26 May Nigerian Business Culture
An Inside Perspective: Nigerian Business Culture and Incentives
As we pointed out in our previous article addressing Nigeria as the rising giant of the African economy, the Nigerian business culture may differ substantially from cultures existent outside the country. This article focusses on Nigerian business culture, and further describes why incentives will inevitably give companies that much needed edge over their competitors.
Business in Nigeria
A Few Introductory Notes about the Culture of the Business Environment in Nigeria
Nigerian society is strongly hierarchical in terms of power relations. It is a necessity that a clear hierarchy is established where every employee is aware of this structure so that he or she may contribute to it constructively. In a certain sense, a benevolent autocrat is the preferred leadership style, and those willing to embrace this culture should experience success.
Collectivism vs. Individuality: Nigerian society is strongly rooted in a collectivist culture. Although this doesn’t rule out individuality, a collective effort allows for communal ownership of resources and effort. In this atmosphere, trust becomes very important.
Decisive action: Nigerian culture could perhaps be described as “masculine” in the sense that emphasis is placed on action and dealing with challenges directly and quickly. There is a stress placed on competition, quality, equity and continuous improvements. Managers should be assertive and decisive because “things are sorted out by fighting them out”.
Short Term Focus: Many Nigerian businesses are focussed on achieving results quickly rather than adopting a long-term stratagem. In short, people love to see results timeously and know that their monetary investment is being fruitful.
A Brief SWOT Analysis of the Business Environment
Strong banking and financial sector
Well managed money supply
Availability of young, active and mobile labour force
Investment competitiveness and profitability
Inadequate power supply, neglected road networks, inadequate security set up and other related infrastructures
Insufficient information systems, insufficient technology resources, and a lack of independent scientific research
Lack of market diversification
Insufficient managerial resources capabilities and leadership skills
A growing population creates high demand for products and services
Political improvements create more opportunities as markets develop
Opportunities for outsourcing, creating synergistic bilateral relations, and a greater availability of ideas
Supplier relationships, cross country trading and inter-firm linkages can create opportunities for learning and improvements.
Crime rates, frauds, scams and corruption
Threat of import effects on the local markets
Increasing competitors in the local markets
How Does Nigerian Business Culture Differ from that of Other Countries?
Although decisive action is encouraged, Nigeria’s pace of doing business is often slower than South Africans and westerners are used to. “I will tell you one little thing about doing business in Nigeria: time is like a slow river. If you can grasp this mind-set and learn to manage it, you will do well in Africa” (Nissi Ekpott, 2012).
The fact that most transactions in Nigeria are completed using cash is also a foreign concept for many international players. The international business culture supports e-commerce, and whereas this is developing in Nigeria, the bulk of transactions are still carried out in cash.
There are some important cultural differences evident that should be taken into account: Nigerians are perceived as aggressive in comparison to other countries. Indeed, Nigerians often describe themselves as being “proud and loud”.
As stated before, many Nigerians like seeing short-term gains. Whatever they invest in, they would love to see it yield meaningful profits/income in as short a time as is possible.
Prominent Nigerian Business People and Their Recipes for Success
Prominent business people in Nigeria:
Aliko Dangote: Conglomerate
Austin Okere: Conglomerate
Molade Okoya-Thomas: Conglomerate
Mike Adenuga: Conglomerate
Cosmas Maduka: Conglomerate
Augustine Ilodibe: Conglomerate
Jim Ovia: Banking
Recipes for Success:
They started small: The business people listed above are rich by any standard, and are USD billionaires. These entrepreneurs were not born into wealth, however, and all started small. In other words, each have taken significant risks and built their careers through perseverance and hard work.
They concentrated their efforts: The above business people did not diversify their effort, and instead concentrated on specific markets: this is to say that their success came from streamlining the efficiency of time, resources and effort.
They paid attention to the needs of their workers: One key to becoming a successful business person in Nigeria is to take care of your workers. Having enthusiastic workers is key to a smooth and efficient production process. Production is a tedious task, so be sure to take care of your workers and always incentivize them.
Efficiency was their watchword: Another key aspect to the success of the billionaire business men was their constant effort to improve efficiency and productivity. Aliko Dangote built the largest cement factory with the latest technology just to increase efficiency. Efficiency is the keyword to successfully running not just a manufacturing company; but a successful business.
They had a mission: Success in business is highly dependent on the focus of the vision of the company. Questions that should be answered are as follows: Why did you become an entrepreneur? Why do you want to start a business? Why do you want to build a business? Why do you want to become a successful business person? If you take a closer look at the entrepreneurial life of the billionaires, you will notice that they all had a strong business mission and that mission was the driving force behind their success. If you want to find success as a business owner, you must have a strong business mission. Aliko Dangote became the richest black person in the world because he was on a mission to provide a basic need for over 150 million Nigerians.
What should an international business person do to make sure that they are implementing correct business etiquette in Nigeria?
One of the biggest mistakes international companies can make is to assume that the rest of the continent functions like their home market. “Some people want to export ideas from their own market to other markets without being very flexible, adapting to and learning from local situations” (Nissi Ekpott, 2012).
Companies shouldn’t aim for “overambitious profits” too fast, but also shouldn’t be too cautious that they don’t take advantage of the opportunities.
What are important things to remember when conducting business in Nigeria?
Short-term based and profitability oriented strategy: It is important to remember that the culture demands quick actions and returns on business investment, with a high commitment to group work. International business should not seek to conquer the whole market with a given product, but must innovate different forms of products constantly to meet the quick changes in demand. Performance based view on payment will also be suitable as employees in this environment expect to be paid based on whatever inputs they have contributed to the company; as such, overtime without pay is something that is unlikely, which means that pay performance is the right strategy. A final point is that entrepreneurs should be competitive and constantly showcase the quality of their products and services through available marketing channels.
The Incentives Market
What motivates Nigerian workers?
Recognition and attention
Time off/work free day
Conducive work environment
Gags and gimmicks
Free food day
Casual dress day
What types of incentives would the Nigerian business workforce like to see?
Individual Incentives: These are cash awards to recognize achievement of predetermined performance objectives.
Team or Group Incentives: These are the same as individual incentives, except awards are based on a team or group’s achievement of predetermined performance objectives.
Gain Sharing: These awards represent the employees’ share of the gains of actual results achieved against specific operational goals. When these are exceeded, the “gains” are paid in the form of short-term cash incentive awards.
Spot Awards: These cash payments provide immediate recognition of accomplishments by staff below the managerial level. They are intended to reward risk taking, creativity, and productivity.
Special Noncash Recognition: These may be merchandise, such as a gift certificate. They are usually awarded to those below management level.
Lump Sum Increases: Cash payments are made in a single lump sum to recognize performance achievements. They are not added to the base salary.
Skill-Based Pay/Pay for Knowledge: This pay is given to award acquisition of additional job-related skills and capabilities.
Field and transportation allowances
Better facilities and material resources
How can incentives benefit Nigerian businesses?
Reduced staff turnover
Nigeria is, as is well publicized, a rising star not only in West Africa, but on the continent as a whole. Overlooking this massively growing economy would be a notable mistake, especially for businesses operating from an African base. Non-African countries would also be wise to thoroughly investigate Nigeria as potential markets are erupting on a continual basis, and international investment is always welcomed. In terms of Uwin Iwin, we believe that the city of Lagos is a centre for excellence in Africa, has been vital for the growth of the business. As the biggest population and economy in Africa, we have no doubt that our Nigerian business is set to become one of the most rapid growing offices as it will be the hub for activities in West Africa.