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Outsourcing Business In Nigeria: Why Can't It Work?

I've always wondered about the outsourcing business, and why only countries like India, Brazil etc are the main hubs for America's outsourcing services.

We have brilliant people in Nigeria and there is a high opportunity cost in my opinion, for not taking advantage of this line of business.

Can you point out some reasons why outsourcing would not work in Nigeria.

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I don't understand you o. We are running 24 hour call centers in Nigeria. What difference does it make when people are awake and when they go to sleep? Unless you are looking at a situation where someone in America outsources a job to someone in India, and goes home, expecting to have it ready by the time he wakes. Even with that, we are in a better situation, as our work day intersects with the American work day. India's work day doesn't at all. By the time it is 9am in New York, it is already COB in India.

@Topic,

One factor I haven't mentioned is government. For as long as our government keeps passing silly laws that don't favour the investment climate, we won't attract the right kind of investment. No tax holidays, no land grants, multiple taxation, import-export restrictions as well as port inefficiency (you see ships lining up at Apapa every day incurring demurrage), the Western nations will continue to give us wide berth. Even if we are deficient in infrastructure, we must make up by creating an investment-friendly climate that will assist the creation of local jobs.

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but you still did not cancel out the time factor. How do you run a 24-hour hotline if the outsourcers go to sleep 4 hours ahead of you instead of being awake while you are asleep. (in india's case they are awake while the americans are asleep. thats why they are in the right place for outsourcing).

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i cannot agree more with ajanlekoko, great point. india is almost the same as nigeria, the only difference is the time difference. nigeria offers more educated people than india and nigerians speak better english than they do. thats also a factor u need to consider. outsourcing will soon become a big thing in nigeria,,,,,,

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trust and timezone issues.

Compared to New delhi, you are only half a day or less ahead and as such you are not as competitive as someone who's on the other side of night.

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Not really. India is 4 and a half hours ahead of Nigeria. Makes it 9 and a half hours ahead of the US East Coast (Eastern Time), and half a a whole day ahead of the West.

Nigeria is same time with Western and Central Europe, and 5 hours ahead of East Coast, 8 hours ahead of the West Coast.

Forget that trust matter. Can't you be trusted? There are lots of trustworthy Nigerian graduates from universities and polytechnics that can be easily trained and paid a stipend. They even communicate better than Indians.

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^^

True, outsourcing is very possible in Nigeria. And one thing you guys have to consider: The West to a large extent directs outsourcing to Asia, and funds a lot of those developments. I've been to India in particular, and there is no infrastructure advantage that India has over Nigeria. The IT parks in Hyderabad and Bangalore are funded by the Silicon Valley giants. Unlike China, India has not really taken advantage of the outsourcing boom to transform their country, and still struggle with power, road, as well as corruption issues.

One thing about Nigeria is that it doesn't get the right type of attention from the West, and subsequently does not get the right type of investment. There's a lot of talk about risk, risk, risk. Nowadays there are heavy campaigns on CNN to attract investment to places like Cambodia and Vietnam. I always find that really amusing. I guess very soon we'll be seeing ads asking multinationals to outsource to Iraq and Afghanistan.

The Telecom sector is a good example of how business can be really successful in Nigeria. Cast your minds back to the purported entry of Vodacom into Nigeria, blocked by Vodafone's American shareholders, SBC Global. They cited corporate governance issues, etc., at the time, because some state governors asked for 'brokerage' payments, made such a big issue out of it, and sensationally pulled out. They essentially paved the way for MTN to reap shocking turnovers like NGN740 billion last year.

Nigeria can be an investment and outsourcing dream, but the rest of the world choose to treat us with disdain, and we also don't do ourselves any favours. The so-called India everyone is talking about, they don't even have 3G mobile offering, while Nigeria have licensed 4 operators since 2006, and services have been rolled out since 2008. India is a heavily corrupt nation, no power, no roads, a lower literacy level than Nigeria, yet you find the likes of HP and Microsoft with a heavy manufacturing presence, pumping money and resources into India. My guys, it's all about perception.

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People shldnt get the whole idea of outsourcing wrong,some said initially that it's bout cost,if u look at the hierarchy of outsourcing, cost is number 7 on that list.there are a lot of factors that make company outsource, having said that.outsourcing is very possible in Nigeria. Take out the notion of global outsourcing and think local.wat happens to outsourcing our public sector. U talk about electricity,ow does other company run.if any company can run in Nigeria at the minute then outsourcing is possible.

