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1. FEDERAL POLYTECHNIC NASARAWA, NASARAWA
STATE
SCHOOL OF BUSINESS STUDIES, DEPARTMENT OF
BUSINESS ADMINISTRATION
ASSIGNMENT ON
PRINCILPES OF PURCHASING (PAS 111)
TO BE
SUBMITTED
BY DANLADI WAYU
WITH REG NO,4404
TO BE
SUBMITTED TO
MR,KUFRE INYANG
JANUARY, 2015

2. INTRODUCTION
Firstly we need to know the meaning of purchasing, The activity of acquiring
goods or services to accomplish the goals of an organization.
The major objectives of purchasing are to (1) maintain the quality and value of a
company's products, (2) minimize cash tied-up in inventory, (3) maintain the flow
of inputs to maintain the flow of outputs, and (4) strengthen the organization's
competitive position. Purchasing may also involve (a) development and review of
the product specifications, (b) receipt and processing of requisitions, (c)
advertising for bids, (d) bid evaluation, (e) award of supply contracts, (f) inspection
of good received, and (g) their appropriate storage and release.
There are several ways to overcoming the various business challenges in Nigeria
and the African continent, Chairman Dangote Group, Alhaji Aliko Dangote, has
said.
Dangote who spoke during the Business Conference organised by the Masters of
Business Administration (MBA) students of the Lagos Business School, Pan
Atlantic University, said: “Unstable regulatory environment with policy
inconsistencies can be overcome by constant dialogue with government while

3. inadequate infrastructures can be overcome by including the cost of providing the
required infrastructure in the project cost.
Represent by special adviser Joseph Makoju, Dangote also noted that ulocal
contractors and suppliers with the associated completion risk can be overcome by
drawing up detailed quantities/request for proposals; engaging competent experts
to verify scope of work and ensure that it is reasonably completed; work with the
more credible contractors/suppliers; and setting up project teams to constantly
supervise the entire process.
On access to finance, he said, this can be overcome by prudent negotiations of
interest rates and tenor of facilities; constant review of the bank statement to detect
spurious charges; accessing international capital markets for project finance
facilities; negotiating supplier credits supported by international banks; stock
exchange listings; etc.
According to him, dearth of highly skilled and experienced talents locally can be
overcome by hiring expatriates to lead and train local staff; training and
empowering promising staff to lead entire processes upon demonstration of
capacity and willingness to take on higher responsibilities; institute a culture of
accountability and competition focused on attaining set business goals; develop a

4. culture of process ownership which does not accommodate excuses for non
attainment of set objectives; reward and promote excellence.”
Nigeria is a country blessed with human, mineral and natural resources. When it
comes to starting a business in Nigeria; the potentials are so great that any investor
or entrepreneur will be tempted to jump in with both feet without first testing the
waters.
A reasonable proof that Nigeria hold huge potential for entrepreneurs and investors
is the fact that we have an abundance of successful entrepreneurs who started from
scratch and built massive business empires without leaving the shores of Nigeria.
I am talking about successful entrepreneurs and Nigerian billionaires such as Aliko
Dangote, Cletus Ibeto, Femi Otedola, Orji Uzor Kalu, and so on. The fact that
Nigeria once produced the richest black man in the world further proves that there
is money to be made in Nigeria; if only you understand her business terrain. The
secret to the success of these Nigerian entrepreneurs is a story for another day.
Secondly, countries such South Africa, China, etc are scrambling to invest or setup
shop in Nigeria. That’s why companies like Tiger Brands, Shoprite, Techno moved
into Nigeria and are expanding aggressively. Now if you are serious about starting

5. a business in Nigeria; then I will provide the necessary down-to-earth information
needed to help you successfully start and build a business in Nigeria.
As expected, there are general business challenges and factors that startup
entrepreneurs face all over the world but when it comes to economic and
environmental challenges; it varies from region to region.
For instance, the economic and environmental factors affecting businesses in the
United States of America or Canada is different from the factors affecting
entrepreneurs in Africa or better still; Nigeria. So it’s based on this fact that I wrote
this article to help familiarize you with the business terrain of Nigeria and how to
handle its challenges.
The Cons and Challenges of Doing Business in Nigeria
1. Lack of Infrastructure
The first business challenge you will face when doing business in Nigeria is
infrastructural challenge. Nigeria lacks the basic infrastructure and logistics to
support entrepreneurship. If you are going to run a successful business in Nigeria;
then you must have the financial muscle to provide your own infrastructure.

