Economy
Accelerating Potential of Nigerian SMEs
By Timi Olubiyi, PhD
As businesses grow, many decisions come to bear, from marketing to funding, expansion, investments, operations, logistics, staffing, technology adoption, and so on, all to enhance business productivity. Without a doubt, just like individuals make poor choices and bad decisions, businesses do too.
Business leaders and entrepreneurs make bad decisions not because they are not clever or experienced but because they are humans. Certainly, humans are never perfect decision-makers at all; a bad decision can occur once in a while or repeatedly, and such is the case with business leaders, entrepreneurs, top management, and/or owner-managers of businesses around as well.
As important as decision-making is in business operations, the good news is that business failures have been identified largely to be due to poor decision-making by operators, owners, or business managers. Why is this good news? Understanding the major cause of past business failures could help restrain many entrepreneurs or businesses from repeating this error clearly. Since poor decision-making has been identified as a major concern for business sustainability, making a good choice most time is important for any business, though this can be argued.
In business, no matter the structure in place, decision-making is key and is one of the main indicators of a high-performing business or one of the indicators of how healthy a business is. Remember, not having a decision-making process is in itself a decision on its own.
I have observed keenly that a large number of businesses, be they large or small in Nigeria, particularly the ones in the industrialized States and areas, relish taking shortcuts as a normal practice, and they hardly ever have an articulated decision-making process within their businesses.
It is rather worse in small-scale businesses where decision-making could be the sole responsibility of the operators or business owners. In fact, in small-scale businesses, the most common cause of poor decision is that the operators are so dominant with excessive managerial control that they see decision-making as their sole right without any recourse to the ideas or opinions of employees or others. This is the big issue really.
Furthermore, no initiative or contributions from employees and subordinates are ever considered, key decision-making is never participatory, and this sometimes leads to business concerns. A decision-making responsibility before, during, and after any implementation of a task in a business should not be the entire decision of the business owners. Playing the obvious role of the sole expert in all departments, units, and concerns of the business operations by the owners is never sustainable but damaging; this action has been captured as one of the major causes of the incidence of widespread business failures amongst small -scale businesses in the country.
A good decision can enable a business to thrive and survive long-term, while a poor decision can lead a business into failure. A common behaviour of leaving things to chance when decisive action ought to be taken is also a poor decision, which can bring huge consequences on the business.
This worrying development amongst small-scale business operators has cost many their fortune, particularly with the advent of the coronavirus pandemic (COVID-19), which has been impacting the economy and businesses negatively. It should be a time for decision-making for businesses and not a time to operate aloof. The coronavirus pandemic has changed the world and also signalled a new era for businesses. Therefore, there is a need for business operators to take strategic decisions, most notably in the manufacturing, retail, and service sectors, due to technology disruptions.
Yet business operators in these mentioned sectors disregard this all-important activity. The failure of any business or venture to make good and quality decisions could be a result of many factors, such as inexperience, lack of time, stress, overwork, and pressure from stakeholders, among others. All these can lead to poor decision-making and the eventual failure of any business. The quality of decisions in any business directly impacts its performance and overall business outcomes.
Small business operators should understand that it is healthy for staff to disagree over decisions if the views defer. It only helps to make a proper and effective decision for the business at the end of the day. Leaders should purposefully create a culture where debate and disagreement are welcome.
Remember, decision-making is the action or process of thinking through possible options and uncertain outcomes and selecting the best option concerning the business. This decision-making could bother on marketing, financing, customer satisfaction, investment, and technology usage in the business.
It is often shocking that once-known and thriving businesses can suddenly go under and cease to operate as a result of what most times seem to be poor decision-making and mismanagement. In the case of big and widely known multinational businesses like Kodak, Nokia, Motion Blackberry, and Motorola, the management ignored the shift in technology and failed to be decisive in their decision making particularly on innovations, until it was too late despite the vantage position.
Though Nigeria has a tough operating environment and harsh economic factors, however, many of the small businesses and start-ups in the real estate, retail, manufacturing, corner shops, and service sectors, among others, have lost their relevancies due to poor or lack of prompt decision-making.
For instance, just on Ogudu road via Ojota in Lagos State, businesses that were once the toast of teeming residences and customers, such as Cherries superstore, Terminal 3 restaurant, CCD stores, and The Mr Biggs eatery Ogudu branch have all now remained permanently closed, failed, sold off or shut down to what seems to be poor decision making from the management. This is the fate of so many of the medium-small scale businesses in Lagos State and, indeed, Nigeria. They disappear after a few years of operations and never grow to become intergenerational businesses.
One of the worst things to do in business is to ignore customers’ preferences, revolutionary innovations and also fail to adapt to changes within the business environment as quickly as possible. The high business mortality rate in Nigeria is mainly due to these reasons. Entrepreneurs and operators try to protect what they already have going for them instead of having a decision-making process that can always suggest innovation and ways of doing things better to meet and surpass customers’ expectations.
