Firm-level innovation in Nigeria

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Answers from an Industry-wide Survey

HOW CAPABLE ARE HOW CAPABLE ARE MANUFACTURING FIRMS IN MANUFACTURING FIRMS IN

NIGERIA TO INNOVATE?NIGERIA TO INNOVATE?

NATIONAL CENTRE FOR TECHNOLOGY MANAGEMENT, ILE-IFEwww.nacetem.org

At the Industrial Innovation and NIS Workshop organised by UNIDO

22-23 November, 2007

Abuja, Nigeria

W. O. Siyanbola (PhD) & A. A. Egbetokun

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National Centre for Technology ManagementNational Centre for Technology Management

……managing technology for sustainable developmentmanaging technology for sustainable development

OUTLINEOUTLINEThe Implementing AgencyThe SurveyResultsWay Forward

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The National Centre for The National Centre for Technology Management Technology Management (NACETEM)(NACETEM) Set up to:2. serve as training centre for the development of high level manpower in

Science, Technology and Innovation (STI) management to all tiers of government and the private sector.

3. conduct policy research, evaluation and review with a view to making policy recommendations for dynamic technology-based development.

4. establish, maintain and provide access to databanks on STI research outputs and facilitate activities towards commercial exploitation.

5. Design and run PG Courses/Programmes in STI management in conjunction with appropriate Departments/Units/Centres of Universities/Institutions.

6. Assist government at all levels in the country in STI policy formulation and strategies for utilising such for development.

7. Collaborate with other countries especially African countries in STI policy research, training and consultancy.

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NACETEM, so far.. .NACETEM, so far.. . 60 short-term relevant courses in various topics in STI management,

Over 500 participants in attendance.

Over 150 students (mid to high-level workers) trained through weekend PGD in Technology Management (Lagos and Ile-Ife; Abuja coming soon).

2 major Policy Discussion Fora for top-level policy makers Experts Forum on STI Management (National Assembly S&T Committee

Members; 2006) STI Policy Dialogue for State Ministries (Perm Secs/Technocrats from

States; 2007)

6 Concluded research projects

(see http://www.nacetem.org/concluded_research.htm)

9 ongoing research projects (see http://www.nacetem.org/research.htm)

http://www.nacetem.org/concluded_research.htm

http://www.nacetem.org/concluded_research.htm

http://www.nacetem.org/research.htm

http://www.nacetem.org/research.htm

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The SurveyThe Survey

One of NACETEM’s several corporate research projects

Commenced in 2006

Data collection commenced in September 2007

Aims mainly to understand the innovative characteristics of Nigeria’s manufacturing industry and how best they can be helped

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Concept Innovation is application of knowledge in production

Innovation includes machinery/equipment acquisition

An innovation is relative only to the firm; focus is not on novelty in the industry, the country or the world

Firms’ innovation capability is manifested in their innovation activities

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Survey CharacteristicsSurvey CharacteristicsWork in progress; not to be quotedResponse rate, so far, is about 30%Used the ISIC Rev3Covered all industriesReference Period: 2003 - 2006Used stratified random samplingUsed questionnaire for data collectionQuestionnaire administered by the KIA

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Key Survey Constraints Firms are largely unwilling to give information Firms seem to have “lost faith” in government Data collection is expensive!

WE ARE OPEN TO COLLABORATION

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Zonal Representation in the Zonal Representation in the SampleSample

Firms from the South-West > South-East > North-West in the sample.

Is this indicative of the level of industrial activity in these zones? WE BELIEVE SO!

South East13%

South West66%

North Central2%

North West11%

South South8%

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Ownership Structure of the Ownership Structure of the FirmsFirms

Full Nigerian ownership > JVPs > other ownership types. Does this indicate health in the economy? MAYBE!

4.64100% Foreign Individual(s)

26.423Joint Venture

100.087Total

2.32100% Foreign Corporation

4.64Nigerian Public Ownership

62.154100% Nigerian Private

PercentFrequency

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Who are the JVPartners?Who are the JVPartners?

26.35Nigerian firms & Foreign Individual(s)

36.87Nigerian Firms & Foreign firms

100.019Total

21.14Unspecified

15.83Nigerian Govt. & foreign firm(s)

21.14Nigerian Public- Private Partnership

PercentFrequency

Most of the JVPs are firm-centred

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Where is FDI coming from?Where is FDI coming from?

Europe > Asia > Africa.

CAVEAT: This may not be the absolutely representative situation because the Asian-owned firms were less responsive to the survey.

