Harnessing SMEs’ potential to boost growth

Owners of Small and Medium Enterprises (SMEs) in Ibadan, Oyo State, have called on the Federal Government to harness the potential of SMEs to drive economic growth and create jobs. At an event organised by some members of the Manufacturers Association of Nigeria (MAN) in Ibadan, Oyo State, the SME owners noted that harnessing the potential of SMEs remains a viable option to bring the economy out of the woods. OLUWAKEMI DAUDA reports.

 

THE formulation and implementation of policies and measures targeted at boosting the capacity of Small and Medium scale Enterprises (SMEs) will help harness the potential of the sector, which will in turn, boost economic diversification and create jobs.

This was the position taken by some SME owners who, after their meeting in Ibadan, Oyo State, called on the Federal Government to prioritise reforms and policies that will help re-direct SMEs to contribute meaningfully to economic growth.

At the conference organised by the business owners with the theme: How to Make Small and Medium Scale Industry Attractive to Youths to Boost the Economy,” the entrepreneurs said one of the factors militating against the diversification of the economy was the “lack of proper attention given to the small scale industries by the Federal and State governments.”

They, therefore, called on government at all levels to formulate responsive and dynamic policies that can sufficiently stimulate the SME sector.

One of the organisers of MAN, Chief Adegbite Badmus, said the simple measure of any economy is the Gross Domestic Product (GDP), which, according to him, is defined as the value of goods and services produced in a given year, of which SMEs are key contributors.

“There is the need for the Federal Government to harness the potential of the SMEs so that they can have an overwhelming positive impact on the GDP and influence the growth and development of the economy through market expansion, opportunities for foreign trade, competition, and foreign exchange earnings,” Badmus said.

He, however, bemoaned SMEs’ lack of access to loans, which he said, still remains a major bottleneck to boosting the capacity of SMEs in the country.

Although, he acknowledged the Federal Government’s efforts to provide intervention funds to support small businesses, he expressed worries that the requirements to obtain the funds are too cumbersome and discouraging to small business owners.

“There is an urgent need to bridge the gaps in access to finance, access to markets, and also empower our small and medium scale entrepreneurs to be able to compete globally. There is also the need to strengthen the financial institutions to empower the visionary youths in the country,” Badmus said.

The entrepreneur further said there is need to build the capacity and skills of Nigerians to access finance as consumers, investors and entrepreneurs; increase the number, visibility and influence of the youth in leadership and decision-making positions in the manufacturing sector.

A  legal consultant and member of the group, Mr. Clement Okafor, pointed out that the research conducted by his group has shown that if the financial and business sectors become more inclusive for youths in particular, the result will be a large-scale and fundamental shift in the business and financial landscape across the country.

“Our research has revealed that small scale industries have positive impact on the economy of many countries because they provide employment opportunities to the youth.

“But in Nigeria, as in many other African countries, there is dearth of financial institutions that cater for long and medium term credit needs of small and medium business operations,” Okafor  said.

He emphasised that the importance of small scale industries to the economic survival of the country cannot be overemphasised. They have moved from the sub-existence level of pre-indigenisation period to a position of importance in the country’s industrialisation process,” he said.

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Okafor further pointed out that in any economy, small scale industries are powers to reckon with in terms of provision of employment to the people, adding that small scale industries can perform their roles effectively if they are empowered economically.

“In Nigeria, small scale industries have not been encouraged enough by the government due to some constraints such as lack of clear policy on the part of the government to strengthen their operations, lack of capital, lack of facilities in the form of power, water supply, good road networks etc.,” he said.

According to him, there is need for an enabling environment to make small businesses operate optimally. “The principal factor hindering their operations is lack of capital. The capital for such businesses could either come through personal savings, through pooling of resources from friends or through commercial banks as the case may be,” he emphasised.

A former employee of United Bank for Africa (UBA), Mr. Samson Onabanjo, said commercial banks have enormous roles to play to help small scale enterprises, but lamented that they have not been able to play the intermediation roles due to lack of capital,.

“Lack of defined policy for lending to the public and heavy collaterals among others are also issues. Lack of defined interest rate, man-know-man syndrome and other constraints are preventing small scale industries from performing their roles,” he stated.

Onabanjo said there was the need to identify the problems encountered by SME owners in obtaining finance from commercial banks, appraise the situation and make recommendations as to how to improve on the bank services.

The Federal Government, he also said, needs to create attractive opportunities for investment. “We must conduct other aspects of commercial banking operations like acceptance of terms deposit and provision of loans to Nigerians,” he said.

Onabanjo praised the Central bank of Nigeria (CBN) for supporting manufacturers with long term loan facilities to boost their investments and for taking strong stance on the need to sustain the ongoing land border policy aimed at repositioning the nation’s economy.

He urged the Federal Government to sustain land border closure policy in order to fully achieve the benefits. He also condemned some proponents of border re-opening, noting that the development of Nigeria was paramount.

Onabanjo noted that the gains of the border closure are numerous to mention, but specifically, “Its impact on the economy and security is unprecedented and manufacturers are now able to sell out the huge goods deposits in their warehouses.”

“We are in total support of the position of all the stakeholders/investors who supported the border closure.

“As the giant of Africa, it is absurd for developed nations to build warehouses in our neighboring countries and pay them heavily for goods to be dumped therein and smuggled into our country with little or no returns to the government to develop our country to international standard,” the banker said.