Many businesses still follow this rigid path, particularly in the manufacturing, services, and retail businesses, lacking the foresight of the advent of online presence, e-commerce, and technological shift occasioned by COVID-19. In my view, businesses need to have a sound decision-making policy that is in tune with the current realities of aggressive social media and internet usage. We have experienced a major cultural shift in customers’ behaviour with COVID-19, and businesses need a decision-making process to review their activities from time to time. This will help to adapt to the economic and environmental changes accordingly.
Multiple studies have suggested that engaging employees in the decision-making process can impact businesses positively, make them more committed to business success, have stronger connections with the businesses, increase engagements and also help produce higher quality results.
Therefore, building a participatory decision-making culture is recommended for businesses, particularly small-scale businesses at this time. This strategy will more than likely improve the competitive position and effectiveness of the management, operators, and business owners. Because making decisions is a critical component of effective leadership, hence involving employees in the process will help businesses make better decisions.
Let the truth be told, inexpensive and reasonable businesses built around clothing, housing, potable water, medical care, education, home essentials, shopping and food items will always have economic demands. Thus, as much as the adequate and proper decision-making process or policy is in place, that should give the needed competitive advantage and make businesses not to ordinarily fail. Good luck!
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Dr Timi Olubiyi is an Entrepreneurship & Business Management expert with a PhD in Business Administration from Babcock University Nigeria. He is a prolific investment coach, seasoned scholar, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and Securities & Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: [email protected], for any questions, reactions, and comments.
By Dipo Olowookere
The first trading day of the week at the Nigerian Exchange (NGX) Limited ended in stalemate on Monday, though the key performance indicators were slightly up.
The All-Share Index (ASI) inched higher by 1.39 points to 149,437.88 points from last Friday’s 149,436.48 points and the market capitalisation was up by N3 billion to finish at N95.267 trillion compared with the previous trading session’s N95.264 trillion.
The financial services space was upbeat yesterday, with the banking index gaining 0.89 per cent and the insurance counter rising by 0.87 per cent.
However, the consumer goods segment performance badly, losing 0.79 per cent as the energy sector declined by 0.05 per cent, while the commodity and the industrial goods indices closed flat.
Business Post reports that investor sentiment was bullish during the session as there were 28 appreciating stocks and 23 depreciating stocks, representing a positive market breadth index.
Sovereign Trust Insurance led the gainers’ gang after it chalked up 10.00 per cent to sell for N3.74, Guinness Nigeria appreciated by 9.96 per cent to N239.50, Mecure Industries rose by 9.88 per cent to N41.70, First Holdco improved by 9.86 per cent to N34.55, and AIICO Insurance also expanded by 9.86 per cent to N3.79.
The losers’ group was led by Prestige Assurance after it gave up 10.00 per cent to finish at N1.53, FTN Cocoa lost 8.16 per cent to trade at N4.50, Guinea Insurance depreciated by 7.69 per cent to N1.08, Royal Exchange crashed by 7.25 per cent to N1.79, and Nigerian Breweries slipped by 6.86 per cent to N76.75.
A total of 553.2 million shares valued at N13.3 billion were transacted in 28,907 deals on Monday versus the 602.8 million shares worth N30.7 billion traded in 20,550 deals last Friday, indicating a shortfall in the trading volume and value by 8.23 per cent and 56.68 per cent apiece, and an improvement in the number of deals by 40.67 per cent.
FCMB was the most active stock with a turnover of 92.0 million equities valued at N964.0 million, Access Holdings sold 67.9 million shares for N1.4 billion, Consolidated Hallmark transacted 50.8 million equities worth N208.8 million, Fidelity Bank exchanged 35.8 million shares valued at N672.4 million, and Jaiz Bank traded 29.7 million stocks worth N134.1 million.
By Adedapo Adesanya
The oil market went down on Monday as investors balanced disruptions linked to escalating US-Venezuelan tensions with oversupply concerns and the impact of a potential Russia-Ukraine peace deal.
Brent crude futures lost 56 cents or 0.92 per cent to sell for $60.56 a barrel and the US West Texas Intermediate (WTI) crude futures depreciated by 62 cents or 1.08 per cent to close at $56.82 a barrel.
The market is closely monitoring developments and their impact on oil supply, with Reuters reporting that the US plans to intercept more ships carrying oil from Venezuela following the MV Skipper tanker seizure last week, intensifying pressure on Venezuelan President Nicolas Maduro.
Venezuela’s oil exports have fallen sharply since the US seized a tanker last week and imposed fresh sanctions on shipping companies and vessels doing business with the South American oil producer.
However, despite this development – ample oil supplies continues to go China which is Venezuela’s biggest oil buyer. This is in addition to plentiful global supplies and weaker demand which are capping some of the impact of supply disruptions tied to the tanker seizure.
China has been stockpiling crude oil at a daily rate of around 1 million barrels this year. It has also been building new storage capacity. This year and next will see a total of 11 new storage sites built across the country, with a combined capacity of some 169 million barrels. By building new storage capacity, the world’s largest importer can keep buying more crude.
Pressure also mounted on the market over progress in the US peace talks to resolve the 46 months war between Russia and Ukraine. The Ukrainian President Volodymyr Zelenskiy has offered to drop his country’s aspiration to join the NATO military alliance, one of the reasons Russia says it attacked the sovereign nation in 2022.
