By Kachi Okezie
The question has been posed to members of the organising committee of the Nigeria Diaspora Investment Summit (NDIS) on several occasions: why does NDIS prioritise NIGERIA-based Micro, Small and Medium Enterprises (MSMEs) for direct investment from Nigerians in diaspora? Implicit therein is the assumption or myth that NDIS is exclusively geared towards supporting MSMEs to the exclusion of other types of business structure.
This article attempts to clarify the issue by underscoring that although NDIS is a platform for businesses of all kinds, ages and sizes, MSMEs and non-profits tend to predominate at the summit. This is due to being historically and statistically more in need of and best suited, among other considerations, for inward direct investment from Nigerians in Diaspora.
The Nigeria Diaspora Investment Summit (NDIS) is an annual business matchmaking event which brings together investors mostly from the Nigerian diaspora seeking to invest in Nigeria and the Nigerian-based MSMEs, start-ups and non-profits offering such opportunities. The summit, funded through sponsorships, advertising and event ticket sales, has attracted on average 2,000 participants yearly, comprising investors, pitchers, exhibitors, business leaders, general participants and the media.
A key feature of NDIS is the expertly facilitated pitching segments whereby pre-qualified and coached businesses (mostly MSMEs and non-profits) present their investment opportunities to prospective investors, mostly from the diaspora. NDIS also features interactive sessions where diaspora investors, business leaders and government officials connect, engage and network with Nigeria-based founders, exchanging ideas and doing deals.
In choosing to prioritise MSMEs for investment, the organisers of NDIS – the Nigeria Diaspora Summit Initiative (NDSI) and the Nigerians in Diaspora Commission (NIDCOM) – were persuaded by the fact that MSMEs were historically and statistically best placed to receive inward direct investment from Nigerians in Diaspora. This approach aligns with several key reasons that highlight the potential benefits for both the diaspora investors, who are typically impact investors, and the MSMEs.
Perhaps, the first consideration would be that of economic development and job creation. It is well established globally that MSMEs are vital contributors to economic development, often serving as engines of job creation. MSMEs constitute over 90% of businesses in Nigeria and contribute about 48% to the national GDP, thus playing a crucial role in economic diversification, reducing reliance on oil and gas by promoting activities in agriculture, manufacturing, and services. MSMEs employ over 80% of the labour force in Nigeria, making them essential for job creation and poverty alleviation. Consequently, prioritising them for investment can have a significant impact on employment opportunities within the country.
Also persuasive was the fact that diaspora Nigerians are motivated significantly by their strong emotional connection and sentimental attachment to their homeland, coupled with their deeper understanding of local needs. These combine to propel their desire to contribute to the country’s development. Compared to the nominal foreign investor, a typical Nigerian in the diaspora, having grown up in Nigeria, is familiar with local needs, cultural nuances, and market dynamics. Investing in MSMEs allows such an investor to leverage this knowledge effectively to make informed and impactful investment decisions that can lead to sustainable growth.
Another factor which informed the decision of the summit organisers to prioritise MSMEs for investment by Nigerians in diaspora is the need to support and foster entrepreneurship in the country. Many MSMEs are founded and led by local entrepreneurs with innovative ideas. Supporting these businesses through diaspora investments not only fosters entrepreneurship but also encourages a culture of innovation within the country.
The need to foster and encourage inclusive growth is a further consideration. Inclusive growth, according to the International Monetary Fund (IMF) is growth that “embodies the principle that wealth creation, economic freedom, and equal opportunity can coexist.” It is also economic growth that raises living standards for broad swaths of a population concurrently.
Proponents of inclusive growth have warned of the dangers of inequitable growth, prominent of which are adverse political outcomes, a particularly high risk for a country like Nigeria with very high levels of multidimensional poverty, youth unemployment and a large population. MSMEs are often deeply rooted in local communities. Therefore, investments in such businesses can help distribute wealth more equitably, thereby contributing to inclusive economic growth and reducing geographical disparities.
A fifth consideration in opting to prioritise local MSMEs for investment by Nigerians in diaspora is their flexibility and adaptability. MSMEs are generally more agile and adaptable to changing market conditions. Diaspora investors can capitalise on this flexibility, helping these businesses navigate challenges and seize emerging opportunities.
A further factor that persuaded NDIS to prioritise local MSMEs for investment by Nigerians in diaspora is technology and innovation. Many MSMEs operate in sectors where technology and innovation play a crucial role. Diaspora investors, often exposed to global trends, are in a vantage position to leverage in expertise and capital to fuel technological advancements, propelling MSMEs to compete on a broader scale.
Also in consideration as a factor that persuaded NDIS to prioritise local MSMEs for investment by Nigerians in diaspora is diversification of investments. Prioritising MSMEs for diaspora investments allows for a diversified investment portfolio. This reduces the risk associated with concentrating investments in larger enterprises and sectors, contributing to a more resilient and dynamic economy.
Social impact was equally considered in the decision to prioritise MSMEs for diaspora investments. Investing in MSMEs can have a direct and positive social impact on the local community, aggregating to the wider society. These businesses often engage in community development, supporting local initiatives and creating a positive ripple effect throughout society.
Yet another factor that informed the decision to prioritise MSMEs for inward direct investment from Nigerians in diaspora is the prospect of a decent return on investment (ROI), which is the primary motivation of most investors. Diaspora investors are likely to witness a tangible and quicker return on their investment in MSMEs. The nimbleness of these enterprises enables them to scale faster, leading to a more immediate impact on the investors’ portfolios.
And, finally, the need to strengthen the national identity and pride was not only persuasive, but a key consideration. Diaspora investments in MSMEs often contribute to a sense of national pride and identity on the part of the investor, who views it as a way of “giving back” of “helping out.” To that end, the satisfaction of knowing that their investments directly support local businesses and communities can create a stronger emotional connection for the diaspora to their home country.
All in all, prioritising Nigerian MSMEs for investment by the diaspora is a strategic move that aligns with broader economic development goals by leveraging the unique knowledge, experience and experience of diaspora investors. It can also foster a symbiotic relationship that can drive sustainable growth, create jobs, and contribute to the overall prosperity of Nigeria. For the diaspora investor, being able to deploy capital in ways that benefit society, whilst also achieving financial growth and high returns is key. As for the MSMEs and non-profits – the recipients of such inward direct investment – their agility and ability to scale faster and make an immediate impact on the investors’ portfolios, makes them ever more attractive to such investors.
The next NDIS, a hybrid event, will take place in Abuja, 12-14, November, 2024. For details about participation or sponsorship, please visit www.ndisng.com
Kachi Okezie, Esq, chairs the media and publicity sub-committee of NDIS and can be reached on 0813017013 (WhatsApp only) or kachiokezie2022@gmail.com
