‘Investment in knowledge ’ll keep businesses going’

updated: Monday 02.11.2009

Sam AsekunowoSam Asekunowo, a personal finance advocate and banker, in this interview with Akin Adewakun, identifies poor investment in knowledge as the bane of indigenous businesses. Excerpts:

YOU emphasised the need for every individual to have an alternative source of livelihood in your new book, The Power of Plan B. What informed the writing of the book?
The book is designed for as many people that are still in paid employment and as many as would be laid off jobs during this recession. It is also meant to serve the needs of many people that may want to develop a career in entrepreneurship, especially applicants who have been around for some time without a job and for those who are fervent about being financially independent.

Everybody desires financial freedom, but the only way to achieve financial freedom that would last long is through entrepreneurship. It is by exploring that skill or thing inherent in you that is value-adding and which you do effortlessly. Therefore, the decision to write the book is to fulfil a burden I have had over the years for developing people interested in becoming entrepreneurs. The second drive for writing the book is because I believe it would be my own meaningful contribution towards the development of the nation’s economy and by extension, the global setting, that is, by empowering people to look inward on what they can do, using their talents, their hobbies and past experiences.

I have seen that for people to get fulfilled in life financially, it won’t come from earning salaries. This fulfillment must come from taking home profit, not taking home salary pay check or pension. For instance, the first 100 billionaires in the world are not salary earners but people who have their businesses. Even the highest paid employee in the whole world, the Managing Director of Palm Olive Colgate in the United States, earns less than $100million in a year. Remember, in a typical American economy, somebody rated as the highest paid employee will also have huge expenses to meet. I tell you, this man is not rated as one of the 500 richest persons in the world, meaning that the $100million he earns annually does not make him a rich man in that economy. In Nigeria, how much do you think an employee will earn to make him a millionaire if he does not steal? So the purpose of the book is to ginger the reader to look at those strong areas that he can develop, which would, on the long run, place him on the road to financial fulfillment.

But how practicable are those principles espoused in the book in our business environment?
I believe whatever works in other places should also work here. The question you may ask me is: why is it that the people here in Nigeria are not getting into the millionaires’ club as fast as they should? What makes America today are the small businesses, they account for about 60 per cent of its economy. But here, the largest number of people are either poor or working for somebody and they are unable to fulfil their dreams financially because we have refused to imbibe the culture of entrepreneurship.

Meanwhile, that must be developed if we are really sincere about moving out of the poverty bracket as a nation. So, being really rich and fulfilled can not be from paid employment.

You can only get comfortable in paid employment when you are still working, but the moment you stop working, your finances start to dwindle. While owners of businesses share profit, employees go home with whatever is apportioned to them as salaries.

But how suitable is the nation’s business environment to entrepreneurship and why have indigenous businesses been finding it hard to survive for a reasonable period of time?
There is no time that you will say the Nigerian economy has been absolutely unfriendly to entreprenuership, because in the 90’s, when things were extremely bad, we still saw many companies springing up and making profits. I tell you today that as buoyant as the American economy seems, it does not mean that any business that is set up there survives. Between 60 and 70 per cent of businesses set up in America today suffer problem. So it is not limited to Nigeria alone, all over the world, young businesses have their own challenges and that is why the issue of knowledge comes in for every entrepreneur.

Moreover I think greed is a major reason indigenous companies have not been surviving here. That is why you will see a rich man in Nigeria who likes to die feeding all his family alone. He doesn’t like to share. An average American will share his knowledge and wealth. They don’t throw out money the way we do here, instead they build wealth. Then, a lot of finnancial indiscipline exists here and no matter how well a business is capitalised, in as much as corruption and all these vices exist in our business environment, businesses would always come to a dead end.

Another challenge we have here is that of illiteracy on the part of the nation’s business owners. A typical business man in Nigeria does not appreciate knowledge and when you don’t read, you don’t learn and when you don’t learn, you are dying. So a business that does not learn is dying.

What are the implications of the present global economic recession for entrepreneurship?
My fear is that we never prepare for anything in this part of the world. According to Warren Buffett, this recession can last for an average of eight years and as I speak, there is a fund created for small businesses in America and in some parts of Europe. Small businesses have started receiving attention from their government, but in Nigeria, we are still battling with corruption. We are not solving the problem of electricity, we are not solving the problem of bad roads or that of low capital to small businesses. Government is paying no attention to small businesses. So you can expect that this recession might take close to 20 years to get out off in this part of the world. A lot of businesses will collapse, especially those ones that are not well run and whose owners have not realised the need for them to acquire more knowledge in a way that they will be able to survive the recession. For instance, I tell people that the cost of acquiring knowledge in recession is far lower than ignorance in recession, because ignorance in recession can be killing.

So, entrepreneurs here must invest in knowledge, they must read on how to survive, on how to operate profitably and reduce waste. So, for indigenous businesses to survive here in this hard time, business owners should invest in the acquisition of knowledge.

There is this lingering controversy surrounding the recent move by the Federal Government to deregulate the downstream sector of the oil sector, what would be the implication on the nation’s business terrain?
I must tell you that Nigeria is a very vibrant economy. It is one economy that I respect so much. You see, for every problem and challenges that we have in this country, over a very short time, you will see the problem fade away even without applying any solution. So many times, this issue of deregulation has been discussed. And a lot of time, there has been hike in the prices of petroleum products and many companies have been surviving it.

If government deregulates the energy sector, I believe it would be painful at the initial stage but will ease off later. It only needs to allay the fears of the public, including those of the nation’s entrepreneurs, who believe that nothing good will come out of that decision and that the hike would lead to inflation and high cost of production.

The government should also be very responsible by making sure that whatever income is generated is used to develop the economy so that at the end of the day, there would be no losers.

There is this argument that the coming on board of another body, ANAN, to regulate the accounting profession would water down the quality of accounting profession, as a chartered accountant, what is your take on this?
Going by happenings in advanced economies like those of the United Kingdom and the United States, there are a lot of professional bodies, especially around economy and finance. You have the Institute of Certified Management Accountants, the Association of Certified Cost Accountants and also the Association of Chartered Accountants in Uk. I think competition is good. I don’t have any problem with ANAN coming in.

I also believe that for the sake of the consumer, the people who consume the accountancy services, there must be choices. In any economy, both the fake and the original must exist side by side. It allows the consumer to know the competency of the two bodies. As a matter of fact, you can see ICAN has come a long way, it has built this economy to the level we are today. So, if another sister body is coming, it is a welcome development. I don’t see that as a rivalry. I see it as a development that would even help every chartered accountant to remain sound, because when you see yourself competing with another professional body, then the onus is on you to go back and renew your competency. And the market understands the quality of the different bodies. So let the two bodies exist and let consumers have choice. We should run a free market where the consumer is free to choose. I see collaboration between the two bodies in future, not rivalry. If the Federal, state and local governments can be doing their jobs side by side, what stops the two bodies from doing the same thing.

Accountants have also been blamed for the nation’s present predicament, since it is argued that they collaborate with organisations, as auditors, to cook up fake financials. What is your take on that?
What people must understand is that before an audit firm is engaged, there are terms and conditions, failure which would be termed as breach of contract. Secondly, the Corporate Affairs Commission and the Act of Parliament that set up ICAN in 1965 specified the role and responsibilities of an ICAN member or the audit firm. I also recognise that there is a tribunal within ICAN that is primarily in charge of looking into the cases of abuse or professional misconduct of any chartered bank and the strength of that tribunal is equivalent to the High Court, so if there is any case of financial misconduct, the public is at liberty to report such erring member to the tribunal.