If small and medium scale businesses are rated as the wheels of every economy, with huge estimate that 96 percent of all businesses in Nigeria are Small and Medium Enterprises (SMEs), compared to 53 percent in the United States and 65 percent in Europe, then the nation’s journey to economic revival and survival is really in absolute struggle.
Of course, it will not be difficult to prove the assertion, going by the challenges that have lingered over the years, which create growth and development problems for small businesses. The lack of access to credit, decayed infrastructure as well as the headache of insecurity and unstructured nature of the players, among other difficulties are real.
Not to be wished away is the fact that there have been series of strategies, programmes and promises developed to make this very critical sector work, with the outcome still remaining less than ideal.
The argument is: if the huge percentage falls under the small business segment, then the proportion of the entire nation’s populace left stranded, excluding the completely jobless, and the underemployed, will paint a vivid picture of the troubled state of entrepreneurial development in the country.
According to the World Bank report, about 70 percent of Nigeria’s estimated 150 million people live on about $1 per day, that is, about 105 million Nigerians live below the poverty line, with 35 per cent of this number classified as living in absolute poverty.
However, if promises were to be realised, there may be some hope around the corner as it has been reported that the present administration has commenced series of MSME clinics around the country, which was recently flagged off in Abuja, by the Vice President, Prof. Yemi Osinbajo.
The effort focused on finding a one-stop-shop that would address different challenges confronting this critical sector, expectedly, would bridge the information gap between the authorities and operators with the aim of encouraging small businesses to be more efficient and capable of competing at the global level.
Granted, the popular cliche, “charity begins at home” would be propagated by the many, whereby these small businesses are seen to have successfully taken off properly and competing favourably locally, but the global target should not be disregarded.
The initiative, already led by the Corporate Affairs Commission (CAC), with the Nigerian Investment Promotion Council (NIPC), Nigerian Export Promotion Council (NEPC), Small and Medium Enterprise Development Agency (SMEDAN), Federal Inland Revenue Service, Bank of Industry, Customs, Ministry of Trade and Investment, among many others, is to ensure delivery of its objectives in 21 cities across the six geo-political zones of the federation.
The wake-up call is deserving of commendations, but the total applause would come upon implementation and realisation of the plan. Of course, the government is indeed not pretending about the fact that agriculture value chains and manufacturing, which is largely MSME segments, are the way to go.
The CBN in August 2013 launched the Micro, Small and Medium Enterprises Development Fund (MSMEDF) with a share capital of N220 billion. It was established in recognition of the significant contributions of the Micro, Small and Medium Enterprises (MSME) sub-sector to the economy and the existing huge financing gap.
The Divisional Head, Retail, First City Monument Bank (FCMB), Olu Akanmu, said: “SMEs are the bedrock of any country’s economic development. It can hardly make good progress except they excel. Therefore, being a forward-looking bank with the appropriate desire for growth, we have decided to provide this sector with maximum support’.
He reiterated the commitment of the lender to support its customers who are operating in the SMEs space to overcome the challenges they usually face, especially at the take-off stage, ‘’because we want to be part of their success story’’.
While the weight of today’s global economic downturn, the fall of the Naira, the flight of the dollar, the crash of oil price alongside certain government policies are taken for granted by some, Nigerian banks are currently going through all these. To boost the strength of the struggling MSMEs, which has become inevitable, banks are making efforts with various initiatives.
For FCMB, it has taken financial intermediation to this key sector of the economy as one of its operational areas of strength, which can be buttressed by its interventions that have resulted in better access to financial resources by needy individuals, women-owned firms and empowerment outfits, as well as small and medium scale businesses and organisations.
First City Monument Bank deepened its support to Small and Medium Scale Enterprises (SMEs) in Nigeria by disbursing over N3 billion to such businesses in the last 18 months. The development has led to an increase in the number of SME operators that have benefitted from the funding support of the Bank across the country.
It has now emerged as one of the top participating banks appointed by the CBN to drive the N220 billion Development Fund instituted to provide loans to SMEs.
Akanmu said that FCMB has put in place, various initiatives and capacity building programmes that have fast-tracked the growth of SMEs, thereby up-scaling their contributions to the development of the country and brought its professional expertise closer to the people by having dedicated loan officers at some branches nationwide.
“We have Cluster Marketing, for operators of SMEs. The initiative was designed to enhance their financial, marketing and management skills. We aggressively supported women managed businesses in line with the MSME fund scheme by collaborating with some involved in SMEs, providing funds, sponsorship and advisory services.
“These interventions are in line with the bank’s value as a helpful institution committed to enhancing the growth and achievement of the personal and business aspirations of its customers and the nation in general,” he said.
He, therefore, advised SMEs to re-examine their operations and effectively position themselves to take advantage of the opportunities within the country.
“There is huge intervention funds from both government and multi-national agencies focused on supporting SMEs. Some are focused on helping with affordability, in other words reducing the cost of borrowing, while others are focused on accessibility, in other words helping to mitigate those risks that make small and medium scale businesses fail credit acceptance tests or requirements”.
Unfortunately, a good number of the outfits do not know the difference and therefore, adopt the same strategy for accessing both. This will rarely work’’.
Currently, FCMB has value-added offerings for SMEs, including the e-invoicing platform – a unique solution designed to help businesses monitor and control their cash management, especially as it affects payments, receivables, reconciliations and other financial transactions, through the internet and other mobile channels among others.
Given the current state of the Nation’s economy, the need to effectively support micro, small and medium scale businesses and the informal sector generally, should be faced with the highest level of commitment, by both the public and private sectors.