A possible peace deal could eventually increase Russian oil supply, which is currently sanctioned by Western countries.
Adding to pressure, China’s factory output there slowed to a 15-month low in November, while retail sales grew at their weakest pace since December 2022.
By Adedapo Adesanya
BudgIT, a leading civic-tech organisation promoting transparency and accountability in Nigeria’s public finance, has called on the federal government to be transparent after it deferred the implementation of 70 per cent of capital projects initially appropriated in the 2025 fiscal year to 2026.
“From our analysis, while this development is not entirely surprising, we hold cautious reservations about the implications of this decision,” it said in a statement.
The group said the deferment suggests the federal government intends to limit the number of capital projects under implementation, to use available funds more efficiently, prioritise critical projects, and reduce the long-standing problem of abandoned projects.
“In this sense, the move appears to be an attempt to retain the 2025 capital projects—many of which are based on existing economic plans and strategies—rather than introduce an entirely new set of projects in the next fiscal year.
“We view this as an effort by the federal government to restructure the sequencing of capital project implementation. Rather than rolling out a fresh budget filled with new capital projects, the government appears to be attempting a reset by carrying forward existing projects and improving implementation discipline,” it said.
BudgIT said this approach, if properly managed, could help salvage a challenging fiscal situation and strengthen budget credibility.
Recall that BudgIT has consistently raised concerns about Nigeria’s budgeting process, particularly the government’s failure to adhere to the approved budget calendar and its practice of running multiple fiscal programmes concurrently.
“We have maintained that budget timelines must be treated as sacrosanct and that unfinished but still relevant projects should be consolidated through a supplementary budget passed within the same fiscal year, rather than endlessly rolled over,” it said.
“Consequently, the continued inclusion of numerous uncoordinated and low-priority projects has bloated federal capital expenditure and increased public debt, often without clear developmental value.
“This pattern weakens the impact of capital investment, as spending decisions increasingly appear driven by project insertions rather than sound planning, prioritisation, and fiscal discipline. This is compounded by the fact that the federal government does not publish disaggregated reports on capital expenditure implementation. So, citizens are at a loss in knowing precisely what has or has not been implemented,” the statement added.
This challenge, it said, is further illustrated by developments during the 2024 fiscal year, in which the federal government extended the implementation of capital expenditure components of both the 2024 Appropriation Act and the 2024 supplementary Appropriation Act into mid-2025, and subsequently to December 2025.
“As a result, although the 2025 Appropriation Act was duly passed and assented to, it appears that only its recurrent components—such as personnel and overhead costs—were implemented in 2025. This is further evidenced by the absence of federal budget implementation reports for the 2025 period and official statements indicating that revenues from the 2025 fiscal year were used to fund the implementation of the 2024 budget.”
It revealed that it remains unclear whether the 2024 fiscal year has been formally closed.
“The recently published Q4 2024 federal budget implementation report is explicitly described as “provisional,” raising concerns about proper fiscal closure. Formal closure of fiscal accounts is essential, as failure to do so undermines financial reporting, fiscal transparency, and consolidation standards.”
In light of these, BudgIT stressed that this decision to defer capital project implementation must be robustly defended during the upcoming budget defence sessions at the National Assembly.
“The Executive arm of government must clearly demonstrate to the Legislature that this action is necessary to restore order to Nigeria’s fiscal framework and to end the damaging practice of implementing multiple budgets concurrently. By the time the annual Appropriation Act is passed by the National Assembly and transmitted for presidential assent, it is often heavily bloated with additional projects. While the National Assembly’s power to increase or decrease the budget is constitutionally recognised, BudgIT has long argued that this power has been widely abused, often disregarding fiscal planning and national development priorities.”
Commenting, BudgIT’s Deputy Country Director, Mr Vahyala Kwaga, underscored the need for discipline and clarity in implementing the deferment.
“Deferring 70 per cent of capital projects is neither a solution nor a setback on its own. What matters is whether this decision marks a clear break from the cycle of bloated budgets, overlapping fiscal years, and weak project implementation. Without strict adherence to budget timelines, proper fiscal closure, and transparent payment processes, the risk is that we simply postpone inefficiencies rather than resolve them,” Mr Kwaga said.
In addition, BudgIT urged the federal government to fully adhere to its “Bottom-Up Cash Plan” as outlined by the Federal Ministry of Finance.
“This approach—where payments are made directly to verified contractors rather than routed through MDAs—has the potential to improve efficiency and accountability in capital project implementation. The government must ensure strict compliance with payment protocols, contractor verification processes, and timely disbursement of funds.
“To this end, we call on the Ministry of Finance, the Ministry of Budget and Economic Planning, the Budget Office of the Federation, the Bureau of Public Procurement, relevant MDAs, and the President of the Federal Republic of Nigeria, Bola Ahmed Tinubu, to uphold the principles of transparency, legal compliance, and accountability in the management of public funds and public projects.
“We also encourage citizens, civil society, the private sector, and the media to actively support and scrutinise capital expenditure implementation, as the benefits of effective public spending ultimately accrue to all Nigerians.”
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