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Published On: Thu, Oct 30th, 2014

The impact of politics on business

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By Oyede Saheed Adesunkanmi

Many authors have written several articles on the impact of politics on business in Nigeria. Some are of the opinion that politics (i.e government) impact on business is overrated while another School of Thought believes that politics has a very large impact on business. Business exist for its own purposes, politics exist for its own purpose and both have impact on each other but far too well, the impact of politics on business is more pronounced. As a fact; most times, political activities within a state gives a direct pointer as to where the economy will swing to. In this context, permit me to define business as the politics of aggregating resources to achieve a pre-determined goal/end usually in form of an economic gain. On the other hand, Governance is the continuation of politics by another means. Before now, scholars have often argue that businesses should not be regulated by politics because the forces of demand and supply are more than enough to shape the business world, if at all; business needs some political input, it should be minimal. This article seeks to look at ways through which Business Executives can maximally benefit from taking interest in political happenings in their operational environment especially on policies that have a direct bearing on the survival of the Business Organization.

A lot of Political factors determine how and to what degree a Government intervenes in the economy. The Government of the day establishes rules and regulations guiding business operation in our economy. This can be in the form of tariff, waivers, import duties, import promotion Decrees, industrial promotion policies, etc. The 2004 import waiver granted to Dangote Cement enabled him to become a major cement importer. Also, the 10-year tax holiday given to Dangote Cement factories in 2007, catapulted Dangote Cement to become the number one cement producer in Nigeria with over 65% market share. Also, the 2005 import embargo on Ibeto cement cost him his market leadership. Dangote did not just get all the above on a platter of Gold, he took active part and interest in the political issues that affect his business interests.

Dangote has given back to PDP in so many ways and indeed to other political Parties. Prominent of his donation was the bags of cements used to build the PDP secretariat which he donated at the PDP Fund raising Dinner which was widely reported by the media outlet on the 28th of April, 2009. Otedola also pledged N1BILLION for the same project. It might interest you to know that recently, a non-Governmental Organization- Human Rights Writers Association of Nigeria (HURIWA) has urged AlhajiAlikoDangote to donate the required bags of cements for the immediate fencing of the Nation’s International Borders as a way of curbing the proliferation of small arms and light weapons in the country. It might also interest you to read up an Interview granted by IsiakaAdeleke to the Punch Newspaper on the 24th of May, 2014 (LIFE AND TIMES SECTION) titled ‘Dangote encouraged me to join Politics’.

Businesses follow the politics of the day to direct their investments. Is the government focusing on privatization? More private business will spring up! If the politics of the day is Nationalization, private businesses will begin to close shop. In 1999 – 2002, the Nigerian Government focused on Telecommunications and we witnessed massive business investment in Telecommunications Industry from GSM operators, Recharge Card Vendors, call center operators, etc. Recently (2010 – present), the politics of the day is Power sector reform and we are witnessing massive investment in Power generation, transmission, distribution and allied services.

As an Executive, before making any decision on whether to expand or close down a branch or invest in new sector of the economy or even invest in another country entirely, considerations are given to the political factors, players and political atmosphere in the Country because political forces directly or indirectly determines to a large extent the viability of such market. The Zimbabwe example on White Farmers and Robert Mugabe readily comes to mind. Every sound Business Man is interested in the percentage of the budget that is allocated to economic activities, the Government disposition towards import and export, Government attitude towards taxation, who becomes the Finance Minister, who becomes the Central Bank Governor and so on and so forth.

To many Investors, their confidence level in a country or otherwise is also affected by the character of the ruling class towards economic growth and development because various businesses depends on favourable policies and programs to enable their businesses grow and remain secure. While it is an established culture in the US for businesses to help advance the course of politicians especially during Election period, the reverse is the case in Nigeria as Nigerian Business Men have not really exploited this avenue to their own advantage. The fear of many Businesses in Nigeria arises from two basic points namely:

The cost associated with such decision(s): Businesses don’t take active role in politics in Nigeria because of the cost associated with such moves when the outcome will eventually be of benefit to the entire sector. One fact: You cannot be the only beneficiary of your political move but you can substantially be a major beneficiary if you position yourself strategically. There is a caveat emptor here: where an organization makes the wrong move by aligning with the wrong set of politicians, political parties or political class, the outcome can be catastrophic and may result in the death of the company.

If the above painted scenario is a possibility, then the question is how best can businesses partake in politics safely? The answer is simply that the businesses should invest through what I refer to as collective or joint participation; the safe haven here is that as a sector, they have more bargaining powers than when they act individually. Where organizations invest in politics individually, then they should be ready to invest in all the front runners in the election in order to be on a safe side.

The level of political activity also does affect business operations. During Election seasons, there is a boom in Printing and Media businesses as their services are in huge demand to print the campaign memorabilia. Also, Construction Businesses boom as most serving politicians want to show to the Electorates their physical achievements. This is a clear pointer that those into the business of printing and construction should be much more interested in what happens politically within a given state.

Politics do create bottlenecks that slow down the process of doing business. The Oil Business is a good example. Since 2008, the Petroleum Industry Bill (PI Bill) has been the National Assembly undergoing numerous readings and reviews. Should the PI Bill be passed into law, it will provide guidelines on how International Oil Companies (IOC’s) can operate Nigerian oil wells. Due to the non-passage of this Bill as at May 2014, IOC’s have withheld over $20bn worth of investments in Nigeria. Because of the politics, business in the oil industry has not witnessed the much needed boom. Political decisions are like a snake that changes its skin when the time demands and a standard Business is like the proverbial Beetle…. There is no killing the Beetle.

Oyede Saheed Adesunkanmi via hiefhumanbeing@gmail.com

 

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