Nigeria

Chinenye Nwaogu: Gov Okezie Ikpeazu: MSME Czar – Part 1

Prior to 2015, when Dr Ikpeazu campaigned for the office of the Governor of Abia State, one of the major platforms he promised to leverage to launch the state into the development hall of fame was the MSME sector. It is no news that the MSME sector as has been demonstrated in many grown and emerging economies has been accepted worldwide as instrument of economic growth and development. It is referred to as the engine of growth and catalyst for socio-economic transformation of any country. MSMEs represent a veritable vehicle for the achievement of national economic objectives of employment generation and poverty reduction at low investment cost as well as the development of entrepreneurial capabilities including indigenous technology.

The World Bank has described the MSME sector as the growth engine of any economy, representing about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national economies (GDP) in emerging economies.

Abia nay Aba has for many decades demonstrated its capacity as the leading MSME hub east of the Niger, 80- 90 % of residents of this city are involved in one form of MSME activity or the other. In fact, Aba remains the commanding centre for finished leather and garment products with over half a million of its residents involved in the value chain. The National Bureau of Statistics has several reported that the GDP of Aba is more than the national average and the economic indices of Aba reflects an economically strong and virile society.

With all these advantages, many of the entrepreneurial and economic achievements of Aba has remained with minimal or non-existent government support. The entrepreneurial niche of Aba has remained neglected and unencouraged as long as government existed except for a few interventions here and there. Successive governments have tried to intervene to the best of their abilities to enhance the infrastructural outlook of the city, though with no real impact, no government has been as intentional and deliberate to grow the MSME sector in that city and the state at large until the coming of Governor Okezie Ikpeazu.

What was the magic wand Ikpeazu used to bring Aba and its products and activities to positive national and global limelight? Before now, Aba-made was rather used derogatorily for fake, sub-standards that even the Aba artisan shy away from identifying their own products of exceptional ingenuity and creativity.

When I came on board in 2015, on area I have consistently participate in almost everything about is the MSME subsector and I can speak as one with good information. This sector though the pride of Aba prior 2015 was actually its bane.
Like a typical scientist, a deep study and analysis of the sector was carried out. Part of the that effort saw a major international development partner Ford Foundation sponsoring the maiden Aba Development Summit, where a cream of experts, key stakeholders gathered for two days to brainstorm on how to rescue Aba and return it to the growth path.

Those efforts brough certain issues to the fore;

Lack of Adequate Infrastructure
Lack of Access to Finance
Lack of Product Identity and branding
Quality and standardization issues
Lack of coordinated approach to support the sector
Industry Governance issues
Lack of technological and automation support

The list is quite inexhaustive but the team began with these and guess where the Governor took it from – Branding, surprised? Many argued then and still now that it wasn’t the right strategy, but it has paid off. The Governor himself became the Chief Brand Ambassador for made in Aba products. That strategy was enhanced with the decision to ruthlessly focus on a few products that Aba has both comparative and competitive advantage. With the Governor himself branding these entrepreneur’s product. Branding at the level the Governor took it brough immense attention to the activities of these ingenious entrepreneurs. Everyone looked the way of Aba. In 2016, the Federal Government launched the maiden edition of the Nationwide MSME Clinics in Aba bring together all the critical key stakeholders in the industry from both divides – government and private sector, the financial institution, quality control agencies and customers under one roof to chart a way forward for the sector. It was at that event that the Vice President, then Acting President declared that Nigeria has no business importing from China if Aba regains its pride of place as the MSME and industrial centre of Nigeria. Successful business leaders will tell you that there is real power in huge marketing and branding efforts. Have you wondered why successful brands spend fortunes signing up celebrities as brand ambassadors? Our branding strategy with Made in Aba products paid off for the players in the industry, in 2017 Aba leather sector added more 1.5 billion Naira in products sales. A direct result of that branding and advertising efforts. That branding and advertising strategy had other components including product road shows to brazil, china, turkey, Gambia, etc., for the first time in the history of the MSME ecosystem in Aba, they were part of the Governor’s delegation to the presidency, in the same vein the government organized the maiden Made in Aba fashion shows in Abuja and New York, USA with the entrepreneurs themselves participating and showcasing their products. That also gave them the opportunity to showcase side by side other brands and global players. Such opportunities fueled their confidence in their products.

Like Governor explained on one occasion our strategy would be a linked chain of events that will cause a chain reaction that will positively improve the sector. With branding came the need for product identification. Before 2015, most shoemakers and garments makers in Aba including the guy that does 30,000 boxers daily shied away from identifying with their brand names. They preferred to put foreign labels on their products due to stigmatization of made in Aba products. However, that massive branding and product campaign efforts forced everyone to own their brands today over 40% of products out of Aba wear the label, made in Aba. This enhanced product identification.