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Most of the conditions that some mention for why outsourcing would not work in Nigeria also existed in many of the nations of the Pacific Rim, but that did not stop outsourcing to those countries. If America or Britain wants to outsource to Nigeria, they would create the infrastructure they need to run their business. No stuff that some of you negative ’s site, has stopped the west exploiting resources such as oil in Nigeria has it. America went so far as to go to war in Iraq just to benefit from cheap oil, it would cost them nothing to create and industrial park in Nigeria if they wanted to.

The badmouth of Nigerians in the Diaspora, actually not all are Nigerians, I bet a great deal of those on this board who claim to be Nigerians or say they have Nigerian roots aren’t actually telling the truth. However, as I was stating, the terrible, frankly disgusting attitude of those that are Nigerians and live abroad are in my view as valid a reason for Nigeria’s problem as any Nigerian government.  Yes, I would go so far as to argue that.  I think that Nigerians back home should look on Nigerians abroad as their enemies; they should do something if they can to disown Nigerians abroad. Why-o-why cant some of these bad mouth people if they feel so bad about Nigeria why can’t they just turn their backs on Nigeria, and call themselves American or British or something else  and have nothing to do with Nigeria and better still, have nothing to say about Nigeria. If they do that, Nigeria will have a better chance of making it in the world.   

and as for the dissembling post just above this one, the truth is that India did nothing for themselves, America and Britain are the ones who created most of the infrastructure of which India now boasts. America helped create most of the IT colleges and industrial estates. When there were shortages of nurses in Britain and America, the American built a huge Nursing school in war torn sirelanka. If one most praise a country for getting itself out of poverty on the strength of its own endeavours, then look to China and not India. If you want a metaphor for the Indian lies then look no further than the recent hit film Slum Dog Millionaire. The British created it but Indian pundits now go around giving the impression that it was an Indian made film.

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Thank you! I don't know where people get this notion that nigerians are lazy. We are a very smart and resourceful people.

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First off, Nigerians are not lazy , try paying Nigerians per hour, and you'll find yourself begging them to go home. Afterall, how many other nationals out here in London work more hours than Nigerians?

Second, there is a cal center in Abuja owned by a friend of mine. He has about 60 girls answering calls for 4 American companies, but like agreed, the main issues are power and of course band width.

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I'm in the outsourcing business and I know for a fact it is happening to an extent already. Companies are outsourcing development of software to companies in Nigeria (and Ghana) and it works well.

But why don't we see the sort of outsourcing model which companies like BT and HSBC in the UK have employed were whole support functions are moved to India, Poland and Romania?

1. Perception -

Nigeria is still perceived to be a highly unstable country. Why would a global organization outsource chunks of it's business to a country where they cannot be sure what will happen from one day to the next?

Because of our brothers who send 419 emails out every 2 seconds, the perception is that Nigeria is filled with criminals. With data protection a huge issue, you can imagine companies will be reluctant to allow support teams in Nigeria access to sensitive information

2. Infrastructure -

Our infrastructure still sucks (for want of a better description). This includes power and network. Now this can be mitigated against by an organization serious enough about making Nigeria a potential outsourcing region by capital investment in 24/7/365 generators and installation of their own Network Infrastructure. This would be a huge investment and I don't think anyone is convinced they would get their ROI

In theory, it could work in Nigeria, but it needs a change of perception ang I feel a significant capital outlay.

www.equity-tracker.com

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@Redman44

So it's the same condition we are facing here they are now facing there too, that's STRANGE to me.

Anyway, I've not been there before so I have no cause to doubt you.

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@solosimple

Don't get it twisted, my brother. People are working long hours in Europe and North America these days. In Britain, there are people that work 90 hours a week. They do all kinds of jobs. They also work on Saturday and Sunday. Flexibility and hardwork is the name of the game in Europe these days. The Recession is making citizens and immigrants work incredible hours in order to survive. The Government understands and they have said peeps can work as long as they want. I have seen white ladies hurrying to work as early as 5am in the morning. Just thought I should clarify things. Cheers.

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Put it this way, the excellent human resource pool we have in Nigeria is not as widely publicised as the excellent human resource 419 pool we have. Nigeria is simply not publicised as a country with smart people who are capable of handling your precious projects as well as any Indian. Why would any business person go through the risk? Any thing Nigerian to the West "is a scam".

