It has been a great concern that the Small and Medium- Scale Enterprises in Nigeria have not performed their expected role of driving the country‘s industrial transformation and development as it is observable in other developed countries.
It is believed that the billions of naira poured into the sub-sector have had no appreciable impact so far on the economy. Meanwhile, SMEs have played and continue to play significant roles in the growth, development and industrialisation of many economies the world over. In the case of Nigeria, however, SMEs have performed below expectation due to a combination of problems, which range from operators‘ attitude and habits to environment-related factors, including instability in government policies, the hostile operating terrain, infrastructural challenges, funding constraints and managerial problems.
According to small business experts, managerial problems represent the greatest problem facing SMEs in Nigeria, while inadequate local raw materials is the least problem. The potential and opportunities for SMEs in Nigeria as regards the crucial role of serving as the engine of growth, development, industrialisation, wealth creation, poverty reduction and employment creation are enormous.
Hence, the realisation of this requires a paradigm shift, from paying lip service to a practical but radical approach and focus on this all-important sector of the economy by the government addressing the identified problems realistically.
However, experts argue that in spite of all the suggestions, SMEs themselves need to change their attitude and habits relating to entrepreneurship development. According to them, the government should also involve the SMEs in policy formulation and execution for maximum effect.
These positions came to the fore at a recent seminar organised by the Nigerian Association of Small and Medium-Scale Enterprises, where stakeholders attempted answers to the yearning questions.
According to a former Head of State, Federal Government of Nigeria, Chief Ernest Shonekan, one of the major ways to revive SMEs in the country is through proper implementation of budget and policies.
He says, ”For instance, the budget of 2011 just announced by President Goodluck Jonathan is very promising, especially in areas of government support for SMEs and the provision of infrastructure and institutional impediments to more competitive and business-friendly investment environment.
”Stimulus packages have been added for power, aviation and manufacturing sectors with the provision of a $500m facility to support SMEs.”
He notes that as the economy is gradually emerging from the recession, stimulating growth should not be limited to the SMEs and those in the formal sector of the economy alone.
”Such economic stimulation packages, if extended to the informal sector, may encourage many of them to actually migrate to SMEs, so that we can capture their activities and contributions to the growth of the economy,” Shonekan says.
He, however, adds that in attempting to go forward, there is a need for SMEs to be focused, recharged and be prepared to contribute more to the development of the economy.
”Ours cannot be different, South Africa and nearby Ghana are already in the lead. We must do what is needed to achieve our vision of becoming one of the first 20 most developed economies in the world by the year 2020,” he stresses.
On her part, the Minister of State for Commerce and Industry, Ms. Josephine Tapgun, says globalisation and free market competition present a major challenge to societies seeking sustainable human development and economic growth.
”These challenges are particularly intense, especially when the objectives sought are on development of the real sector, employment generation and wealth creation,” she notes.
She explains that almost all economies have transited from household artisan industries over time to the modern industrial set up, witnessing phenomenal upgrade in skills, machinery and equipment and management practices, among others.
She adds that historical evidence indicates that most of today‘s giant corporations began as very small innovative and creative firms, including Guinnes of Dublin, Sony and Honda of Japan, Odutola and Dangote of Nigeria.
”SMEs in Nigeria can learn from the giants, adapt imported technologies, modernise their process, add value to our local raw materials and compete in the global market,” she adds.
Tapgun says, through innovations, the entrepreneur introduces new production techniques, new commodities, improves on existing ones, opens up new markets, explores new sources of raw materials and designs new techniques of management.
She adds, ”Research and development programmes are formal avenues of inculcating innovative skills in the entrepreneurs. Associations are meant to pass this unto their members to improve SMEs in Nigeria.”
According to her, skill is the only difference between a trained entrepreneur and one who banks simply on luck. She, therefore, says, ”SMEs must develop a high sense of self esteem, creative attributes and business management skills.”
On the part of the government, she assures stakeholders of the ministry and the involving agencies‘ support for SMEs development, stressing that such support will give them all assistance that may be required to make them innovative and to make their products globally competitive.
The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, had said that one of the ways forward for SMEs in Nigeria was for operators, like NASME and other business management organisations to join similar international organisations, including the Council for Small Businesses, International Small Business Council and other international enterprise promotion organisations that are involved in SMEs worldwide.
He says, ”These organisations will help SMEs to cultivate new ideas and techniques through partnerships and enterprise promotion programmes and will improve market access for products.
”I will like to reiterate the CBN’s resolve with the Federal Government to partner all stakeholders on the establishment of a National SME Development Council in Nigeria to promote and boost SME investment in Nigeria.”
He adds that the council will also help to address some challenges, including skills, shortage of funds, poor professional and marketing information services, poor economic research and SME data base, lack of appropriate technology and technology transfer and SME infrastructure.
Sanusi explains that the council will also serve as a veritable channel through which SMEs, OPS and BMOs will make their views impact on the various governmental policy decisions for the benefit of the SME sub-sector in Nigeria.
He notes, ”I would want to assure SMEs of banks’ continued support, especially with regard to their forthcoming zonal workshop commencing in the second quarter of 2011, which is aimed at sensitising the entrepreneurs on the various programmes of government that are targeted at improving the productivity of the SME sector in Nigeria.
”I am confident that these continued collaborative efforts with all stakeholders involved in SME development will up-scale economy-wide activities such as outputs, income and employment generation, as well as ensure a vibrant real sector development.”
He stresses the need for all to work towards raising the ratio of SME contribution to exports from the current low level of less than two per cent to four per cent by the year 2020.
The Managing Director, Nestle Nigeria Plc, Mr. Martin Woolnough, believes that the challenges facing SMEs in Nigeria range from inadequate, inefficient and non-functional infrastructural facilities, lack of easy access to funding, discrimination from bank, unfair trade practices, widespread corruption and absence of long-term finance, to lack of appropriate and adequate managerial and entrepreneur skills, among others.
According to him, these challenges are enormous and can only be tackled through multi-dimensional and multi-stakeholder approach, involving actions from the government and its agencies, banks, regulatory authorities, tax authorities and the SMEs themselves.
He says, ”For instance, my company works together with 65 distributors (SMEs with an average turnover of 500 Mio -1NGN). During the credit crunch we were able to help them, we set up a project, called, ‘Distributor Financing‘, where we help them to get money from our banks with lower interest rate than in the past. In my opinion, that was a good example also of how bigger companies can help SMEs.”
Another way forward, according to a former Chairman of the People‘s Democratic Party, Chief Audu Ogbe, is a reduction of the country’s import duty rate.
”The Central Bank of Nigeria has done well by providing funds but the funds have been so difficult to access. If power is stable, the interest rate will come down and Nigeria will rise again,” he notes.
Source:http://www.punchng.com/
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