Micro, Small and Medium Enterprises (MSME) is one of the most important sub-sectors of the economy, as it currently represents 96 per cent of all businesses in Nigeria, while contributing 75 per cent of the national employment figure.
Of the 17.2 million MSMEs in Nigeria, over 17 million are micro-enterprises. Thus, growth in this sector directly correlates to the growth of the economy, particularly as it relates to the issue of employment.
Certainly, a well-nurtured and well-structured MSMEs sub-sector can contribute significantly to employment generation, wealth creation, poverty reduction, as well as sustainable economic growth and development of Nigeria.
Analysts, however, argue that a number of challenges are inhibiting the potential growth of MSMEs across the country.
They say that these challenges include very low access to affordable finance, poor access to business development services, inadequate infrastructure and high cost of doing business.
For example, a recent survey, jointly conducted by National Bureau of Statistics (NBS) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), indicated that finance was a major factor limiting the activities of operators of MSMEs.
In addition, only 4.2 per cent of 17.2 million MSMEs had been able to access loans or overdrafts from financial institutions, while new entrants or start-ups found it practically impossible to access funds from banks.
In order to address such challenges, Dr Olusegun Aganga, the Minister of Industry, Trade and Investment, launched the National Enterprise Development Programme (NEDEP).
The main focus of programme, which is aimed at generating about five million direct and indirect jobs between 2013 and 2015, is on Skills Acquisition, Entrepreneurship Training/Business Development Service (BDS) and Access to Finance.
The entrepreneurship training/business development service component of the scheme is being implemented under the One Local Government, One Product (OLOP) platform.
On the other hand, the access to the finance component is being handled by the Bank of Industry (BOI), while the skills’ acquisition element is being coordinated by the Industrial Training Fund (ITF).
NEDEP, which is being implemented under the aegis of SMEDAN, is guided by empirical research that is based on experiences of successful similar initiatives in Africa and Asia, as well as OLOP pilot projects in Kano and Niger states.
NEDEP is aimed at revitalising the rural economy, improving employment opportunities, creating wealth and alleviating poverty, particularly in the rural areas of the country.
The goals of the programme are expected to be actualised via the establishment of sustainable MSMEs in the 774 local government areas of the country, based on the comparative and competitive advantages of each of the local government area.
NEDEP is also expected to entrench entrepreneurial culture, industrialise the rural areas and enhance industrial clusters’ development, while increasing the contribution of MSMEs to the GDP and stimulating the export drive.
The programme is also aimed at curbing youth restiveness, militancy and other social vices such as prostitution, drug abuse and thuggery, among others.
The attributes of NEDEP include three-pronged delivery by SMEDAN, ITF and BOI; formation and registration of cooperative societies, national and state councils on MSMEs; as well as restructuring of the three implementing agencies (SMEDAN, ITF and BOI).
Other attributes are the execution of the One Local Government, One Product (OLOP) programme, the development of one product for export in each state and the upgrade of Industrial Development Centres (IDCs) to MSMEs Clusters.
Observers maintain that the OLOP programme also represents a tool for fostering unity among Nigerians, as the development of one product in a particular local government will go a long way in uniting the citizens.
They particularly note that the five million direct and indirect jobs, which are expected to be created between 2013 and 2015, will also be a unifying factor.
The skills acquisition part of the programme, handled by ITF, is expected to bring together citizens from across the country.
It is expected to educate and train the participants on many aspects that will ultimately enable them to learn about the traditions, culture and customs of other citizens.
Currently, cooperative societies are being formed and registered, while the collection of business plans from cooperative societies has started across the country.
“The Federal Government launched NEDEP last year, specifically to address the challenges confronting MSMEs across the country,” Aganga said.
The minister pointed out that through NEDEP, the problems identified as major impediments to the growth of MSMEs in the country would be tackled decisively.
On the issue of expanding the access of MSMEs to finance, Aganga said that the government was making designed efforts to ensure that MSMEs had access to affordable finance through the N220-billion MSMEs Development Fund.
“We are going to make sure that the CBN guidelines make it easier for MSMEs to access that fund,’’ he added.
The MSMEs sub-sector is expected to experience a remarkable transformation, as President Goodluck Jonathan has already approved the conversion of the 23 Industrial Development Centres (IDCs) to Industrial Parks where the enterprises will have liberal access to electricity and water supply as well as other incentives.
The CBN Governor, Mr Godwin Emefiele, at the signing of an MOU between the CBN and 13 state governments on the N220-billion MSMEs Development Fund, on July 24, 2014, said that MSMEs were globally recognised as critical engines of economic growth.
This, according to him, is due to the potential of MSMEs to create jobs, boost production, generate income and reduce poverty.
Emefiele said that in spite of this global recognition, Nigeria’s MSMEs did not have the adequate finance they needed to play pivotal roles in the country’s development trajectory.
“According to a joint report by the International Finance Corporation and McKinsey, the financing gap of this critical sub-sector of the country is about N9.6 trillion as of 2010.
“In order to address this gap and unlock the potential of Nigerian MSMEs, the CBN has initiated this N220-billion fund as an innovative way of improving their access to finance, shoring up their potential for job creation and enabling them reduce poverty within the country,’’ he said.
The micro-loans will be administered through private or state-owned micro-finance institutions, finance houses and cooperative finance agencies, while the SME loans will be disbursed through commercial banks.
State governments will be also able to access up to N2 billion each for on-lending to eligible beneficiaries through participating financial institutions in their states.
The fund is in conformity with the Federal Government’s resolve to revamp the CBN in a way that it will act as a financial catalyst for job creation and inclusive economic growth.
While these are the ultimate goals, the main intermediate objective the CBN and the state governments is to ensure that these funds get to the beneficiaries at the very bottom of the social pyramid at a single digit interest rate.
In order to ensure the attainment of the set goals, the CBN is, therefore, expected to commit considerable human, material and financial resources to monitoring both the disbursement and utilisation of the funds in a robust and verifiable manner.
The participating financial institutions are, nonetheless, required to submit periodic returns on the disbursements as well as analyses of the social impact of the Fund, while the CBN is expected to undertake regular on- and off-site checks to ascertain the veracity of the reports.
The state governments are also encouraged to ensure that the set goals of the programme are achieved by ensuring the deployment of funds in an effective and efficient manner.
The participating states are Akwa Ibom, Bayelsa, Benue, Borno, Delta, Enugu, Gombe, Imo, Katsina, Ondo, Osun, Oyo, and Zamfara States.
However, the ITF is looking at the possibility of utilising the 23 IDCs located in 23 states for the training of youths under the National Industrial Skills Development Programme (NISDP).
SMEDAN has equally opened offices in all the 36 states, as part of efforts to bring the benefits of MSMEs closer to the people.
All in all, perceptive observers note that the MSMEs sub-sector of the economy is undergoing a great transformation, saying that the future of MSMEs in the country is very bright. (NANFeatures)
