Entrepreneurs need to know everything that will affect the business they are pursuing. It is therefore key to be aware of economic policy and the various positions and actions the government is taking – or will take – to promote economic growth. Policies are infused into laws, statements, regulations, and actions like the national budget, monetary policy from the central bank, fiscal policy from the ministry of finance, import tariffs, and a whole host of responses occurring over time.
Also, there might be a larger tentpole plan that encompasses the economic policy’s general outlook, motivations, or expected outcomes. The National Economic Sustainability Plan (NESP) and Economic Growth and Recovery Plan (ERGP) are examples of this approach.
The challenge for the entrepreneur is to take these policies and reduce them into information that can be used to decide on a business idea, form a business plan, begin or evolve a business, or forecast possible areas of growth and where strategic advantage may lie. You can take a look at our section on government priorities and how they intersect with entrepreneurship.
The Economic Architecture of Nigeria
On the revenue side, the modern Nigerian economy has always been built on the idea of mono-products like agriculture and oil. However, recent governments have tried to create an environment for multiple streams of revenue. Efforts are being made to bolster other sectors such as renewable energy, a more effective tax collection regime, manufacturing and industry, mining and solid minerals, innovation and technology, and a new approach to agricultural production.
This diversification represents a new era of opportunity for the discerning entrepreneur. Government policy areas always emphasise infrastructure, spending, grants, loans, and public sector contracts. Understanding the economic architecture of the country is vital to knowing how your business can benefit from the broader economic outlook. Take a look at our section on the economic priorities of the Nigerian government.
It is also important to note that economic policy is a moving train. Governments will change and the specific areas in which they invest will also decrease or increase according to the peculiar outlook of each administration. You will always need to keep up with new changes, study as much as you can, and follow news and information for relevant updates and development. For example, a new development in government policy is taking place in the recently passed Nigeria Startup Bill. This bill – the result of collaborations between the presidency and the tech industry in Nigeria – aims to clarify legislation and regulations for the tech ecosystem in Nigeria to attract more investments and encourage growth in the sector.
Tips for the Entrepreneur in Engaging with Economic Policy
- Getting your business formalised to interact with government agencies is vital. See our advisory on legal compliance and business. This is a business expense you should put into your plans at the formation stage of your business or its evolution.
- Remember that you are a business first and foremost. Do not forget that your business must break even and move to profit for it to be sustainable over the long term. Pick realistic targets for yourself and do not overstretch. Government activity has a lot of large figures attached. Do not get sidetracked by it.
- Also, if government contracts are your focus, remember that there might be a period between execution and complete payment. Consider this in your planning so you can still run your business while you await payment.
- A narrower focus is always ideal. There are many sectors of the economy and many opportunities in each one. Pick the one most suited to your talents and capacity.
- Be adaptable. Government policy will change. You must be ready to adapt to these changes and find the opportunity in them.