A LESSON FROM THE OHIO THIRD FRONTIER

THE UNIQUENESS OF OHIO THIRD FRONTIER PROGRAM IN SUPPORTING THE GROWTH OF ENTREPRENEURSHIP

From the lecture on The Role of Government in supporting the growth of Entrepreneurship, it is obvious that the example of the State of Ohio is very unique. The uniqueness of the Ohio case can be traced to the motivation of the government to support the growth of the economy through funding entrepreneurs. To achieve this, the Ohio Third Frontier was formed in 2002 as a government program to provide financial support to entrepreneurs.

In terms of timing, we are made to understand that over a period of ten years, the government of Ohio had helped to provide capital to investable entrepreneurial ideas like CardioInsight co-founded by Charu Ramanathan. Cleveland’s entrepreneurial boost was ignited by the obvious decline in investments which aroused the interest of government and entrepreneurs to do something about the declining economy. The catalyzing agent was the Ohio Third Frontier program, anchored on innovation and creating opportunities. In the words of Bruce Katz (author of The Metropolitan Revolution), such programs as the Ohio Third Frontier are structured around the need to encourage innovation, entrepreneurship, manufacturing, and trade. To achieve this, it is important to make provision for long term periods for return on investment. This is said to take several years or even decades for progress to be felt. Moreover, the funding of these projects need to be sustained to achieve the desired objectives.

As regards evaluation, this can be viewed from two perspectives; evaluation of entrepreneurship proposals, and evaluation of success. In the case of Ohio Third Frontier, responses to government’s call for proposals are evaluated through a third party independent evaluation process. In other words, the proposals are forwarded to a third party professional evaluation agency to access the viability of such proposed projects and advise the government. Some of the key performance indicators for evaluation of such proposals include; the high growth rate of the project, and the sustainability of the program.

Furthermore, successful entrepreneurs who receive government funding to establish their projects have a responsibility to deliver their mandates. To ascertain the level of success they achieve, their activities are also subjected to some form of evaluation. Top on the list of success paradigms for entrepreneurship programs are; job creation and the quality of jobs created, provision of tax revenue to the state, as well as follow-on capital. In other words, a successful entrepreneur should be able to create jobs, generate revenue for the state, and build on the investment capital for expansion of the venture.

The support of the Ohio Third Frontier program to the growth of entrepreneurship also covers risks involved in investments. It is obvious that high growth entrepreneurship ventures come with high risks that may be almost impossible for one investor to bear. The Third Frontier program therefore provides a pool of funds made up of government funding and donor organizations to provide sustained funding for such projects. Although some entrepreneurs like Peter Kellner (Co-Founder, Endeavour Global) are skeptical of seeking government funding for fear of change in policy resulting from change in government, or having strings attached to the agreement, many others testify and agree that government funding is very essential in giving birth to start up entrepreneurships. Government involvement through the Ohio Third Frontier also supports the sustainability of entrepreneurships through regulations and other forms of checks and balances. Funding from the Third Frontier also helps to cushion the adverse effects of the prolonged period before return on investments.

One of the factors which guarantee success for Ohio entrepreneurs is the structure of the Third Frontier program. The program is structured to act as a catalyst for development of entrepreneurship in the ecosystem. Firstly, there is recognition of crisis in the economy, then, there is coalition of strong community leaders, rapid creation of a plan, and provision of money and support for establishment of investable ideas. The establishment of the Third Frontier was anchored on the need to have a funding organization that will be big enough to handle various kinds of projects. Also, the program requires outside match funding counterpart to achieve funding partnership for such projects.

The success of the Ohio Third Frontier can be traced to the way it was structured ab initio. In this sense, it does not act as the kingmaker for entrepreneurs or attempt to design projects for the entrepreneurs. Rather, the program acts as a catalyst for the entrepreneurship projects and not as their controller. The program is also structured around the following key factors; how big is the program? How will the program avoid favoritism? How diverse will the program be? Would it fund different stages of the entrepreneurship? Would it fund both research and entrepreneurship? What metrics will be used to measure success?

