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Why some startups fail in Nigeria –Akomolafe

Henrich Akomolafe is the Group Managing Director of Akotex Group, a technology and innovation company which focuses on elevators and escalators with subsidiaries in construction, real estate, and Information Technology.

He is also the Founder of the Henrich Akomolafe Initiative (HAI), a non-profit organisation aimed at creating a sustainable future for Africa through educating children and youth, improving healthcare and eradicating poverty.

In this interview, Akomolafe, who recently bagged the Future Award for Entrepreneurship 2020, talks about how he started his own company, the challenges and why some startups fail in the country.

Starting up 

I have had a natural flair and passion for business since I was a child. I co-founded a company with my father and I have served on the board of directors till date. In 2016, out of a keen desire to meet needs and make a difference in vertical transport, I founded Akotex Elevator Limited – an indigenous elevator company reputed for timely supply, installation and maintenance of MP lifts, escalators and moving walks. It was at a time when Nigeria had slipped into recession, but I was determined to succeed, and together with my team, we were able to provide strategic steer for the business. The results have been humbling.

Seed capital 

There was really no large sum initial startup capital. I had the business idea and the skill set for the business. Generating the startup capital was really blending the skills with the idea. 

Challenges 

The challenges I grappled with are far from peculiar – from lack of skilled manpower to inadequate funds and high interest rates in the financial institutions to unstable economy and politics to inconsistent government policies, and most recently, insecurity. Every entrepreneur in Nigeria faces these challenges daily.

Mitigating challenges

Adaptability is so relevant for businesses. There are things I cannot change about the operating business environmentn. So I have to constantly assess and reassess my plans and make necessary adjustments. For example, the COVID-19 pandemic affected the businesses of some of our prospective clients, and inadvertently, their resources. Taking this into consideration, we had to tailor our deliverables to meet the resources of our clients without compromising on quality. This strategy placed us in a vantage position to receive more jobs in a short time and increased our aggregate profits as the need for our maintenance services doubled. To address the challenges around getting skilled manpower particularly in elevator engineering, we adopted our approach where we employ graduates in related fields and provide on-site training for them. Bottom line is this: You have to be flexible and adaptable. 

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Profitability 

Akotex Group has experienced tremendous growth in the last few years, with impressive annual turnover every year since 2016. With the remarkable profits generated from the businesses, we have been able to establish new businesses including BNR, a real estate and construction company and M7R, an information technology company which combines seven 2019 technological trends – artificial intelligence, machine learning, robotics, automation process, virtual reality and augmented reality, quantum technology and computing, internet of things and block chain payment gateway.

SMEs in Nigeria 

Research has shown that 80 per cent of Small and Medium Enterprises (SMEs) fail within their first year of operation in Nigeria. In the United States, however, statistics shows that 20 per cent of small businesses fail in their first year. That is an enormous 60 per cent difference and the reason for the huge gap is not far-fetched. Entrepreneurs in developed nations do not have our problem. They do not battle with epileptic power supply, poor road networks, lack of finance or difficulty in obtaining soft loan or inconsistent government policies. Until we fix these challenges, doing business in Nigeria will remain a struggle.

Ease of doing business

According to the 2020 World Bank Doing Business Report, Nigeria ranks 131 out of 190 countries on the World Bank Doing Business Index. This is already saying a lot. Like I mentioned earlier, entrepreneurs in Nigeria face lot of challenges – from policies and regulations to infrastructure.

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Business expansion

We have plans to establish the first elevator and escalator factory in Nigeria in the next few years. This has been our vision from the beginning. We also have plans to expand our real estate company to create affordable housing for young entrepreneurs using blockchain adoptions. Additionally, the fitness and wellness industry is growing and we plan to disrupt that space using information technology. Already, we have created fit and curves which will be launched soon into the Nigeria market immediately testing is finalised.

Entrepreneurial training 

I have plans to train manypeople. One of the strategic objectives of the Henrich Akomolafe Initiative is to contribute to national and global progress by educating and empowering youth. I am starting this off by taking vertical transport to universities and colleagues to raise awareness, inspire interest and provide guidance. I am currently the youngest in this sector and I would love to bring as many young people as I can on board.

Sunnews

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