Opinion
Cheta Nwanze: The challenges of entrepreneurship in Nigeria
There was a tweet that drew attention on the Nigerian section of Twitter recently because it had a young Nigerian, Vincent Adeoba, former Co-founder and CEO of a transport tech startup, Transtura, describing his experience in setting up a startup in Lagos and how he encountered unforeseen challenges and the pervasive grip of extortionate practices.
Mr Adeoba had made the transition from being a senior associate at PwC Nigeria to being a Co-founder of a startup looking to help solve significant problems in the Lagos transport sector, but despite his meticulous planning, he had not grasped the severity of the challenges posed by entities like the National Union of Road Transport Workers (NURTW), the Lagos State Traffic Management Authority (LASTMA), the Taskforce, and the Lagos State Ministry of Transportation.
He assumed that they would be somewhat open to the idea of improving the transport sector for the people of Lagos and that that desire would at least provide some balance to the inclination for corruption and help all parties involved find the motivation to seek common ground for a mutually beneficial way forward. But that turned out not to be the case.
The lesson Mr Adeoba came away with is that the Lagos Government had no real interest in
actual development but was, instead, laser-focused on the ruthless extraction of resources into
private pockets, whether by looting or extortion using bodies like the NURTW. According to him, an agreement that at some point led to the NURTW getting 20% of Transtura’s daily revenue in addition to dealing with a barrage of extortionate practices was not enough to appease the powers that be.
Transtura still had to deal with malicious and illegal impoundments, assaults on drivers, and vandalism of buses that were intended to force them out of business and the company could not turn to the police for help because the police force was in step with NURTW.
Ultimately Transtura folded, and Mr Adeoba abandoned his entrepreneurial aspirations and
returned to take up a position with PwC, this time in New York. Nigeria had lost yet another
talented individual.
This story is not an aberration. It struck a nerve with a lot of people because it was actually
closer to the norm.
To a large extent, Nigeria’s government at its different tiers is controlled by people who have
little or no interest in the growth and development of their areas but rather just see the
government apparatus as tools to be used for personal enrichment at the expense of overall
progress.
The economic and social repercussions of extortion’s stranglehold on businesses like
Transtura are far-reaching, stifling growth, deterring investors, and potentially diminishing the entrepreneurial spirit crucial for Nigeria’s economic prosperity.
In a 2021 study, “Under the hood”, SBM Intelligence took a look at the various “taxes” paid by
various groups in Nigeria’s informal sector, which includes most of our public transport, the area that Transtura tried to play in, and found that 63% of businesses in Nigeria’s informal sector pay some form of dues/levies at least once a day.
No matter how you cut it, that is too much and is a roundabout way because these costs will be passed on to consumers, making them cut back on non-essential spending and ultimately hitting the bottom line of these same businesses that we need to grow the economy.
So much of the narrative around the Lagos State transport sector revolves around the actions of the NURTW, but a state with 20 million residents and significant economic influence in West Africa should have a much more evolved approach and structure for transport policy and
management that intends to foster growth and development by sorting out infrastructure quality; public transport accessibility; traffic management; safety standards; and a properly enforced regulatory framework.
The transport sector’s impact on the economy, including its contribution to GDP, job creation,
and overall economic development, cannot be overstated.
This goes for the informal sector in general. In other parts of the world, states, regions, provinces, counties and local authorities deploy transport management structures, policies and professionals to achieve goals associated with these aspects but Lagos grapples with a chaotic structure dominated by influential informal sectors like NURTW that are primarily focused on violent extortion and committed to keeping out a formalisation process that would make it much less relevant just to enrich 0.01% of the population at the expense of 20 million people.
But let us be careful not to beat Lagos too much because this is such a pervasive Nigerian
trend. In our country, a few people stop an entire society from taking the obvious path of
progress pretty much because they know that nothing will happen. This article uses the NURTW and Lagos Transport Sector as an avatar but the foundational framework found in this problem, a culture of impunity, applies to practically every Nigerian sector and shows why there is so much retardation and poverty in the country. I have seen this, for example in Aba, where three local governments basically taxed a burgeoning tech business to death with daily demands for spurious fees.
Nigeria stands at a crossroads, contending with the oppressive influence of mafia-like groups
backed or overlooked by the government that obstruct its path to evolution and progress.
Drawing insights from global experiences, there is a compelling narrative of societies elsewhere overcoming similar challenges.
In Italy, the dismantling of the Mafia’s grip was achieved through legal reforms, anti-corruption measures, and dedicated law enforcement. During its Prohibition era, the United States tamed organised crime with the establishment of the FBI and stringent laws, showcasing the efficacy of specialised units. Then there was RICO. Colombia’s relative success against drug cartels is stilted and a work in progress, but it is clear that there is some political will aimed at taming the scourge. Hong Kong’s transition away from Triad influence involved a multifaceted approach, combining legal measures, societal awareness, and economic opportunities. Every one of these laws were uniformly enforced without any favouritism, and that is what brings the trust required to make them effective.
Nigeria must heed these lessons, recognising that collaboration with criminal entities is
unsustainable. Instead, focusing on legal reforms, robust law enforcement, and holistic socio-
economic development is imperative for enduring progress. The example of the National Union of Road Transport Workers (NURTW) in Lagos is emblematic of broader challenges faced by businesses across various sectors in the country.
In Lagos, one of the reasons why the NURTW exists is that Lagos’s position as a commercial
heavyweight owes more to borrowed momentum than self-made governance. Decades as the
federal capital showered the city with preferential treatment, masking the need to develop its
own organic governance muscle. This reliance on past advantages led to apathy towards
organic growth; institutionalised inefficiencies; and tolerance of ruinous practices.
The consequence? A city teetering on a precipice. Its borrowed brilliance masking the cracks in
its own foundation. Lagos must shake off the comfortable cloak of inherited success and chart
its own course. It needs to tame the extortion racket, streamline its bureaucracy, and invest in
public services that benefit all, not just the elite.
Only then can Lagos truly claim its crown, not as a relic of federal largesse, but as a self-made
titan, a beacon of progress forged in the fires of its hard work and innovation. The world
watches, waiting to see if Lagos can shed the borrowed brilliance and step into the sunlight of
its own hard-earned success. This is also the story of Nigeria.
Cheta Nwanze is a partner at SBM Intelligence
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