
A major factor we see from time to time as critical to success for businesses especially in a unique business environment like Nigeria is proactive planning. We constantly emphasise to our clients the need to understand evolving trends and market dynamics, new competitors and complementors, and regulatory changes. Some of these are more visible and others are less visible. Businesses only know this by constantly planning and adapting their plans. Unfortunately, business owners, entrepreneurs and managers are caught in the day to day management demands and taking time to plan their businesses, which usually requires asking critical questions is not done often enough.
Strategic planning helps businesses constantly identify where they are at any moment, set and review goals, and highlight growth enablers. It forces businesses to ask the tough questions regularly and find answers to them. Doing enough of this process is critical to business growth and success.
Looking at anecdotal evidence it would seem at first glance that the major hindrance to Nigerian business growth is capital; however there may be some other factors. What are your thoughts on this?
Yes, capital is an issue. It is a lot better these days, since banks are perhaps more willing to support SMEs and non-multinational blue chips because they probably have a better understanding of how these businesses work. I will also not take for granted the challenge of running a business in a country with sub-optimal infrastructure. However beyond capital and infrastructure challenges, I would emphasise again strategic planning, especially in spotting and taking advantage of market opportunities.
Sawubona once did extensive research on some key markets in some cities in the South-East of Nigeria and we found out that there are so many brands in the South-East that were so popular and had so much patronage, but were hardly seen in Lagos. This was across a range of products. There are businesses here in Lagos, battling to compete in this saturated market (Lagos) when there are emerging cities in Nigeria that offer huge market opportunities.
We researched an alcoholic beverage brand in particular and the consumers were so loyal to that brand because aspects of the brand like design, packaging, and communication resonated so strongly with them that the consumers developed a local phrasing for the brand that went along the lines of this is our own brand and in this place, this is the only brand that appeals to us. One will struggle to see this brand in Lagos. The Nigerian economy obviously has significant market opportunities but the discipline to disaggregate this economy into smaller units or constituents or simply put, cities that have unique market opportunities will be very critical for growth.
Technology also offers significant growth opportunities for businesses. Businesses have traditionally focused on building financial capital, human capital, trade and logistics capital to mention a few, but today, technology and digital capital are critical to massively scaling revenues and reducing costs. Businesses will not just stumble across digital capital. It has to be developed and again, the foundation of this is strategic planning.
What are your perspectives on management consulting as a profession and its continued relevance to businesses?
If there is one thing that keeps me awake at night, it is trying to find the answer or perhaps answers to this question. Generally, management consulting as a process is done based on the consultant’s understanding of the way the world works. I highlighted a few minutes ago that research is the basis of most consulting engagements and for good reason. So essentially, my approach to a management consulting brief is guided by my understanding of the workings of the world in which that business operates. This could turn out to be a challenge because management consultants and business support service providers generally have to understand that this frame of reference is changing at an incredible speed and this is not just a developed world phenomenon. I was speaking to a client who runs an e-commerce business a few days ago about how practically difficult it can be to really map trends from consumer analytics to build insights because the moment you think you have a pattern, you may begin to see a new direction. For example when I started my career in consulting, I understood technology to be an enabler of business. In business school, I was made to understand technology as an enabler of business. From my perspective as a management consultant today, I see that is technology not just as an enabler of business, but is the business of the new economy. This seemingly innocuous difference in perspective can be the difference between organisational success and failure. So first of all, for management consulting to keep its relevance, its frame of reference, which is its understanding of how the world works, has to keep adapting to changes in the real world.
How does this affect the businesses that engage management consultants?
The fast pace of change is also a challenge for clients. Let’s say a consulting firm develops a strategic growth plan for a client. That plan is based on a frame of reference at a particular time. It should be futuristic, but its forecasts are based on a set of variables that are what they are – variables, so they can change. If there is a radical shift in those variables, the client may struggle to implement the plan in the real world and this may negatively impact the value the client places on that strategic growth plan. So I will say another way management consulting has to show itself as relevant is to build the people, systems, and processes that are not just good at planning and advising, but can adapt and implement these plans successfully in very volatile market and industry environments. The big firms saw this many years ago and I think the follower few are also seeing this. The reality is that the industry for consulting firms that are simply idealistic in approach is already saturated in Nigeria, so building implementation competence is as much a defensive strategy as it is an offensive strategy. This shift can however be very tough for management consulting firms if they are not wired to implement in difficult environments from the start. This will also have a significant impact on human resourcing requirements for consulting firms.
