What should be the purpose of business?

Protocols. Governor Seyi Makinde, Secretary to the Government of Oyo State, Mrs Olubamiwo Adesosun, Members of Oyo State Executive Council present, leaders and captains of industry, distinguished ladies and gentlemen.

This occasion is holding at a critical period in our national history. Our economy is just getting out of recession. While growth has started, it remains very slow at a GDP growth rate of 2% with the imperative of creating jobs to employ millions of our youths with combined unemployment and underemployment rate of 40%. The challenge of widespread poverty stares collectively at all of us, elites with 92 million of Nigerians living below the poverty line at less than $1.90 a day. Governor Makinde in his inspiring inaugural speech discussed our national challenge of out of school children. Nigeria now has an estimated 13 million out of school children according to data from the Universal Basic Education Commission. Oyo State government must be commended for the initiative that has returned 170,000, 43% of the estimated out of school children population in Oyo state back to school since the commencement of Governor Makinde administration. Children are out of school largely out of poverty, out of the desire to etch a living, to support themselves and even their parents. Our social inequalities have become more acute as our demographic structure increasingly looks like an hour glass with a widening base of the poor at the bottom, a thin long middle, representing a shrinking traditional middle class and narrow wealth concentration at the top, according to Oxfam Nigeria Inequality Report of 2018. 

Our thesis in this short presentation is that business and its leadership, if it is to be relevant in the context of the socio-economic challenges of Nigeria, its widespread poverty and acute social exclusion, business needs to redefine a purpose that puts positive social impact that lifts millions of our people out of poverty as its reason for being. While we must make profit, our profit must be driven by a larger social purpose to solve the problems of our people to create inclusive prosperity for all our citizens working with our governments and the people themselves in organised civil society. From housing, to financial services, health and education, millions of our people are excluded from markets either because our business models are not inclusive enough to be relevant to the context of a country with acute social inequalities or that existing market models are failing to deliver affordability and access to millions of our people. The primary purpose of government is the welfare of the people. A reality however is that the government and state have become so fiscally constrained by limited resources and weak institutional capacities such that the welfare purpose of the state cannot be delivered optimally by current institutional capacities. While we must call for continuous reforms of state and governance and the strengthening institutional capacities for delivery of public welfare, how could the private sector find innovative solutions and business models that make our markets more inclusive, more affordable for millions of our people, while making sustainable profits; and create a shared prosperity for our businesses, their shareholders and the larger society? How should business work with government and civil society to solve the problems of employment, education, public housing and sewage management, transportation, health, access to finance for micro sme s and small holder farmers for a more inclusive society? 

Given the state or government fiscal constraints, our first approach to solving these problems should be to get our private sector markets to work with inclusive innovative business models while the state provides the enabling environment , incentives and regulation for entrepreneurs with such innovative and inclusive business models. That is why the initiative of Oyo State government working with innovative companies like Farmcrowdy in agriculture to increase access to finance and markets for small holder farmers is very commendable. FCMB Microfinance bank, with extensive operations in areas like Iseyin, Saki and Oyo with our agent banking network around Oyo State will like to partner with Oyo State and Farmcrowdy to further strengthen this noble initiative of increasing market and finance access to our small holder farmers in Oyo State. There are also inclusive low-cost private education business models providing low cost private education to excluded communities and children that the state fiscal resources cannot serve.

With the challenge of millions of out of school children and constrained state fiscal resources in education, encouraging low cost private education, providing incentives and enabling environment for them, regulating standards and helping low cost private education entrepreneurs with capacity building, supported where possible by development assistance could significantly increase access to education for many excluded children.  

In the financial services sector, our banks working with the technology ecosystem must innovate to improve access to finance to get more than eighty percent of Nigerians to own a bank account from the less than forty percent we have today. When millions of our people have a bank account, they can save and access credit, by borrowing from their future income to address their short term cashflow gaps , invest in their future, set up their small businesses and lift themselves out of poverty without the crutches of government support. That is why at FCMB, we innovated and launched the FCMB Easy Account, a first in Nigeria, digital account that every Nigerian whether they are on the rivers on Bayelsa or on the hills of Idanre or on their farms in Iseyin or Kaura Namoda, they can open a bank account instantly on their phone by dialling *329# and following the instructions. With FCMB Easy Account, your phone number is your account number and you can send and receive money to any bank account in Nigeria. With FCMB Easy Account, every Nigerian, no matter their location in life, either by income or geography becomes a part of the larger formal commercial economy, they can trade with anyone, the horizon of their trade and life opportunities are no longer limited to their immediate environment, thereby engendering prosperity for themselves and their families. 

Leveraging digital technology in our various industries to build innovative business models, we can improve access, and make our markets more inclusive for wider shared prosperity. Digital technology reduces transaction cost, reduces acquisition, search, information and matching cost of customers. Digital technology reduces bargaining and contract enforcement cost and allows services and access to scale rapidly and inclusively at low cost. How could we develop innovative business models leveraging such digital technology to improve access to quality education, health, energy and power and finance, to make our commercial markets more inclusive and create a widely shared prosperity for our people?

In the areas of housing, what innovative solutions can we create, working with the larger ecosystem in innovative and affordable housing material and construction technology, financing, construction, land reform, ownership, property and market regulation that will bring millions of our excluded citizens into formal housing and improve the quality of life of more people?

While the topic before us, is leadership by example, the business perspective, we have approached this topic with a thesis that a good business leadership in a country with our socio-economic challenges must be such that leads a business organisation to be socially relevant, not just to make profit for its shareholders. While our businesses must make profits, such profits should be a bye product of social relevance, of solving social problems and impacting positively on society. This is not about the typical business charity or corporate social responsibility (CSR). Such CSR and charity activities are tangential and not core to the business. They are a side action and not the mission and purpose of business. Our thesis is that the greater purpose of business in a country like Nigeria, given our acute challenge of social and economic exclusion, should be to solve social problems across various sectors, to create wider inclusion, engender inclusive and more widely shared prosperity and impact positively on society. And of course, doing so at sustainable profit to the shareholders of business who work in a “common-good” social compact with the state and larger society. 

Ladies and gentlemen, thank you for listening.

Keynote Speech delivered at the Akinjide Adeosun Foundation on the 20th of November, 2019, where Governor Seyi Makinde of Oyo State was given Public Service Leadership Award.