Players in the small and medium enterprise ecosystem have raised the alarm that over 2 million of their members have ceased to operate having succumbed to the vagaries of a harsh operating environment accentuated by foreign exchange (FX) volatility, inflation, cash crunch, high energy costs, scathing and duplicated taxes, among others.
According to the experts, SMEs need cheaper funds and moratarium and others incentives to serve as fertilisers for growth.
There are also genuine concerns the government at national and sub-national levels show great disregard to the MSME sector despite being the wheel of the economic growth of any country. These small businesses stimulate new employments, which ultimately results in the acceleration of economic development.
In Nigeria, the sector currently contributes 50 percent of the Gross Domestic Product and has provided over 48 percent of all employment oppourtunities in the country, according to the United Nations Industrial Development Organisation.
The present economic situation is limiting their growth, contribution to the GDP and frustrating.
Responding to the situation, National Vice President of the Nigerian Association of Small Scale Industrialists (NASSI), Segun Kuti-George, lamented that while many small scale businesses have died, many others have gone in search for other means of livelihood.
“Some are operating on a skeptical basis, downsizing their staff or producing 30-40 percent of their capacities which is not sustainable. Inflation is increasing day by day and disposal income of consumers is being eroded. The difficult terrain has forced about two million small businesses out of shop within four to five years,” George said.
He advised that the government should provide credits with better or low interest rates, some form of grants for those in the micro sector of the economy, tax reliefs or holidays to support entrepreneurs and keep the cost of registering a business stable, not increasing it.
He said businesses cannot project their profits or investments due to the instability in the economy. “This is scaring away investors who are major players in the market. Energy is a key element of the production process. Nigeria’s inability to supply and distribute sufficient electricity has left businesses at the mercy of generators that consume diesel and petrol. We cannot continue to use generating sets, it’s no more sustainable,’’ he said.
Kuti-George noted that multiple taxation from local, state governments and other levies are hindering the progress of these small businesses and urged the tax reform committee led by Taiwo Oyedele to conclude and make recommendations quickly to save businesses.
He called for a ministry or bank for MSMEs to meet the funding needs of small businesses.
“There should be a ministry and a bank for MSMEs. The bank of industry is attending to big businesses more. The same requirements they have for big businesses are the same for small businesses, it cannot fly that way.
“The over 90 percent of businesses in Nigeria is MSMEs. That is what is generating business and sustaining the economy. It should be prioritised So a ministry or bank will allow them to breathe,” he said. For the disbursement of grants, he called on the government to involve associations of small businesses in general disbursement of these funds so that the funds will get to those who really need them.
He asked for special consideration to be given to those who are ready making machines that will help small businesses.
“We import over 90 percent of our machineries for our processes of raw materials. But those manufacturers here should be assisted to produce machines, they can commercialise it so that we can stop importing, with the high attendant exchange rate,” he said.
A member of the Lagos Chamber of Commerce and Industry (LCCI), Daniel Dickson-Okezie, pointed out what small businesses can do to navigate through the harsh economic reality.
For small businesses to survive, this 2024, Dickson-Okezie emphasised the need to diversify their revenue streams: improve their financial management, this he said is very important, as they must learn to negotiate favourable payment terms from suppliers and also adopt robust financial records.
He also pointed out that they also need to enhance operational efficiency, adding that the idea is just to maximise productivity and minimise costs.
“It may also mean introduction of technology and embracing technology solutions,” he said.
They need to meet up with the present reality by collaborating and networking. “SMEs must be intentional about collaborating and networking with other businesses as well as industry associations.
“In addition to this, all SMEs must be agile and innovative and this involves monitoring the market trends and reacting appropriately.
“If you don’t follow the trend sof things happening in your domain, you will be left out. It has led to the dearth of SMEs.”.
Chairman of NASME, Oyo State, Mr John Karunwi, called on the federal government to improve on palliatives for MSMEs in 2024, noting that the grants have been delayed for too long. From The Sun.