Enhancing finance for small businesses
In response to an evident and persistent finance gap that is holding back one of the most significant bursts of entrepreneurial wealth creation in the coming decades, it is recommended that:
- CDC be tasked to develop a Lagos-based co-investment fund targeted at early stage businesses that are 'formal from day one';
- The Department for International Development (DfID) liaise with potential partner firms from the City of London in accountancy, finance and other City services to create a 'wrapper' of corporate formality for all investee companies of the co-investment fund; and
- The co-investment fund partner with Lagos-based venture capital firms, banks and the Nigerian Stock Exchange to develop reliable 'financing pathways to growth' for small businesses.
DfID can utilise the expertise at CDC and the legal, accounting and financial services in the City of London to help develop a vibrant early-stage venture sector in Lagos.
By providing co-investment capital to local venture funds, DfID can leverage its capital to provide a significant boost to filling the 'finance gap'. The financial commitment should be sufficient to 'change the norm' of early stage business formation in Lagos, encouraging formalisation and helping to embed the UK corporate model into governance structures.
By working with legal, accounting and other financial services firms in the City of London, the co-investment fund can ensure investee companies are structured to be 'formal from day one' providing local banks with greater confidence to lend against the assets of the business.
DfID should work in partnership with the Lagos State Government and UK City service firms to develop 'formal from day one' support hubs in the State Government’s 'enterprise zones'.
Creating a more skilled workforce
In response to an evident skills gap existing side by side with widespread unemployment amongst the young people of Lagos, it is recommended that:
- DfID establish a UK vocational-skills strategy to train a generation of Nigerians to meet the emerging need for reliable, quality trades-people in Lagos and beyond;
- The Office of Qualifications and Examinations Regulation (OFQUAL) should modify its regulations to enable accreditation of qualifications offered overseas by UK-registered providers;
- DfID work with UK Further Education Colleges and other providers to offer packages of technical National Vocational Qualifications NVQ courses for specific trade skills (e.g. plumbing, construction, electrical); and
- DfID invest, for example via the Open University or Cranfield University, in hybrid distance learning curricula for entrepreneurship and business qualifications.
There is a huge amount of human talent which has not been 'processed' effectively to sustain Nigeria’s SME growth. The UK has a strong reputation in Nigeria for its capabilities in education, but other than for university courses delivered in the UK, for which the reputation remains strong and the courses highly valued, that advantage has been eroded by fierce competition from providers from other countries.
However, rather than rely heavily on a model of providing UK-based higher education to Nigeria’s elite, the UK should adopt a broader strategy for skills development. A more cost-effective hybrid model with education being provided in Nigeria to UK accredited qualification standards will achieve greater penetration and better target Nigerians based on their talent rather than their wealth and background.
Leveraging connections between the UK and Nigeria
As an acknowledgement of the desire for the UK to strengthen and deepen its historical connections with Nigeria and the untapped potential of the Nigerian diaspora in the UK, it is recommended that:
- The Foreign and Commonwealth Office broaden its diaspora programme in coordination with DfID to include support for entrepreneurship and business growth, targeting Lagos for a pilot 'Diaspora Marketplace'-style initiative;
- The football Premier League extend their Enterprise Academy Programme to Lagos reinforcing the strong brand recognition of Premier League clubs in Nigeria; and
- UKTI create and deliver tailored support for UK-Nigeria partnerships in financial services, the creative industries (including fashion, film and technology) and education.