Redefining enabling environment for SMEs (1)

One of the very popular phrases of current economic discourse in Nigeria is enabling environment. You hear this in every conversation with members of the business community, public officials and the intelligentsia. The term is so freely used and, sometimes in a manner that suggests that the speaker does not mean to be taken seriously. Some people just throw it like a get-away password….we will provide enabling environment. In particular, politicians and government people seem to use it to raise hope among the hapless people and to divert attention. A close cousin of it is “empowerment”. These are words and phrases that sometimes end their journey on the lips of the speaker. Indeed, it is sometimes doubtful if the speaker actually understands the full meaning of the phrase beyond some narrow attribute of it.

Enabling environment is a compound of two very important words that actually touch the core of our feelings – enable and environment. According to the New Webster’s Dictionary of the English Language; International Edition, to enable means to make possible or to allow one to do something. There is always something that each of us wants to do. The word, enable or facilitate or help or assist, spoken in the context of support in meeting our objective is always welcome. Naturally, anything that helps our goal achievement would definitely be positive.

The second part of the phrase is environment. The same dictionary defines it as surrounding – another important thing in the life of any living thing, and more especially human beings. Our environment is our surrounding and it is very important to us. Moreso,if one comes from a background with which most Nigerians are familiar – adauntingly harsh socio-economic environment that, for many of us, has only one thing to its credit – quickening our aging process, then the phrase enabling environment becomes something to which we look forward.

The provision of enabling environment means more than what we often have in mind when we speak of it. We seem to limit it to the provision of infrastructure – water, light and road network. Of course these facilities are good and form part of an enabling environment. But they cannot end the story,otherwise the term would have been limited to Nigeria and other poor countries that are kindred spirits in their woeful lack of infrastructure.That does not appear to be the case, because even in the most advanced countries, this term is still used because there is always room for improvementeven if the context may vary. I believe this is why we need to redefine our concept of enabling environment, to avoid any doubts, just in case somebody truly and honestly wants to provide us with it.

Enabling environment is not a destination. It is not a landmark that one achieves and records it in the book of achievements. Enabling environment is a process. It means different things at different times and to different people, even when they are in the same place. Enabling environment is a continuously evolving phenomenon and holds different meanings for different people. It is not as simple a term as we have been made to perceive it. Enabling environmentactually encompasses allthe norms and customs, laws and traditions, regulations and policies, agreements and infrastructure,requisite for the promotion of all human activities of production, distribution and consumption of goods and services along a value chain.

There is both a local and an international dimension to enabling environment. On the international scene, it would embrace such things as the conventions, treaties; agreements and market standards that help facilitate international interaction. On the domestic or local scene, and particularly among the SME community, enabling environment connotes even much more. It has physical, fiscal, monetary and even moral and spiritual dimensions.

For example, we can no longer continue to talk about enabling environment without reference to the crushing tax regimes we operate from the local to the federal levels of government. Paying attention to the impact of taxation on start-ups, small struggling businesses and the seasonality factor in the life cycle of certain businesses is to me enabling environment.

When we promise small businesses an enabling environment, we should for a moment look away from the abject infrastructure failure (which we have not even successfully addressed), and say to them:i) going forward,you will no longer be subjected to multiple taxation. We will properly delineate the taxes and make sure we do not pick your pocket twice at a go.ii) Let us say to the woman whose shop we have marked with oversized letters for tax purposes that we shall no longer send touts to vandalize your store because you have not paid the unreasonable taxes and levies we mysteriously assessed and levied on you without an idea of the size of your business.iiii) Let them hear the we shall beautify the roadsides which you have turned into shops, because the roadsides were actually an eyesore, and when you see the beauty of your street, you would on your own desist from making illegal shops on the beautiful gardens. If the streets are well maintained no sane person will make shops on street gardens or paved sidewalks.That is enabling environment.

Light and water should not dominate our concept of enabling environment discourse, especially when all we see is lip service on even those. They are actually human rights that should be taken for granted everywhere and in every country. Light and water become very important socio-economic issues wherever there is leadership failure because even desert countries can have water in abundance if well run. But if government is turned into an organized fraud against the people then even fresh air might become scarce.

In all honesty, I do not see the rationale for taxing the micro and small enterprises in this country.Firstly, I do not think their tax input amounts to much in volume terms. In reality, how much are they capable of paying as tax that would impact both federal and state resources significantly. It is some negligible amount. Second, what fraction of the taxes, levies and fees extracted periodically from these victims of our economic mismanagement dowe honestly believe ends up in government coffers? The truth is that in most cases, these taxes, levies and fees have inadvertently created the kind of environment, which Wale Adebanwi and Nuhu Ribadu, the former anti-graft czar in Nigeria, would characterise as a paradise for maggots. Some people just get rich implementing the laws.

I believe that our domestic revenues will not be significantly impacted if we give substantial tax relief to MSMEs, and especially micro and small enterprises. A more important place to look is to improve tax efficiency and revenue management. All we need do is to block the leakages and reduce the revenue fraud, which are rampant in many places We should stop venting the anger of our non-performance on the hapless small men and women who wake up very early every morning to write their own pay cheques by themselves and also employ our citizens.

 

Emeka Osuji