Europe50%Asia

43%

Africa7%

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Organisational StructureOrganisational Structure

10 (12-2)Range

2.274Standard Deviation

4.94Mean

3Mode

ValueStatistic Manufacturing firms in Nigeria are relatively flat.

Does this indicate good management practice? WE BELIEVE SO.

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Age of the Firms

20 – 39 yrsMode

80 (81-1)Range

15.7Standard Deviation

23.9Mean

ValueStatistic

Industry in Nigeria has come of age

0 5 10 15 20 25 30 35

% o f T o t a l S a mp l e

Le ss than 5

5 - 9

1 0 - 19

20 - 39

40 - 50

Ove r 50

U nspe c ifie d

Ag

e of

Firm

(Y

ears

)

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Size of the FirmsSize of the Firms

Most of the firms are in the Micro, Small and Medium Enterprises (MSME) category. Average Firm size is 35 employees (2006 figures)

27.3

58.2

7.3 5.5

1.8

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Less than 10 10 - 49 50 - 99 100 - 299 Over 300

F i r m S i z e

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Innovation Indicators…Innovation Indicators…

44.8Diffusion-based

55.2Marketing

74.3Organisational

78.1Process

83.8In-house Activity based

84.8Product

88.6General

Percentage of FirmsInnovation Type

The firms are generally innovative; diffusion-based innovation is the least common

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…… by Firm Sizeby Firm Size

100.0Over 300

100.0100 - 299

75.050 - 99

84.410 - 49

86.7Less than 10

% InnovatorsFirm Size Smaller firms appear to be more innovative…

…though firm size is not strongly associated with innovation (χ2 = 1.08; p>0.05 at 4 df)

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…… by Firm Ageby Firm Age

% InnovatorsFirm Age

66.7Over 50

91.740 - 50

90.920 - 39

100.010 - 19

88.95 - 9

83.3Less than 5…and the younger ones too

…though firm age is not strongly associated with innovation (χ2 = 5.03; p>0.05 at 5 df)

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…… and by Firm Locationand by Firm Location

90.5South-West

100.0North-West

100.0South-South

50.0North-Central

83.3South-East

% InnovatorsZone…firms in the North-Central are the least innovative (χ2 = 6.603; p>0.05 at 4 df)

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Sources of Information for Sources of Information for InnovationInnovation

44Fairs, exhibitions

52Education & research institutes (EROs)

45Parent firm

46Professional journals & trade pubs

47Business and industry associations

52Client firm

78Customers

61Internal

39Government

41Consulting firms

62Suppliers

% of Innovating FirmsVery important sources

EROs contribute little to innovation…

…government contribute the least

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Key Reasons for InnovatingKey Reasons for Innovating

% of innovatorsVery important reasons

70Improve working conditions

73Take advantage of new technology

75Extend product range

82Lower production costs

91Satisfy customers’ demands

100Improve product quality

Product Quality leads reasons for innovation…

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Key Reasons for InnovatingKey Reasons for Innovating

% of innovatorsVery important reasons

45Deliberate in-house efforts

50Avail of government support

50Replace old product generations

55Deal with new competitors in export markets

60Deal with the challenge of new technology

62Deal with new competitors at home

65Comply with Nigerian laws and standards

65Develop more environmental-friendly products/processes

…deliberate efforts is least important

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Impact of InnovationImpact of Innovation

24Rejection/Return of products

55Employment

76Diversification

80Positive environmental impact

82New product development

82Process improvement

86Compliance with regulations

89Product differentiation

90Market share (domestic)

93Profit

Increases in % of innovatorsVery Significant Impact

Innovators made more profit…

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Barriers to InnovationBarriers to Innovation

35Long administrative/approval process within firm

37Lack of skilled personnel

45Lack of information on technology

47Weak customer demand

47Legislation/legal restrictions

57High cost of innovation

64Lack of financing

72Domestic economic conditions

% of innovatorsVery Significant Obstacles to Innovation

Economy and funding require attention…

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Most important forms of Govt. Most important forms of Govt. SupportSupport

24Technical Support/advice

27Subsidies

29Infrastructure support

29R&D Funding

30Training

34Tax Rebates

36Loans and Grants

% of innovatorsForms of Govt Support

Firms think financial incentives are critical…

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Way Forward

We all have responsibilities Government (focus on macro-economics and

institutions) EROs (foster relationships) Development Partners (assist with funding) Industry (Be willing to cooperate)

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THANK YOU

Firm-level innovation in Nigeria

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