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Mek una leave story - You can't outsource what you don't have. Highest rates of unemployment in USA & UK, Credit crunch don hammer all the outsourced jobs. In fact, they say oyinbo don start to dey do cleaning again for london!

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You just have to love this country. Bravo to all the contributors. Indeed there's a future for the country.

@ Topic. It's all been summed up.

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Are you serious? Have you ever been outside Nigeria.

People work 12hr shifts, 6 days a week easily in the U.S.

In Nigeria, when you say 8am to 6pm, have you factored in the 1-2hrs lunch break.

In the US, you get paid for time spent working. In Nigeria, it is fixed.

There are people who work 80-90hr weekly shifts in the U.S easily.

This has nothing to do with the post but i just wanted to clarify your misconception.

If you had said Nigerians in the U.S, i would have agreed with you because Nigerians in the US toooo dey work. Some people work 16hrs, 7 days a week.

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If anyone thinks Nigerians are lazy people, my question is this, In what other country of the world do people work from 8am to 6pm, 5 days a week as we do in Nigeria (majority even work on Saturday, and some on Sunday too)

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why would anyone wanna outsource to a nation where?

No constant electricty.

Light depends on generator and gas is no readily available.

People getting to work is crazy and roads are terrible.

Accountability is messed up and no transparency.

Political wahala is always ready for another showdown.

Muslims and Christians are on each other throats.

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na wa for all these ppl outside naija that keep on talking abt 419 and online scams. . .abeg we've heard enough already

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Sorry, am just seeing it the order way, Lets put up ideas on how it can work.

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Lazy people is at the root of the problem. That is why 419 comes from Nigeria, thousands of people sat in internet cafes all day sending their silly mails and trying to steal and thieve their way through life rather than work for a living!

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We got the labour - but we lack the enabling environment for large scale outsourcing. Until infrastructure, infrastructure ,infrastructure,

somehow happens in Nigeria - Forget it. The simply fact of the matter " Business are in it for profit".

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I totally disagree with this statement. If you are lazy, it is better you speak for yourself and people around you, not generalising it. Nigerians (except you and the few you are indirectly referring to) are energetic, strong willed, rugged and smart people.

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Good point with regards to Africa. The only problem is that other countries are/have already beaten us to it. Manufacturing industries are already leaving Nigeria for Ghana. Don't be surprised when you call customer service in Nigeria and the operator has a Ghanian accent!!!

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Gents,

A few facts you might not know about, or have never heard.

Fact 1: Outsourcing from the West to Nigeria is already happening on a small-medium scale. RIM of the Blackberry fame has a development project outsourced to a Nigerian company based in Abeokuta. It's been running for at least 5 years now.

Fact 2: There is actually an outsourced call center operation in Nigeria and Ghana, which handles traffic for clients in the US and Europe.

Now to the topic proper. Infrastructure in Nigeria doesn't permit outsourcing on a large scale (manufacturing and services) to Nigeria; we don't have pervasive and reliable Internet access, and we don't have power at all. We do have the labour force, however I don't think we have a sufficiently trained workforce for services or manufacturing outsourcing. We don't have a large pool of skilled technicians in Nigeria to support a number of these industries, and we're already behind, so I doubt seriously that we will catch up with the likes of China, India and Brazil.

What we should focus on in my view is Africa. Nigeria can become an outsourcing hub for both manufacturing and services for Africa, if we get the infrastructure in place.

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Who told you that Nigeria has brilliant people. Yeah, maybe we have "some" but most people are definitely not brilliant.

If you define brilliance as the ability to pass exams or memorise 3 textbooks, then Nigerians are brilliant. Brilliance has to do with innovation and intuitive thinking which a lot of Nigerians lack.

Businesses are in "business" for profit. Why would they eye Nigeria if the opportunities for profit don't exist.

The price of diesel and maintaining generator sets is enough to chase anyone away.

Why would you bring your business to Nigeria when you can get "cheaper" labor and reliable power supply in India.

Lets talk about the real issue here : Technical know-how/education. Most of the oustsourcing being done in the world today is in the I.T industry. Whether you like it or not, the Indians have a good lead on I.T so it is only natural that businesses would head there. Nigeria still has a lot to catch up on in I.T.

Why will anyone waste their time trying to play catch up when they can head straight to India. (I'm not saying the indians are the best because i've interacted with some of them who don't know what the heck they're doing). The point is that they are well established in the industry and companies will always head for them.

