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Nigerian business culture and incentives: An inside perspective

This article focuses on Nigerian business culture, and further describes why incentives will inevitably give companies that much needed edge over their competitors. 

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 versus 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 focused 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

Strengths:

  • Strong banking and financial sector
  • Well managed money supply
  • Availability of young, active and mobile labour force
  • Investment competitiveness and profitability

Weaknesses:

  • 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

Opportunities:

  • 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

Threats:

  • Crime rates, frauds, scams and corruption
  • Threat of import effects on the local markets
  • Increasing competitors in the local markets

How does Nigeria’s 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 mindset and learn to manage it, you will do well in Africa,” says Nigerian-born entrepreneur Nissi Ekpott.

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 while 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 incentivise them.

Efficiency was their watchword: Another key aspect to the success of the billionaire businessmen 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 in general.

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: 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 man in Africa because he was on a mission to provide a basic need for over 150 million Nigerians.

Implementing correct business etiquette in Nigeria

So 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,” explains Ekpott.

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.

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. Therefore, 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
  • Applause
  • Time off/work free day
  • Leadership roles
  • Conducive work environment
  • Gags and gimmicks
  • Free food day
  • Casual dress day
  • Improved pay
  • Job titles

Types of incentives the Nigerian business workforce would like to see

  • Individual incentives: These are cash awards to recognise 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 non-cash 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 recognise performance achievements. They are not added to the base salary.
  • Skill-based pay or 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?

  • Motivation
  • Increased earnings/profits
  • Loyalty
  • Reduced staff turnover
  • Collaborative efforts

Nigeria is, as is well publicised, 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 our company, incentive solutions provider 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.

David Sand is the founder and CEO of Uwin Iwin, an incentive, loyalty and employee engagement specialist company with offices in South Africa, Kenya, Nigeria, India, and Brazil.

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  • Bukola Olofinjana

    Thank you David. A very useful and helpful article.

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