Fixing Nigeria’s structural constraints around infrastructures and foreign exchange liquidity are some of the ways millions of small businesses can be repositioned to spur growth, according to an expert.
Speaking at the National Association of Small and Medium Enterprises business roundtable themed ‘MSMEs: The Catalyst for Nigeria’s Economic Rejuvenation and Growth,’ Muda Yusuf, chief executive officer at the Centre for the Promotion of Private Enterprise, noted that the mortality rate among small businesses is very high currently owing to the numerous economic headwinds in the country.
“These challenges include the structural constraints, especially around infrastructure, the naira exchange rate depreciation and the related liquidity crises in the foreign exchange market, and the galloping inflation among others,” he said.
According to him, MSMEs are the major sources of resilience that the Nigerian economy had long been reputed for amid numerous shocks.
He noted that small business operators in the country are currently going through another round of shocks inflicted by the subsidy removal and naira float policy.
He noted that the social outcomes of the reforms have been profound even though they were necessary.
“We have seen a significant surge in inflation across the broad spectrum of products, food and non-food, driven largely by sharp depreciation in the naira exchange rate and increases in energy costs,” he said.
“These have taken a huge toll on business sustainability, profit margins, job retention, and capacity of small businesses to service their loans,” he explained.
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He called for the need to stem the tide of deindustrialisation in the Nigerian economy, saying many factory premises have been converted to event centres, warehouses and supermarkets following their collapse.
“Many of our industrial estates have become a shadow of what they used to be. This is evident in industrial estates in Ilupeju, Ogba, Ikeja, Sango-Ota, Agbara, and many other parts of the country in the eastern or northern part is not different.”
“It is therefore imperative to take urgent steps to stem the tide of deindustrialization if we must curb the growing unemployment and the increasing import dependence of our economy.”
According to him, some of the factors responsible for the deindustrialisation include; the influx of cheap and substandard products into the country that creates unfair competition for our domestically produced goods, foreign exchange scarcity, poor power supply, high energy, gas and diesel costs and multiple taxation imposed by numerous government parastatals and agencies among others.
He urged the federal government to address the systemic issues of infrastructural gaps as a matter of utmost priority, noting that immediate focus should be on electricity supply and logistics.
“Unless we have these two critical infrastructures in place, it will be very difficult to ensure a competitive industrial sector and to make possible the transformation of the sector.”
Also, he called on the government to fix foreign exchange liquidity and currency depreciation issues. He added that the removal of multiple taxation and tax exemption for MSMEs operators with turnover of N50 billion and below will also help in boosting MSMEs productivity.
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