OLAWALE FASANYA was appointed as director general/chief executive officer of Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) in June, 2022, following an approval by President Muhammadu Buhari. In this exclusive chat with BusinessDay’s associate editor, KEMI AJUMOBI, he shares on the vision of SMEDAN, their goals, projects implemented and in the works, access to funding for SMEs amongst others. Excerpts:
As a pioneer member of SMEDAN, has the agency lived up to expectations?
The agency came into being in 2003 with an act from the national assembly. The agency was set up primarily to develop MSMES in all ramifications and prior to the emergence of SMEDAN, there has not been any agency that has been in charge of a coordinated approach to SME development. Initially, the act says the agency should be called Small and Medium Industry Development Agency Of Nigeria (SMIDAN), but when we came on board, we realized that if we say industry alone, we would be neglecting the commercial side so, to make it more encompassing, we changed the name to SMEDAN as it is in other parts of the world. I was part of those who started it.
We were 3 in one room, seated by a table and we have been able to grow it to what it is today. The initial approach was to provide business information and so we started by going to all the 36 states to sensitise the governors on the need for them to embrace SME development because going by our initial statistics, we found out that the country is actually running on SMEs because, if you look at the population of large businesses in Nigeria, they are not up to 1 million, so when we had the survey that shows that we have about 41.5million MSMES in Nigeria, out of the 41.5million, the total number of small businesses put together is not up to 2 million. The rest are now called nano and micro small businesses. The major ones are very few.
The agency now has the mandate to make sure we can hold a number of these SMEs, and majority of them operate informally. Part of what we started doing is to see how many of them we can formalise so we try to move them from informality to formal, especially the micro businesses but along the line, we found out that when you say micro businesses, those are the businesses that are employing up to nine persons, and we found out that it was too elastic, so we came up with nano businesses which are one man businesses employing just one or two persons plus themselves. It is a self-owned business, and that is how we have nano businesses that are different from micro businesses. It is clear that the initial thinking of everybody in business is that the problem is funding, but people don’t think that it is not just about funding, there is the need to build your capacity to run your business because most people start businesses and it dies at infancy. Also, for example, when people retire, they get their pension, see their neighbours running a bakery and they also want to start a bakery. They see someone riding cars and they want it, without knowing if perhaps it was the children who sent it. Most Nigerians do business by perception, but at SMEDAN, we want to fill that gap, and this is why we are concentrating more on building capacity, providing business development support services and a host of other business information for people to start their businesses.
We also started something in our offices called Business Clinic, where you can walk in and talk to us so we can shape your mind towards a particular business, or if you are already running your business, you can come in, then we diagnose the problem and try to proffer solution. It has been herculean because most times, to build people’s capacity, we are not able to access funds and this is a major issue. Along the line, we started thinking of programmes that can be inclusive of little funding and capacity building. In recent times, we had to roll out the conditional grant scheme where we assist nano businesses with little funds. We also have the Matching Fund Programme, where we match funds with funding agencies like banks, we bring some money, they match with us and then the bank will take the interest and then we can actually write-off the interest from our own counterpart funds. We started this for about two years now and we are concentrating on agric business. Therefore, as an agric business owner, you can access between 2.5 and 5million to inject into your business, pay back at very minimal interest rate of maximum 6 percent. But you know, we still run on government subventions, our budget is solely from government so we don’t have big money to put but this year, with the banks we are matching funds with, we have been able to do Bank Of Agric, Fidelity Bank and Jaiz Bank. We have been able to pull about N500million. These banks will now lend to beneficiaries.
What do you intend to do differently?
Overtime, we now know where he shoe pinches more in growing businesses. So, as said earlier, one of the major things is capacity building but now, we don’t want to be doing just classroom kind of training, what I am putting emphasis on with my staff, who we are currently training, is to provide advisory services.
There are a lot of people out there doing their business who do not have the requisite knowledge, so we will go out, we will ensure to send out our staff, they will now be like extension officers who will visit you at where you are doing your business, ask you questions, proffer solutions and other advisory services. This goes a long way. If we now discover that your problem is funding, we identify the funding agent and like I said, apart from the matching fund, before the end of the year, we want to experiment with a micro finance institution. We already have subscribers from the private sector, others like National Association of Small and Medium Enterprises (NASME) and Nigerian Association of Women Entrepreneurs (NAWE), they want to have shares, so we are ready and it is just for us to finalise license with the CBN. This we will do in the next few weeks, so that we can also fund in a little way.
Also, when we take off, we are looking at getting some other funders, even internationally to come and help us capitalise the bank. We are still talking to CBN to see what we can do together to make sure that we fill the gap of access to funding. We are also training our staff to be able to assist SMEs put together bankable business plans because most times, this is the problem and the business owners don’t really know what to do. We will be filling that gap. We are also approaching some states to start what we will call BDS (Business Development Service Volunteers) who we will train. So, if for instance, the state government is ready, we get some youths together, train them and then we ask the state government to pay them stipends. It is a way of taking the youths off the streets. So they will also be complementing us in giving advisory services to SMEs.