What is your take as Nigeria as an investment destination?
The 1980s and 1990s were generally seen as the lost decades for Africa. There was little or no growth and development. However, things started to change around the year 2000 and African countries started experiencing growth, powered by among other things, strong commodity prices, consumer demand, institutional and macroeconomic reforms. Of course we all know this growth did not bring about development. About 40% of Africa’s upper and lower middle income countries, like Nigeria, became middle income countries during this growth period but are still low human development countries. Access to education, infrastructure, healthcare and social and financial inclusiveness are fundamental drivers of human development. Unfortunately for Africa, these drivers are themselves driven by access to inclusive economic opportunities which our growth has not given us.
Now there is clear statistical evidence that shows the direct relationship between innovation and increase in productivity, even where levels of other factors of production remain constant. With a bold approach to locally-created and adapted innovative solutions, these human development drivers that are lacking in Africa can provide business opportunities and become platforms that can drive subsequent increase in productivity.
What sectors are most interesting to you?
Agriculture employs about 70% of Africans, many of whom are in subsistence farming, actually some estimates put the subsistence level at somewhere around 70%. Another estimate we got to realise from the proceedings from the World Economic Forum for Africa a few months ago is that the productivity of subsistence farming in Africa can be as low as 40%. This is an opportunity for private sector investment to improve productivity, create sustainable economic value, and solve a very significant social problem by creating more jobs and improving the human development situation.
Technology, especially accessible high-speed internet is also an area I am excited about, because of the positive impact they have on economic productivity. Technology infrastructure is a critical backbone for development. We know from the NCC that internet penetration is currently around 83 million connections. Many of these 83 million connections actually struggle with low quality and high cost of connectivity. Despite the challenges, the effects of the internet have been transformational across sectors from retail to real estate, consumer electronics to automobiles. You can then begin to imagine the power of creativity and innovation that will be unleashed when internet access is not only more inclusive, that is lower priced, but with better quality.
Financial coverage for as many citizens as possible is quintessential to building a modern and viable economy. With about 39% of Nigerians still outside the traditional financial services coverage, opportunities exist for innovative solutions, which are not just businesses opportunities but serve as platforms for massive productivity gains. We all celebrate Kenya’s M-pesa. How do we as Nigerians create innovative solutions to, for example, digitize, record, and manage the large pool of cash in the informal economy, many of whom are in the excluded segment? This will improve the productivity of those currently unbanked. It is a huge consumer banking opportunity, but this opportunity cannot be accessed with the same frame of reference that consumer banking has been traditionally viewed.
This is not to say the private sector will just throw money into these problems and they will automatically become huge and profitable businesses. There is need for institutional reforms, some of which are ongoing, at different rates across Africa. There is also the need for government investments that can reduce factor costs and make private capital more efficient. Investments in critical infrastructure, education and security will be catalytic. Also Africa needs to massively deepen its capital markets. Nigeria and South Africa are the biggest economies in Africa, but the size of the Stock Exchange in Lagos is so small compared to Johannesburg. This needs to be addressed as private sector funding, a critical element of innovation, thrives when investors see robust exit opportunities and the capital markets are built to provide this option.
How does Sawubona help investors who are interested in taking advantage of these opportunities?
The process for investing typically involves initial market assessments and feasibility studies, including analysis of the market opportunities and risk, competitive analysis and profiling, business case development, and understanding the regulatory requirements. Based on an understanding of the fundamentals of the market and industry, a market entry strategy is developed where the business, among other things, develops a business plan, marketing and sales plan, operational structures from options like licenses, franchises, joint venture agreements, etc. Essentially this is where the business roll-out is planned. In actually rolling out, the business will need regulatory approvals, and then implement the plans that were a basis for setting up the business. Sawubona’s services essentially cover these areas.
How does Sawubona help investors who are interested in taking advantage of these opportunities?
The process for investing typically involves initial market assessments and feasibility studies, including analysis of the market opportunities and risk, competitive analysis and profiling, business case development, and understanding the regulatory requirements. Based on an understanding of the fundamentals of the market and industry, a market entry strategy is developed where the business, among other things, develops a business plan, marketing and sales plan, operational structures from options like licenses, franchises, joint venture agreements, etc. Essentially this is where the business roll-out is planned. In actually rolling out, the business will need regulatory approvals, and then implement the plans that were a basis for setting up the business. Sawubona’s services essentially cover these areas.