In summary, it can be stated that the Ohio Third Frontier is unique in supporting the growth of entrepreneurship not only in ensuring that entrepreneurs’ dreams are actualized, but also in providing solutions to issues relating to timing, evaluation, risks, and structure for sustainability. The Ohio Third Frontier program is a model which every community seeking to develop its economy should replicate. In my opinion, I think every aspect of the program will be feasible in my community if the government is willing to take responsibility for establishing an entrepreneurship funding program such as the Ohio Third Frontier.

OVERVIEW OF HOW THE NIGERIAN GOVERNMENT SUPPORTS THE LOCAL ENTREPRENEURSHIP ECOSYSTEM

In all sincerity, successive governments in Nigeria have made series of attempts to support the local entrepreneurship ecosystem in the country. Unfortunately, most of these efforts had little or no sustained success because of inconsistency in government (resulting from military coups and political instability). Furthermore, the country suffers from non-implementation of policies and corruption, which leads to bastardization of laudable economic projects because of selfish interests of a few individuals. In most cases, successive governments abolish programs put in place by their predecessors irrespective of the economic and social importance of such programs. At the long run, ideas are unnecessarily duplicated and the goals of establishing them are rarely achieved because professionalism is usually sacrificed on the altar of favoritism. In this sense, rather than put a professional in position to drive an idea, an individual, who may not be knowledgeable in that area is put at the helm of affairs to compensate him and he will end up not knowing what to do until his tenure is over.

It is also unfortunate that these support programs are not well planned before they are implemented. For instance, some of these programs are executed from the federal level and they end up not getting to the grassroots persons who actually need them. A remarkable case was the Better Life for Rural Women program institute by the late Maryam Babangida. A program meant for the empowerment of rural women ended up being a means of further empowerment for the city women who hijacked the program and ran its affairs for themselves. Most skills acquisition programs of the government of Nigeria have also failed because the target audience are mostly not the end beneficiaries of such programs. In essence, the Nigerian government attempts to support the local entrepreneurship ecosystem have not had much success due to the uncoordinated ways of planning and executing them.

GOVERNMENT-SPONSORED PROGRAMS/ORGANIZATIONS FOR SUPPORTING NIGERIAN LOCAL ENTREPRENEURSHIP ECOSYSTEM

1. Youth Enterprise With Innovation in Nigeria (YouWiN): The Youth Enterprise With Innovation in Nigeria program was established by the Federal government of Nigeria to encourage young entrepreneurs. It was also seen as a means of stemming the escalating youth restiveness in the country and engaging the youths in activities which are economically productive. The program is administered through an annual business plan competition. Successful participants in the competition are given entrepreneurship grants through designated banks appointed as funds managers for the YouWiN program. Skye Bank is the major handler of the financial operations of the scheme and the bank supports the program by taking the awardees through entrepreneurial training and capacity building programs. These awardees are expected to utilize the grants in establishing entrepreneurship projects that will create jobs for other Nigerians.

2. Entrepreneurship Development Program (EDP): This is a program of the Federal government of Nigeria aimed at helping her citizens to develop their entrepreneurship ideas. The program is responsible for identifying budding entrepreneurs and guiding them through the process of acquiring enduring entrepreneurship skills and setting up small and medium enterprise projects.

3. National Open Apprenticeship Scheme (NOAS): This scheme is the Federal government’s effort at encouraging her citizens who have no access to education to learn artisan trades through apprenticeship with practicing entrepreneurs. The government enrolls these individuals into the apprenticeship program and supports them with small financial incentives.

4. Start Your Own Business (SYOB): This initiate was established to help budding entrepreneurs to access funds from microfinance banks to start their own small and medium enterprise businesses. It involves an individual coming up with a business idea and presenting the idea to the agency, which in turn, acts as go between for the bank and the entrepreneur. The entrepreneur then presents collateral to the bank before the funds are disbursed to him for the business. He gets back his collateral when he refunds the seed capital to the bank.