Also, we are aware that a lot of SMEs find it difficult to get workspaces, we have 23 industrial development centres across the country, and we intend to use them to provide workspaces for as many SMEs the workspaces can take. Some of them have land spaces of about 25 hectares and have not been able to put them to use, I want to direct my energy to ensure those workspaces are allocated. Also, within those IDCs, we will bring in regulatory agencies like NAFDAC and others that have one thing or the other to do with SMEs.
We also intend to work with science and technology, to have incubation centres within those IDCs so you can incubate your business and practice it there. We also have innovation hubs where young people can use as office spaces. There are a lot of young people who have bright ideas, all they just need is a space and then they can do e-commerce and more.
How is SMEDAN helping to protect SMEs against cyber-attacks?
We are currently partnering with Google and Facebook to train a lot of youths on cyber security and how they can run their business profitably online. This will be done in the 36 states. Just last week, we had about 200 youths trained in Kano on cyber security, and we are working to ensure we put a lot of information out there on cyber security especially as it relates to small and growing businesses.
There are a lot of young people who have bright ideas, all they just need is a space and then they can do e-commerce and more
Read also: SMEDAN, GIZ engage entrepreneurs to drive implementation of national MSME policy
What other initiatives and policies are being put in place to help ensure SMEs enjoy business growth?
Currently, we have a national policy and national policy prioritizes a lot of things. Fortunately, this time around, we are working with development partners to make sure that the policy is seamlessly implemented. We are not just saying we have a policy that is in a file, we want to make sure it is implemented. How are we going to do this? We already have focal officers from different places that we have put together, and we are training them to be working with us.
We also have what we call SME councils, they are about 24 and everyone has keyed in to inaugurate their council. We appeal to other states to do same. These councils will have all agencies, both private and public agencies that have one thing or the other to do with SMEs. They will all have the policy as their guide so we can touch all the nitty-gritty contained, and we will be monitoring it to make sure that the policy is being implemented.
We now have a coordinated approach to SME policy implementation, and the policy gives a lot of priority to the youths/students. We are already re-orientating them so that when they leave school, most of them can become business owners. The policy also recognizes people with disabilities. We just finished training a hundred. We didn’t do more than that because we intend to empower them. I recently just said that we are going to organise special fairs with people living with disabilities because, these people may be disabled, but they are not mentally disabled. Some of them are producing wonderful products and we want to showcase them and find a way to open markets for them. These are some of the things we intend to do, going forward.
What are the challenges facing SMEDAN?
There are a lot of challenges and you cannot run away from those challenges confronting small businesses, especially with Nigeria’s level of insecurity and infrastructural challenges.
Most times, SMES go through a lot, and that is why they are not as competitive as some others in the climate because they have to provide their own water, sometimes provide their own roads to where their business is, provide electricity themselves and so on. By the time they invest in these things, it has already eroded into their capital.
Some of these things are beyond our control and that is why we are now focusing on cluster businesses and trying to form SMEs into cooperatives, where we try to assist them. For example, we have a programme called One Local Government One Project, we put them together as a cooperative, we identify machines that can automate what they are doing, especially if they are in the same value chain of business, and then, we give them a little capital. For example, if you are producing groundnut oil, maybe you are doing 10 gallons a day, we look at machines that can help you produce 20 gallons, we train you and provide machines, we write-off 30per cent and you pay back 70 per cent. These are some of the things we are doing beside things like infrastructure that is outside our control.
We are still talking to CBN to see what we can do together to make sure that we fill the gap of access to funding.
How is SMEDAN encouraging employment?
We have a particular programme we call National Business Skill Development Initiative. We bring youths together, train them, give them starter packs and we monitor them. For instance, if we give you 6 months starter pack, you are able to enlarge your business, employ one or two persons, we then deploy officers to visit to help them solve some of the problems. The issue of funding is major and that is why we are doing our best to see how we can attract fund for them at single digit interest rates.
We are working on a portal called Credit Information Portal for SMEs, so that when you go on that portal, you will be able to know which funding is available in banks, at what interest rate and how you can access it. We can assist you through the process, in fact, our intention is to get banks to key into the portal, you can apply through the portal and then we follow up for you to make sure you access funds, but you know, these days, a number of banks have also approached us to have SME friendly loans that do not really require collateral.
Recently, IBTC and Fidelity bank came to us and we are going to partner with them to make sure SMEs are able to have information because most times, the problem is lack of information. We are also making sure that in all our 36 states offices and the FCT, we have business information centres and SME clinics as I said earlier. They will be providing information for you. If your problem is NAFDAC number, we provide information and link you up and follow up, so that it doesn’t take you a long time to get your NAFDAC certification. If we now ascertain that your problem is funding, we will know where to refer you to if it is not within those initiatives that we are also complementing funding for, for capacity building.
IBTC and Fidelity bank are partnering with us to make sure SMEs have access to information because most times, the problem is lack of information
Final words
Our slogan is Think Big But Start Small. Most people think that until they have millions, they cannot start a business but this is not the case. Also, if you are running your business and having issues, reach out to us, we will produce advisory services for you to guide you, so that within a little time, you overcome some of your business challenges
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