A top NACCIMA executive has stated that the major challenges facing MSMEs are more than the commonly indicated issues of funding. “Contrary to the popular belief that finance is the major challenge of SMEs, market access remains the biggest impediment. Poor market access is a major problem to businesses,” said Adeniyi Ogunsanya, chairman, industrial/small- and medium-scale (SME) group, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) in Lagos during the association’s economic review of the nation.
Who else knows better than Ogunsanya, who oversees SMEs in Nigeria’s largest association of businessmen, industrialists and key economic players.
A little research has shown that market access has a number of meanings. At the local level, market access incorporates identifying your customers or having right of entry to locations where demand for your products is or could be moderately or reasonably high. In this sense, the market access principle says that you cannot just go to Mile 12 or Oshodi market in Lagos and begin to unpack your wares while beckoning on customers. Neither can you do so at the Onitsha Main Market. You will need to meet certain conditions in the geographical area such as right of entry, registration with trade unions, payment of rent and government tolls, fees and levies, as well as other provincial or regional conditions.
Analysts say one key impediment to market access is barriers to entry, defined as obstacles that make it difficult to enter a given market. This is worse if the intended market is regulated.
Karla Asikainen of Aaito Univeristy, Finland, carried out a research on vagaries of barrier to entry for businesses. The research concluded that entry barriers are much higher for small entrants compared to larger entrants with an even larger effect.
“The large, already existing companies can use their existing infrastructure and brand name when entering a new industry or a market. In addition to benefitting from existing capabilities and assets, the larger companies usually have much more financial leverage and are usually better in attracting new capital financing to support their entry,” the researcher stated.
This validates the point that barriers to entry for small businesses are often higher in both local and international markets.
What determines market access for goods include the conditions, tariff and Non-tariff measures (NTMs), set by countries for the entry of specific goods into their markets. In the World Trade Organisation (WTO), tariff commitments for goods are agreed upon and set out in each member’s schedules of concessions on goods. For instance, Nigerians who wish to export pairs of shoes to Ghana will need to meet the conditions set out by the Ghanaian authority. Those who export crumb rubber to France also need to meet cross-border conditions too required by the French authorities. Experts are worried that some Nigerian businessmen move into exports without understanding the geography, customs laws, market regulations of destination countries. This has been stated several times by Olusegun Awolowo, chief executive officer of the Nigerian Export Promotion Council (NEPC). However, Badaru Mohammed Abubakar, the boss of NACCIMA, recently addressed this issue when this writer threw a question to him during his economic review.
“ You see, many people just go into export business without understanding its nitty-gritty. How can you move into another market without knowing the demands of the government and regulations there? Most goods are rejected at the borders because the exporters or those handling same are not well-trained in the business,” he said, in Lagos in August.
Away from market access, experts say a big problem arises when an entrepreneur does not have a well-articulated business plan, which is loosely defined as a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. Business plan is a philosophy or ‘ideology’ and requires some level of literacy for it to be properly written. Access to finance is tied to business plans; longevity of the business is also tied to this; and goal achievement is also an integral part of this.
Rasheed Olaoluwa, boss of Bank of Industry (BoI) has always said that a number of applicants to the bank’s loans are turned down because of poor business plans. This means that many applicants cannot convince the bank that the business will last long or even beyond the owner.
ODINAKA ANUDU
