Supporting Local Enterprise Key for Sustainable Growth
Supporting local enterprise is vital for sustainable growth.
There is familiar story in emerging markets, particularly those rich in natural resources, where foreign investment is rising and economic growth is rapid but the distribution of wealth is uneven. Often these countries have a strikingly young population with high unemployment. The challenge is how to develop sustainable growth that captures their potential economic contribution and raises living standards for all sectors of society.
Nigeria is facing this conundrum with GDP growing at more than 7 per cent a year, vastly differing urban and rural economies and a population of 160 million and rising, there are inevitably gaps between the distribution of wealth and the capacity structure of the workforce. Like many middle income countries, unemployment still remains one of the most critical problems facing Nigeria today, especially in rural parts of the country where development is slower.
The world Bank estimates that Nigeria’s youth unemployment rate is at 38 per cent, but a more realistic estimate puts the number as high as 80 per cent with half of those living in rural areas, and working informally.
At SABMiller, we believe sustainable economic growth is achieved by focusing efforts locally. Supporting small businesses in local communities is an integral part of generating local economic growth and engaging unemployed youth. It’s obvious that economic growth is central to higher living standards but sustainable growth spreads benefits more broadly and by creating growth organically from the bottom up, instead of the other way around. Growth embedded in local communities is more resilient, sustainable, and maximizes the potential for change in Nigerian communities with high youth unemployment and low living standards.
In sub-Saharan Africa, SABMiller is a significant contributor to the local economies, generating $2.3 billion dollars in economic growth, and employing 765,000 people directly and indirectly across our beverage operations outside South Africa. For every job at a local SABMiller operation, 56 jobs are created in the local economy, largely in trade and agriculture, but many of them first time business owners.
“By partnering together with governments, business can create, enable, and support environments where young entrepreneurs can start, grow and scale up their small businesses.”
Nigeria is a new business for us, but one that we see as a long term investment. In January of this year we announced a further $180 million investment in expanding our Onitsha brewery, and we are committed to the potential we see in Nigeria. We are also applying the same model to our sustainable development strategy here- to start locally, and we are confident that this approach will be successful.
In example of this local approach can be found in one of SABMiller’s more mature markets—Uganda, where for over a decade SABMiller has been brewing beer. Our local sustainable development strategy in Uganda is underlined by the use of local sorghum grains in Jinja, a town near the Nile River, to produce our clear beer, Eagle. The success of Eagle beer is a prime example of how important it is for global companies like SABMiller to think locally first: through local sourcing, jobs, communities, and ultimately consumers.
By setting up a local sorghum value chain in Uganda, and engaging with local smallholder farmers, Eagle beer is popular among local consumers not just for its taste but also its provenance. Consumers are proud to drink Eagle knowing that it was sourced in their own community. The number of sorghum farmers has also steadily increased to 8,500 farmers, and the production of Eagle beer has contributed to 90,400 additional jobs in the Ugandan economy, including small businesses who will continue to grow.
The private sector has an important role to play in supporting local communities and stimulating sustainable economic growth in Africa if they focus their efforts locally. Generating quality jobs and opportunities around business operations can empower whole communities and maximize the potential for change in people’s lives- including the youth, who are tomorrow’s leaders. However, in the case of Nigeria, there is still more work to be done.
Governments and private sector must work together to ensure a business environment for continued private sector investment and more training and support for small business development. As growth in the country continues, it’s important that small businesses are able to start up and grow in a time of increasing consumer demands.
By partnering together with governments, business can create, enable, and support environments where young entrepreneurs can start, grow and scale up their small businesses—whether that’s through training, education or mentoring. Together we can ensure that growth in Nigeria is sustainable for the long-term, and we are empowering Nigeria’s future drivers of the economy along the way.