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I agree with what most of the people are saying here. Here’s my take:

1. Political stability

2. Legal stability & enforcement – independence of judiciary

3. Highly skilled cheap workers – easily trainable

4. Infrastructure

5. Power

All the factors I listed above and more do get considered when setting up a company but these factors do not all carry equal weight. The most important factor will have to be political stability. Any company that has more than a four-year plan would like to know that their existence could be guaranteed past the present administration. To many mixed messages coming from different sectors/subsequent govt.

Legal stability then comes next – one would like to know what the laws are and how they’re enforced before planning some type of long-term investment. Do Judges tend to ignore the written law in favor of local companies? Do they enforce contracts fairly?

Not having the needed infrastructure could also be a showstopper. Power on the other hand has an easy solution, the cost of which can easily be predicted and factored into the cost of doing business.

The takeaway point is that businesses need stability and predictability in order to adequately plan to recoup their investment. Until then, there’s always a stable economy in Southeast Asia.

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I absolutely agree with all that has been written on this thread on why outsourcing won't work in Nigeria. The infrastructure is that will enhance outsourcing of jobs is not available. Nigeria is utterly undeveloped when it comes to the availability of infrastructure. There are many roads and streets in Nigeria that still look the way they were 20 years ago. Many Nigerians find it difficult to change their thought process and that is why we are where we are as a Nation. Hardworking Nigerians are mocked daily while those with 'connections' get to the top easily.

We need to fix the infrastructural problems of Nigeria first before thinking of calling on the developed to outsource their jobs here. Cheers.

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An average Nigerian, when employed is busy (on the first day) calculating "What he/she can get out of the business". I no wan serve oga 4ever. When the same employee is not even trying to put in his/her dues. The demise of the business is also the end of the employee. No doubt. May be its in the culture or so, i dont know.

A culture that will allow a tenant to owe to 2-3years without getting kicked out. So he/she is not even budgeting rent in monthly funds. Na so so beg beg. Try that here in the States and see how fast the Marshals will be at ur door locking you out.

When i say we are lazy. I mean it. Consider this: An oga of a company hires a driver to drive to/from work. Driver gets oga to work in the morning nothing to do. He only lays down the seat and sleep until oga is ready to go again next 8hrs!!!. why even get a driver?

Here i rest.

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All the reasons given above are why outsourcing is out of it for now, but in future if our infrastructures are in place, why not.

I shudder (recoil) when i hear people say we are lazy. Nigerians are not lazy. Promise72, was probably in Nigeria before traveling abroad. If we were lazy he would not have been able to adapt automatically to holding a job, not to talk of 3 jobs. No jobs for Nigerians. Here you have to be extremely creative to hold more than one , but over there the jobs have been, or are being created for any hard working person. Give Nigerians similar opportunities and see what happens. Some persons here in Naija, yours' sincerely inclusive are holding more than 2 jobs at the moment. Nigerians are not lazy.

I am constantly touched by the staying power of the Nigerian woman, give her very little and she will still get something done.

Give us power, road, security, leadership and see what happens next. we will overtake this countries in outsourcing.

Oga ta Oga o ta owo Alaaru a pe. That proverb is synonymous with all cultures.

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Unstable Power supply

Political Instability

Acute fuel scarcity

Incessant Strike

Bad Leadership / Political Thuggery

Bad roads & other Infrastructure ,

All these among others are some of the issues that is affecting us in this country generally, not only in the outsourcing business.

If they are not affecting the business or the organisation directly, its gulping a huge percentage of the gross profit. e.g Telecommunication Industries can only tell how much they use to power their transmission masts (running generator for 24hrs on daily basis), Secure private security for these equipments and the offices in general. Think about Banks, Power for the ATM machines and other equipments.

Even on one-man-business basis. Regular power supply is one of the major key, Transporting your products and/or delivering services timely on good roads, fuel availability as at when needed without fear of armed robbery is of paramount importance to make way ahead.

If u have been to the CBD in Abuja, just imagine the infrastructures (though not 100% compare to developed nation) to be the same nationwide, then we will be aiming high, have some reasonable % of inviting foreign investors even to be their representatives.

You cannot repesents any reasonable international business where the above mentioned points are still in place.

GOD BLESS NIGERIA, and her true leaders that have real vision for her development.

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Excuse is only good for people making 'em.

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Apart from other issues listed above, stability is very key.

For instance, how would you explain to the companies you are managing a part of their business that your workers did not turn up for work because of a Riot or some other sillly reason? No foreign company wants to hear that as they will loose their customers very quickly due to non delivery of goods or services.

