Prospects of SMEs in Nigeria

Small and Medium-sized Enterprises (SMEs) form the fulcrum of any nation’s economic development because they are “the engine of growth and catalyst for socio-economic transformation, especially for developing countries like Nigeria, according to experts.

They argue that since government cannot provide full employment for all the citizens, SMEs readily come to the rescue in the employment situation in the country by providing jobs, no matter the category, for a larger section of the citizenry.

These enterprises are widely recognised as a veritable vehicle for the achievement of national macroeconomic objectives in terms of low-cost employment and enhancement of apprenticeship.

Due to the importance of SMEs to the economy, the Federal Government in 2018 initiated the Micro Small and Medium Enterprise (MSME) clinics to address the problems militating against the growth of small businesses across the country.

Vice President Yemi Osinbajo said the MSME clinic was part of government’s efforts to improve the business environment in the country and find lasting solution to the perceptible challenges facing the growth of MSMEs‎.

He explained that the idea of the clinic was to increase the efficiency of MSMEs by providing them with practical growth strategies via the adoption of a time-saving approach.

Describing Nigerians, especially the youth, as hardworking people endowed with great entrepreneurial skills that can boost the economy, Osinbajo emphasised that small-scale businesses, mostly managed by youths, hold the future of the country.

“It is important that we, as government, do our part because we have a key role to play in the growth of MSMEs in Nigeria. The clinic is about to develop small businesses quickly; we know that funding is a major constraint to the development of MSMEs; so the Federal Government is determined to reverse the trend.

“Every business concern needs support and we are ready as a government to assist the MSMEs,” he asserted.

The vice president said the clinic was a platform for MSME entrepreneurs to discuss existing opportunities and the challenges confronting their businesses.

The Minister of Industry, Trade and Investment, Okechukwu Enelamahsaid that this category of enterprises contributed nearly 50 per cent to the nation’s Gross Domestic Product (GDP).

He said that concerted efforts were being made to build the capacity of MSMEs, increase their access to finance and eliminate the drawbacks limiting their growth.

He noted that the Federal Government inaugurated the National Council on MSMEs to sharpen its focus on MSMEs and boost the development of the sub-sector.

Enelamah said that the government had also increased the access of MSMEs to finance by providing start-up capital and business expansion capital for entrepreneurs.

Other schemes aimed at boosting the growth of MSMEs included the World Bank-funded Growth and Employment in States (GEMS) Project, which was particularly focused on Information, Communication and Technology (ICT), agro-processing, entertainment, tourism and construction businesses.

The minister recalled that at the end of 2016, the World Bank rated the GEMS project as “unsatisfactory and under-performing” and even considered the outright cancellation of the project.

He said the unacceptable rating by the World Bank necessitated the restructuring of the project.

Enelamah said the Federal Government and the World Bank reviewed and restructured the project to ensure that schemes such as funding, technical assistance and capacity building programmes were provided “directly’’ to MSMEs.

He stressed that the country had achieved a lot through the GEM project, adding that the feat included the registration of over 89,000 MSMEs on the big portal.

He said that more than 900 MSMEs across the country were given grants to implement their business plans, while over 40 local consulting firms were trained to deliver technical services to MSMEs.

According to the minister, over 750 MSMEs had benefited from a training programme Business Development Services Providers (BDSPs) – and over 21,000 MSMEs had received technical assistance, including training by the Enterprise Development Centre of Lagos Business School (LBS).

As regards funding, governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, said the bank had disbursed over N100 billion to support the growth of MSMEs in the country.

He added that another N60 billion was specifically set aside to fund MSMEs in the agriculture and manufacturing sectors.

Emefiele said the bank had recognised that the greatest challenge confronting MSMES and local farmers was access to finance, adding that efforts to unlock the growth potential of MSMEs and smallholder farmers must involve hitch-free access to financial support.

That CBN, he added, would in due course initiate a programme that would directly bring banking services to the rural communities via the licensing of the National Microfinance Bank that would be sited in all local government areas in Nigeria, through which funding could be channelled to the rural communities.

Beyond that, the Federal Government, under its Business Incentive Strategy (BIS), approved a 90-day special window, from October 1 to December 31, 2018, to register businesses at a reduced rate of N5,000 (from N10,000) to facilitate the registration of MSMEs in the country.

The BIS is aimed at creating a window for MSMEs to formalise their businesses, which will enable the enterprises to open corporate accounts with banks, while having access to loans, grants and other government interventions.

In view of the benefits of BIS, coupled with the stakeholders’ demand for time extension, the government decided to extend the registration period by another three months – from January 1 to March 31, 2019  to enable more MSMEs register and formalise their businesses.

All the same, the president of Abuja Chamber of Commerce and Industry (ACCI), Adetokunbo Kayodesaid that the management of funds meant for MSMEs by banks in the country represented a weak link in the finance of small businesses.

He, however, commended government’s efforts to support MSMEs, particularly in the area of funding.

“The management of MSME funds by the banks is, however, a very huge issue; it is a weak link in the chain,’’ he said.

Kayode noted that Nigerian banks were not well-structured enough to fund MSMEs, saying that the organised private sector (OPS) was ready to help canvass and develop new concepts of alternate funding mechanisms for MSMEs.

He said the funding mechanisms would include finance leasing, peer certification for scrutiny of facility for MSMEs.

Kayode underscored the need to put in place targeted funding mechanisms for MSMEs to boost the national economy.

He, however, said that greater emphasis should be placed on the creation of financial institutions with specific focus on MSMEs.

He said that although the Bank of Industry(BoI) was set up for big, small and macro industries; the bank could never serve the purpose, which the government had in mind for the funding of MSMEs.

Kayode also called on the Federal Government to fully activate the National Council on MSMEs to promote the growth of MSMEs in the country, while tackling the challenges facing the enterprises.

He particularly underscored the need for the council to launch pragmatic strategies that would grow small businesses in Nigeria.

The National Council on MSMEs was initiated in line with the dictates of the National Policy on Micro, Small and Medium Enterprises on September 4, 2014 as the highest coordination policy-making body in the MSMEs sub-sector.

Get in Touch


Please enter your comment!
Please enter your name here

Related Articles