MSME: An opportunity waiting to be explored (Part II)

The first part of this article (published August 25, 2014) was about the role of MSMEs in job creation and contribution to GDP. It also touched upon the growth witnessed by the MSMEs’ sector over the years and it ended with several government initiatives which provided impetus to the sector.

Along with the above, many plans have been put in place to train and empower Nigerians to establish and manage their small business. Some of the most popular ones are Train to Work (TRATOW) Initiative, The Youth Enterprise with Innovation in Nigeria (YouWin) programme, Campaign for Patronage of Made-in-Nigeria Products, among others.

According to a 2012 study on ‘Promoting Access to Credit for MSMEs through Effective Government Interventions’, conducted jointly by Enhancing Financial Innovation and Access (EFInA) and Genesis Analytics, the micro enterprises make up 98 percent of this sector. This growing sector points towards the entrepreneurial ability of Nigerians. They have the confidence to be on their own. Armed with their knowledge and technological knowhow, young entrepreneurs too are jumping on the bandwagon. The little start-ups in remote corners of villages, towns and cities have seen a phenomenal growth over time. Almost every nook and corner has a success story being written.

Nonetheless, the EFInA and Genesis study also points out the problems being faced by these very people in securing finance for their ventures from the banks. While the banks cite unavailability of collaterals in giving the loan, the entrepreneurs state the high interest rates that discourage them from applying for any. Lengthy procedures and limited resources too hamper their growth plans.

Better policy framework can further growth

For the MSME sector to flourish in the country, a holistic approach needs to be incorporated. Government policies must be made more people-friendly. Stringent requirements and cumbersome paperwork act as deterrents for the truly deserving. Reports say the N220 billion MSME Fund, of which 60 percent is for women entrepreneurs, launched by Central Bank of Nigeria (CBN) last year is yet to be disbursed. Whatever be the reason, it is ultimately the small businessmen and women who stand at the receiving end.

Speaking of this, lack of access to finance is a problem that most MSMEs face, which ultimately dampens their spirit to continue. Although the stringent requirements are there to ensure only the right people get the money to run their small business, a lot of times these requirements act as barriers for the same people to get going.

Many budding entrepreneurs start with little or no experience of running a business, but they fail to realise their full potential due to their lack of knowledge about the business. If the government is serious about the MSME sector, then it must ensure that regular training workshops are held to guide and train the men and women in charge of their business in the right direction.

Technology can play a pivotal role in giving a boost to the MSME sector, helping them get organised, precise and also connect to stakeholders all across. Right now Lagos and Kano are the strongholds of the MSME sector. The need of the hour now is to extend the same facilities, better infrastructure and availability of resources to other parts of the country too. And technology can help greatly in bridging this gap.

In a country that has been fighting socio-economic disparities and insurgency, the MSME sector has come up as a success story that every Nigerian is proud of. Effective policy implementation and skill development of entrepreneurs would go a long way in strengthening the confidence of budding entrepreneurs. Who knows, the MSMEs may just rewrite the growth story of the nation.

Ruchi Gupta