Significance of Multinational Enterprises (MNEs) to the economy of developing country like Nigeria cannot be overemphasised. Among areas of economic importance of MNEs are employment, transfer of technical, marketing and managerial capabilities, taxes, technology transfer, private foreign investment, corporate social responsibility, among others. All of which contribute immensely to the economic growth of host countries.
However, there have been some ‘biases of globalisation’ among MNEs in developing countries which connotes fear of healthy competitiveness and growth of local industries and efficient small business operations. Key among the biases are mentioned below:
- MNEs have the power of oligopoly
- MNEs use transfer prices for intrafirm trade which has possibility of corporate tax reductions in the host country
- Full profits expatriation (High dividend pay-out), leaving less funds for reserves
- Large size advantage with greater capacity and bargaining power to avoid some form of regulations.
Notwithstanding the above biases, small businesses have been able to fit into the large business environment of Multinationals in Nigeria. Various industrial policies, local contents policy and some institutional reforms are enablers for small and medium scale businesses (SMEs) to feed multinational companies in the country.
How does small businesses feed multinational enterprises in Nigeria?
The connecting dots of SMEs to MNEs range from (i) sourcing of local material inputs especially agricultural products, (ii) provision of logistics in form of land transportation of goods, spare-parts, etc., and (iii) outsourced services like HR recruitment, training & manpower development, consumer promotions & product branding activities, and financial/governance consultancy, to mention few.
Multinational companies in the Oil & Gas sector in Nigeria, such as Chevron, Shell, Total, have engaged several SMEs in many areas of local contents both in the upstream and downstream operations. Large scale commercial plumbing, welding, training, local supplies are few examples.
On the Fast Moving Consumable Goods (FMCG) industry which have meaningful presence of multinationals like Nestle, Cadbury, Unilever, Coca-Cola, small business owners are the major customers in the areas of local raw and packaging materials supply, transporters for conveying raw materials, spare-parts and finished goods, providers of warehouse annexes, HR recruitment & manpower training consultants, strategic consultants for corporate governance, government and community relations.
At Knot Edge, we facilitate the feeder process between small businesses and Multinationals
Our understanding of ‘end to end’ operations of major multinational enterprises in Nigeria through long years’ exposure and experiences of our consultants make it easy to chart simple and straightforward paths for small business owners to access MNEs and exploit various business activities within the multinational environment.
We bring to the domain of small business owners, assessment of various local content opportunities and provide cost-benefit evaluations and analysis of working with MNEs. We also offer different packages of consultancy and advisory in the areas of logistics, finance, governance and relevant institutional guides and frameworks.
Why don’t you come with us?
Author
Sule Omotosho
Principal Consultant