6. Take for instance you want to start a manufacturing firm in Nigeria; you will need
to build your own factory, provide your own water supply and other amenities that
smoothens business operations.
This single factor lengthens the time frame from initial planning to full business
operations when compared to developed countries that have the basic infrastructure
in place. Infrastructural challenge will directly or indirectly increase your startup
overhead cost so you have to properly factor in this challenge in your business
plan.
2. Poor Power Supply
Poor power supply is the next challenge militating against the successful growth of
small business startups in Nigeria. Successful companies operating in Nigeria has
found a way to deal with the challenge of power supply by providing their own
power.
For instance, Aliko Dangote; the founder of Dangote Group has developed the
strategy of situating a mini power plant right next to his factories as an alternative
to the erratic power supply in the company. So if you are successfully going to
operate in Nigeria; then you must map out a plan to curtail the harsh effect of poor
power supply.

7. Update: The federal government of Nigeria has been making giant strides to
address the power challenges the country is facing. As at 1st of October 2013; the
power sector has been deregulated and the licenses given to private investors to run
their own independent power stations.
3. Inadequate Security
Security is the next challenge you must deal with especially if you are a foreigner
wanting to invest in building a business in Nigeria. But I think it’s worthwhile I
add that there has been a massive step up by the government with respect to
security and based on this; I can confidently say that I am impressed with the way
the government is handling the security of the state. However, I don’t think the
security challenge is going away anytime soon; so you have to be prepared to deal
with it.
4. Inconsistent Government Policies
Government inconsistency is really a challenge you will have to tackle if you must
succeed in Nigeria as an entrepreneur. Governance is something entrepreneurs
have no control over; all entrepreneurs can do is try to influence government’s
policy with respect to enacting favorable business laws. But you must have
political clout and massive resources to be able to influence government laws.

8. Now you may not have the political clout or financial muscle to influence
government’s policy so the best strategy to combating the ever changing policy of
the government is to keep a keen eye on government laws and swiftly adjust your
business to align with the policies.
5. Transportation Challenges
The next challenge of doing business in Nigeria is the poor transportation standard.
As expected; the dependable source of raw materials you need may not be situated
close to your target market. So you will have to decide if to locate your business
close to the raw materials or close to your market. Either way; transportation of
either raw materials or finished goods will be involved and this will pose a great
challenge if you intend operating in Nigeria.
Poor transportation standard and road network is a factor militating against
industrialization in Nigeria but I believe this challenge is being tackled by the
government through the upgrading of roads and construction of railway lines.
6. Inability to access funds
Of all the business challenges involved with starting a small business in Nigeria;
this one interest entrepreneurs the most. Inability to access funds and banks

9. unwillingness to support entrepreneurship and small business is the major barrier
to massive entrepreneurship growth in Nigeria.
However, this challenge can be surmounted if you are a die hard, creative
entrepreneur. Hard core entrepreneurs are not held back by the lack of support
from banks; they are not discouraged by the unavailability of startup capital.
Rather than lament over the predicament, they look for creative ways to finance
their business plans and ideas.
So if you are in this category of entrepreneurs; then I want to believe that your
plans of doing business in Nigeria will not be thwarted or held back by the
challenge of capital.
7. Lack of Governmental Support
The last but not the least challenge of doing business in Nigeria is government’s
insensitivity to the plight of entrepreneurs and small business owners. And the
result of these insensitivity surfaces in the form of double taxation, corruption,
unnecessary levies and duties, bureaucratic bottlenecks at various government
agencies like CAC, NAFDAC, etc; and high cost of obtaining business licenses.
But Nigeria operates as a free economy; which favors capitalists, so I don’t think
you will be discouraged by this challenge. A good strategy to balance the excesses

10. of the government is to have a strong business team that will strategically position
your business to withstand the ever increasing demand of the government.
Take for instance the You Win programme designed to help entrepreneurs’
jumpstart or expand their business, the recent 2013 tariff increase for the
importation of used cars; so as to encourage the indigenous manufacturers like
Innoson (IVM) and also attract foreign car manufacturers like Toyota, Nissan, etc.
In conclusion, this is my honest outline of the territorial challenges you will face
when you start a business in Nigeria. I highlighted these challenges not to
discourage you; but to help you prepare in advance because he who is prepared has
half won the battle.
CONCLUSION
This covers most of the aspect of the problem and prospect of Alhaji Aliyu
Dangote business organization, my research shows the problems and prospect in a
business organization of Alhaji Aliyu Dangote.
I am privilege to understand the distinction between the problems and prospective
of a business organization. I hereby encourage my fellow students to go on more
research using the reference below.

11. RECOMMENDATION
Due to the research, I strongly advise that the research should be given more
attention and continuous issue in order to produce productive business managers.
REFERENCES
1. "Group Corporate Profile". Dangote Group Nig.
2. Dangote Group Ventures Into Fertilizer
3. Dangote Group's Cement Operations Span Six African Countries
4. Nigerian Tycoon To Invest $400 Million In Zambia Cement Plant
5. Four Dangote Subsidiaries Listed on NSE