In that sequence of reactions, came massive increase in market share and exposure of the reality of the huge market potentials of made in Aba products. It was as a result of this effort that the leather sector reported a 1 million weekly shipment out of Aba. People began to express confidence in products out of Aba. That boosted the morale of the artisans and entrepreneurs creating a real shift in dignity of handwork. That was all the government needed to do to get more youths involved in the sector to address the huge unemployment challenge facing the entire nation but particularly Abia. The ecosystem needed expansion for growth, that way it will serve as a catalyst for job creation and employment generation. Today many youths in Abia have embraced one form of entrepreneurial activity or the other to earn a decent living. Today we are seeing young graduates and undergraduates proudly identifying themselves as shoe makers and garment markers. I personally know of many students in high institutions who have gone into the leather and garment businesses to earn decent living freeing parents and sponsors of the huge burden hitherto placed on them. We may not have the actual figures, but the MSME ecosystem in the state has added in excess of thousands of jobs and improved livelihood of our people.

With the massive attention paid the ecosystem, many key stakeholders began to express desire to participate in the growth of the sector. Prominent among them was the financial sector. Prior 2015, Bank of Industry a major funder of the MSME sector had closed shop in Abia State and had not interface with the operators in the state. This denied the sector huge fund injection that usually come through that channel. It is on record, that Bank of Industry has done so much if not more than any other institutional financing agency in support of MSME. However, following the intervention of the Governor and his numerous shuttles to the powers that be in Abuja, BOI did not only return to Abia but came back with a bigger bang. Today, the leather sector alone is enjoying a 400 million Naira annual revolving loan basket courtesy of a deal put together by the Bank of Industry, Ford Foundation, Fidelity Bank and Abia State Government. That did not stop there, the state government went further to set up and fully licensed Micro Finance Bank to provide cheap, single digit financial life line to the MSME ecosystem. That Bank has since commenced operation and disbursement of loans to entrepreneurs. The government has also further supported with its launch of periodical Governor Ikpeazu Business Support Scheme also aimed at bridging the access to finance gap.

With that came other agencies, some even changing their pattern of engagement from just regulatory and enforcement agencies to first business growth and enabling agencies. That shift in approach was huge for the creative and ingenuous operators in the Aba MSME ecosystem. Let me buttress with an example, if Emeka decides to create a new juice product and all the agencies that should support with approvals and licence makes it difficult for Emeka to obtain one, he will just use an existing brand label to sell his ideas and products. But with the shift in approach, these agencies now work and walk with Emeka through the standardization process till licence and you have a high quality and edible Emeka Juice hit the market with a storm, another successful entrepreneur has just been born.

It was not just the financial institutions that came along. Rural Electrification Agency came also. REA, in partnership with the state government and the private sector delivered a gas-powered independent power station for entrepreneurs within Ariaria and its environs, a major cluster housing those operating in the entire leather value chain. This power station did not only deliver cheap and eco-friendly power to the MSMEs but also resolved a major concern of environmental and health hazard, operators there were exposed to for many years.

With the massive increase in demand of made in Aba goods came the need for every hand to be on deck to improve the quality of the products out of Aba, of course the producers themselves felt the need to shore up the quality of their products. But the Governor and the Government did not stop there which gave birth to the Abia State Marketing and Quality Management Agency. Working with other operators and all the key stakeholders including partner state and federal MDAs, products out of Aba has continued to improve tremendously.

Perhaps the biggest and the most outstanding intervention of Governor Ikpeazu in the Aba MSME ecosystem is the automation strategy beginning with the leather/shoe production. This Governor selected 30 youths and took to them to China on an all-expense paid training trip. After a thorough training in a fully automated shoe company in Chengdu China, the government went ahead to import all machines need for a complete line of shoe and leather product manufacturing. Today, Enyimba Automated Shoe Factory is now fully complete, with all machines installed, test production done, a private sector-led management board inaugurated to ensure efficiency. Automation was the last lap of strategies to make Aba the hub of quality products and the Governor intends to replicate this in all the key focused sectors. As I write this a team of which I am part is on tour of Turkey and Bangladesh on exploratory visit to major garment manufacturing companies that will lead to the setting up of an automated garment factory, an added impetus to making Aba the hub of quality leather and garment product manufacturing in Nigeria.

Leadership and governance like all other human endeavors is no tea party and those saddled with such herculean tasks are not immune from sometimes harsh judgement and criticisms. To deliver development there are what I call the hardware and software of development. Those who are interested to follow and support the Governor should consider his consistent efforts to build a sustainable software that will power the development of the state in all sectors. Sometimes it is these softwares that are needed to create a sustainable and strong development template and trajectory. Many of the things this Governor has done and is doing are the building blocks successive regimes will not go back to spend resources doing again. Going through this write up one would see that I avoided the issues of road infrastructure totally. That has received adequate attention by many of those whose duty it is in government to inform the public but suffice it to say that in that regard too, Ikpeazu cannot be said to be found wanting if fair assessment is carried out.

It is unarguably true that today Aba and indeed Abia’s claim as the MSME capital east of the Niger has received not just adequate, but empirical and methodological attention by the MSME czar Governor Ikpeazu. I do know that those who operate within this ecosystem have never had it so good. For the first time, government has become intentional and deliberate in its avowed determination to leverage the MSME ecosystem to deepen the development of the state. This has resulted in improved wellbeing, and livelihood for the people, created many jobs and open more vistas of economic prosperity in the state.

Chinenye Nwaogu writes from Dhaka Bangladesh

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