5. Rural Agricultural Development and Training Scheme (RADTS): This program was established by the Federal government to support rural dwellers in developing their agricultural programs. The agency trains these rural agriculturists and also provides improved seeds and seedlings to them at subsidized rates. The agency also helps the agriculturists to acquire engines for mechanization of their farming activities through bank loan facilities.

6. Structural Adjustment Programme (SAP): This is a program introduced by the Nigerian government to encourage manufacturing activities in the country. It was originally aimed at discouraging over dependence on imported goods and services. The main idea behind the program was to encourage local manufacturers to source for local raw materials and use them in the manufacture of goods and services for local consumption.

7. National Directorate of Employment (NDE): This agency was evolved by the Federal government to coordinate the generation of employment for Nigerian school leavers. It served as an interface for recruiting organizations and Nigerian applicants. Applicants were expected to register with NDE and follow up on job openings to benefit from recruitment exercises.

8. Small and Medium Enterprise Development Association of Nigeria (SMEDAN): This program is a Federal government initiative responsible for the development of micro, small and medium-scale enterprises and coordination of their activities in order to develop their full potentials and competitiveness. The program is also responsible for organizing seminars and workshops, as well as registration and co-operation of micro, small and medium business associations.

9. Nigerian Sovereign Wealth Fund: This is a recent attempt by the Nigerian government to support entrepreneurship efforts in the country through funds reserved from the proceeds of oil and gas mineral resources. The Fund is still evolving and the modus operandi is yet to be publicized by the government to the understanding of the average Nigerian.

1. Niger Delta Development Commission: This is a Federal government initiative, aimed at supporting development activities in the Niger Delta Region of the country. The Commission undertakes execution of contracts through local contractors for their empowerment and the development of the concerned communities.

These are a few of the government-sponsored programs and organizations which have been at the forefront of supporting the local entrepreneurship ecosystem of Nigeria at one time or the other in the history of Nigeria.

 MY COMMUNITY’S ENTREPRENEURIAL LANDSCAPE AS IT CURRENTLY STANDS

In Nigeria today, the wind of change is gradually blowing towards entrepreneurship boom. The sensitization being experienced by most Nigerians now was triggered by the trailblazing efforts of Aliko Dangote, who is reputed to be one Nigerian man whose wealth cannot be traced to corruption but can be traced to entrepreneurship ideas. Unfortunately, the government did not play any significant role in the making Dangote Group. At the national level, there are still uncoordinated efforts to establish a program for supporting entrepreneurs. The most seemingly progressive effort is the Youth Enterprise With Innovation in Nigeria program, which has been run successfully since 2012. Yet, there is a lot left to be done at the national level, especially in encouraging small players to engage in oil and gas activities in the country with funding assistance from the government. For instance, the government can encourage small players to establish modular refineries and the government will in turn, sell crude oil to them at a subsidized rate for them to refine and sell in-country or even export to neighboring countries. The government can also establish programs like the Ohio Third Frontier to support entrepreneurs in the agricultural sector to set up medium scale mechanized farms for production of food supplies for local consumption.

At the state level, there is little effort being made to empower entrepreneurs because most of the states tend to depend on the Federal government programs. Be that as it may, many states evolve series of youth empowerment programs but these programs are not founded on sustainable planning.

The local governments are rather docile in the support of entrepreneurship. They also suffer from over dependence on the Federal government, seen as the big father who should take care of the needs of all citizens including those directly operating in the local government areas. It is only in a few cases that you see some local government authorities evolving programs to support entrepreneurship activities.

Conclusion

There is no doubt that small and medium enterprises contribute in no small way to the development of economies and generation of employment. Nigeria suffers today from high unemployment rate because the country is yet to harness her entrepreneurship potentials. When one imagines what the country stands to benefit from developing entrepreneurship through genuine government support, one only wishes that the government of Nigeria can engender the political will to replicate a program such as the Ohio Third Frontier to turn her entrepreneurship terrain around for the good of the present generation and future generations to come.