On Wednesday, Toshiba, one of Japan’s most prominent companies, was delisted from  the Tokyo exchange, after 74 years. Three things dislocated Toshiba: accounting malpractices, corporate governance and bad luck. Yet, when I look at Toshiba, I look at GE.

When GE sold GE Capital, I wrote that it was a very strategic mistake because GE Capital was a double play which powered the whole group, and by selling the financing arm, GE imperiled the capacity of its one oasis to return value to the business: “The summary here is that GE did not know that GE Capital was its double play for shipping those hardware solutions. Even if it was not making money via GE Capital, GE Capital was critical for most monies GE Power, GE Healthcare and other units were making. “ 

For Toshiba, it was the bankruptcy of Westinghouse Electric when the planned construction of a nuclear power plant vaporized. To remain in business after that episode, Toshiba sold off its multi-play businesses like mobile phones, medical systems, large appliances and broad white goods.

But with the plays gone, where do you expect the profits? No place. And over time, Toshiba faded.  Nonetheless, it may not be over for Toshiba: “Earlier this year, the company confirmed it would be taken over by a group of Japanese investors led by state-backed Japan Investment Corp (JIC) for $14bn. It’s not clear how the new owners plan to turn around Toshiba but its outgoing chairman has said high-margin digital services will be a focus.”

From Nokia to Toshiba and everything, markets do not respect brands blindly. Only great products or services do customers respect. If you do not deliver them despite any prior heritage, you will struggle. That is what has happened here. And if we go back to GE, it is back to that old heritage, helping customers buy its products, and it is doing better again. And you will wonder: why did it even leave what was working? Leadership! It defines everything in companies and nations – and we must learn from it.

Now, it seems GE is coming back to that root: help customers buy things by making solutions more affordable. Yes, Access Bank and GE are partnering to help institutions acquire GE Healthcare solutions in Nigeria: “Access Bank and GE Healthcare  are to provide sustainable healthcare equipment financing to private healthcare providers”. GE must have negotiated better interest rates for these customers which none could have gotten directly with Access Bank.

The summary: we must innovate if we hope to thrive in markets, and as that innovation happens, we must measure to know what works, and does not work, so that we do not in the name of restructuring kill the heart of our business.

Until Nigerian policymakers focus on creating systems for Capital development and evolution over our fixation on Money, we will continue to struggle. When I read our policies on land, agriculture, etc, I see policies geared towards Money, when what we should focus on is how to stimulate Capital, even as we pursue the scaling of money.

Money is a subset of Capital, and companies and nations which allow Money to rule over them underperform. In Nigeria, we’re pursuing so much money, with limited efforts designed to advance Capital, triggering a system where there are many farmlands but no capital market product for farmlands. And without Capital, we scale poverty. When South Africa’s stock (capital) market has close to $1 trillion value, and Nigeria’s is hovering around $50 billion, you can see that we have a lot of money in Nigeria, but limited Capital. That must change.

In the five factors of production – land, labour, Capital, entrepreneur and knowledge – there is no Money listed. Capital represents assets (physical and non-physical encapsulating skills, education, knowledge systems, etc) which are used to make goods and services during the transmutation process of turning ideas, and raw materials, into finished goods. Money does one thing: means to exchange goods and services. In short, the unit of Capital is money (i.e capital is measured in monetary terms).

Nigeria’s policy making avoids risks because for us, entrepreneurial capitalism is about making money. Unfortunately, that is our biggest problem because we see success from the lens of money. But should we change that policy viewpoint, trumpeting Capital which feeds entrepreneurial capitalism (not entrepreneurial moneyism), we can enable engines for risk taking, opportunity and job creation, in the nation.

In a simpler way: how can Nigeria push companies to extend beyond accumulating Money in their balance sheets to scaling Capital through risk taking and opportunity acceleration, for shared prosperity. Remember this:

Mr. A has N20 million in his bank account but zero credit.

Mr. B has N5 million in his bank account but has access to assets that can unlock a credit of N100 million.

Between these two people, Mr. B is well loaded as a modern business person.

In my private client services, when industralists come to me, on how they can thrive more in Lagos, PHC, Abuja, and other major cities, I tell them besides everything, they need to deepen their Capital, and not necessarily money they have in their bank accounts.

Yes, to be successful as an industrialist  in Lagos, PHC, Aba, Abuja, etc it is advisable that you have property. With that house in your name, banks can lend you money and magically, you can tap resources (via credits) to keep growing your company, even though you do not have tons of cash in the bank. 

 (Now you know why some Nigerian business people like to buy land and build houses wherever they are: they’re trying to accumulate capital which can qualify them before banks in their businesses. Banks speak the language of capital, not just money).

Yes, till tomorrow, I tell my kinsmen in Lagos, Abuja, Aba, PHC, etc to buy land and build houses because within 5 years, they have capital to move to another level in their companies. Banks LOVE capital, and people with capital get credits.

Nigeria is a nation of money instead of capital, and that is self-evident when you see that we have not done anything to deepen our property rights on land and other assets. When you do not do such, it simply means you are all about money with no interest in the accumulation and development of capital. Unfortunately, no nation develops on Money; Capital rules the world!

Comment on Feed

Comment #1: Capital and money are related economic concepts, but they have distinct meanings.

1. Money:

– Money refers to a medium of exchange that is widely accepted in transactions for goods, services, or settlement of debts.
– It can exist in various forms, such as coins, banknotes, or digital currency.
– The primary function of money is to facilitate trade and act as a unit of account.

1. Capital:

– Capital, in an economic context, generally refers to financial assets or resources that are invested in a business with the expectation of generating income or profit.
– It can take various forms, including financial capital (money), physical capital (machinery, buildings), and human capital (skills, knowledge).
– Capital is often used to create wealth through investment and production.

In summary, money is a specific form of capital, specifically financial capital. Capital, on the other hand, encompasses a broader range of assets and resources that can be used to create wealth and facilitate economic activities.

Thank you Prof. for bringing us back to economics, one of the best subjects in secondary school to build an entrepreneurial foundation.

Comment #2: Since Governors have the sole right to deepen this property right(land), why do you think they are neglecting it? Also there’s this potential of increasing state’s IGR through property tax and yet Governors are not investing in deepening property right in their states.

My Response: Ok – the problem in Nigeria is the Land Use Act which makes it impossible to “own” land in perpetuity by the citizens. In other words, I can buy land in your village and in 10 years, if the government needs that, it can take that land. With that mindset, investing in farmland is seen as risky because the absolute rights may not be given to the citizens. 

Contrast that with the US where people like Bill Gates can buy as much land as they want, knowing that those are investments and no one can repurpose them. Under that system, you can buy the land and then decide to trade them in the capital market. I am not sure you can do that in Nigeria since  that “land” can be taken over by the state.

Of course, changing that system will also mean that if I own a land and I find oil/gold in it, that oil/gold belongs to me, and not the government. That radical approach is the US model which means if the state wants to tap into that oil, it has to pay the land owner the rights. That is the zenith of property rights because you ABSOLUTELY own that property. In Nigeria, we do not have the full law and there is nothing even a state government can do. Remember, even a state cannot control its oil and gas deposits; the federal does. So, no governor can do much unless the federal unwinds. But do not expect that since it will destroy the common pocket of sharing revenue

How Nigeria Can Become Richer