Trust is also very key. Many foreigners and countries virtually do not trust we Nigerians anymore because of the acts of many fraudsters and their illicit activities. When you are handling some type of outsourcing which is not related to manufacturing, you are entrusted with critical business and customer data such as bank account details, payment card details, addresses, date of brith, e.t.c. Nobody will risk putting such information in our hands!

That said, we have very skilled people, can train more and are capable of handling outsourcing if you consider the knowledge perspective. We need to put our acts together in other areas such as infrastructure, discipline, stability and we would be good to go. Maybe we can "rebrand" ourselves when we have done all this, but not before!!

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I disagree with the notion that Nigerians are lazy, 5% of the population being lazy can not speak for 95% of the people. If Nigerians are lazy who made them lazy or who make them look lazy?, the GOVT!

2-3 jobs oversea with the enabling environment you should add. Where will the 2-3 jobs emerge from in Nigeria where there is no power to power the industries. Or banks wont give out loans with reasonable interest rate or without administrative clogging to those with ideas that can create small scale business and put people to work. Secondly, the pay system in Nigeria is bad, it doesnt give the workers the ability to put in their best and earn more for hard work. Like in most countries where pay is calculated on hourly basis. Nigerian industries/govt should introduce hourly pay rate, which is easy by breaking the current salary down to an hourly rate. Automatic salary is cheating to workers and industries/govt, workers who dont turn up for work in a day under clumsy excuse of illness without doctor's report get auto salary. Workers who work hard and over time dont earn extra. Workers who come 30mins late get auto salary. Workers who come 10mins early become discourage and tend to follow suit. So our system is a pull back on hardwork.

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Gentlemen,

I hope you don't mind me crashing your party.

I am very curious to explore the belief that Nigerians are lazy, especially back home.

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Interesting,

So far from everyone's input:

(1) Power issues - energy infrastructure

(2) Telecommunications issues - Telecom infrastructure

(3) Lack of proper town planning

(4) Poor work ethics

(5) Political issues

Yep, these are enough to scare foreign investors off from our shores. Pity, because if you think about it, in terms of outsourcing "services" it would have been nice if manufacturers like Nike, Reebok etc could set up factories in Nigeria and we could all see "made in nigeria" on their products. We are actually closer to the US than the Asian countries (from the east coast anyways).

So much money we are losing from this opportunity cost.

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Sorry to break it to you guys. NIGERIANS ARE BY AND LARGE LAZY PEOPLE. Especially back home. We dont have problem working 2-3jobs overseas but not at home.

Dishonestly is also the name of the game. A Yoruba proverb say that "oga ta, oga ko ta, owo alaru a pe". Loosly meaning "Irrespective of the masters prospect, the servant will get paid"

Many people operate by that mentality unfortunately. They have forgotten that the fate of the master and the servant are intertwined.

Once again, we are very lazy people. And yes, the power issue too.

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Tstark is right on the money here. Everything hinges on the power issue. There are enough tax breaks and incentives for businesses to come to the country and build their own business parks if they want to.

Outsourcing is done to save money, so adding generator and diesel costs to your other overheads defeats the object.

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I disagree - those guys were crooks. People will look and see the likes of Churchgate operating according to the law and flourishing and the numerous Israeli, Italian and Arab construction companies working successfully.

No genuine businessmen have been run out of the country as far as I know, so that shouldn't be an impediment.

Our main flaw is lack of organisation - we can't organise ourselves and put forward proposals to these companies abroad to get some chunk of that business. This is coupled with reliability issues - we lack reliable IT (telephony and internet) facilities which are needed to continually liaise with foreign companies for business purposes. Imagine trying to run a customer support centre and the Nitel gateway goes down because of some strike and you're disconnected?

One more thing - the lack of true development parks/ Industrial clusters. If we had well run industrial estates or business clusters where these companies could set up shop (with necessary infrastructure), there would be a greater likelihood to invest. Image comes into it, but it is the lack of the items above that I think are mitigating against us.

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i disagree with the power assertion,though not entirely,however i think it has a lot to do with our political leadership and their penchant for arbitrarily disobeying laws,many international businesses will have seen what happened to the vaswanis after they were deported all of a sudden even though they have businesses worth billions of naira here,the second reason in my opinion is the bad rep we have in the international business arena

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Una get steady power supply? What company in their right minds will want to jump from frying pan to fire? All those countries you mentioned have steady power supply period.

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