Government should incentivise small businesses to generate jobs

Forum 7 years ago

Government should incentivise small businesses to generate jobs

Steve Babaeko is the Chief Executive Officer of X3M Ideas, an advertising/marketing communications agency that is driving a revolution in the creative industry. In this interview with FEMI ADEKOYA, he explains why government should incentivise small businesses’ operations considering the role they play in the economy. Despite recession, he notes that Nigeria’s consumer market remains vibrant. Excerpts.

As an industry stakeholder, can you give an assessment of the Nigerian economy in the last one year?
One word, it has been challenging. If you look at half year results of most of the blue chip companies we have in Nigeria today; as we actually did some analysis on them, whether they are our clients or not, most of the ones that have published results maybe on their website or on a public domain, the trend observed has not been a very good trend. The economy is facing a very serious challenge at the moment and marketing communication is almost at the bottom of the food chain, so if it is affecting those at the top, of course marketing communications will be greatly hit because it is at the bottom.
?
I might not be able to speak in terms of percentage but I can definitely tell you that the profile of the industry has decreased a bit and we are feeling the pinch and I know most of my other colleagues are saying the same thing. If you look at it from the number of airlines that have just opted out of Nigeria in the past one year and manufacturers that have not been able to produce, the indices are going southward. If you look at the oil industry itself that used to be the robust part of our economy, they are also laying-off staff. If you look at the macroeconomic indices, once it is no longer positive, market communications will be heavily hit. So the first major reaction most of these clients have is to cut cost spending which actually should be the other way because this is the time to boost spending, create awareness and differentiation for your brand, but it is just that first reaction to say look our economy is bad, we have to cut our marketing budget.

Do you think the low purchasing power could be responsible for this decline?
You could say that, but at the same time, if you take a look at the Nigerian economy with a population of about 170 million people market, it means all kinds of brands are competing for market share. So this is the time to say whether the consumer purchasing power has dwindled or not, but with that dwindling purchasing power, there is still a lot of crucial purchase decision to be made. This is the time to stimulate the consumer decision to be in favour of choosing your own brand versus competition. No matter how bad the economy is going, this is not the time to cut down marketing communication strategy. ?


Do you see mergers and acquisition happening in the industry as a result of dwindling fortunes?
?I think we are beginning to see semblance of that, because forever and ever, people will always find this market attractive as long as Nigeria remains one corporate entity coupled with the size of the population. You could go to Ghana, but you will end up doing like 20 per cent of the Nigerian market, but as long as the country remains one entity, that is going to be our competitive advantage over other countries and again, because the economy is so tough and so hard, it looks like people in the advertising industry have no choice than to begin to consider mergers and acquisition.
Some people are already doing a bit of that? and I think we need to see more of that to be honest. I was discussing with another top senior practitioner and we thought it was a joke to see that the clients we work for, some of them are shutting down while some of them are laying-off staff, but at this point in time, more advertising agencies are opening shops. It is just a paradox.

If you look at the American economy, there is statistics that say about 75 per cent of the companies that make up the backbone of the American economy are actually the SMEs. So the blue chip companies account for less than 25 per cent. So how do you drive that SME category, how do you power them up, how do you incentivise them to even want to hire somebody is key. Instead of doing double taxation, this is the time to give tax breaks. I think we are getting those kinds of tax policies wrong a little bit around here.
What will you say is responsible for X3M ideas’ driving force?
Leadership has a strong role to play. I saw something that says a battalion of lions led by a sheep will always be defeated by a battalion of sheep led by a lion and I thought that was very profound. Leadership is very crucial today. How you motivate your team, what you bring to the table, what kind of incentive you use to motivate your team is very crucial and also being in touch with the reality of the ecosystem of marketing communication is crucial. You can see that how we have set up the kind of ambience and environment we create for our team is vital. The remuneration for your team and how regular you keep to it is also very important. Training is also a key factor and I think we have been able to check all the right boxes in that direction, so I will say I feel very happy where we are, but honestly, if you ask me, I will say there is still a lot that we need to do as a team to continue to stay ahead of the curve.

Where do you see your business and the industry in the next five years?
Engineering is going to drive marketing in the next five years, go and write it down. So if an agency is not looking at technology, you are putting a knife to your own throat and slicing it. This is where the industry is going. People will say Nigeria is still behind the curve, but I will say Nigeria has a way of evolving. How many people have landlines in Nigeria? But if you still go across Europe and America, lots of people still have landlines. We have moved from landlines to mobiles in just one stride and that is what is going to happen when it comes to technology. It is going to play the next big role in the way we operate.