• Thursday, May 23, 2024
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BusinessDay

Small businesses await FG’s N50bn grant

The wisdom of starting small

Several nano businesses are yet to receive cash from a N50 billion grant set aside for them by the Federal government, with three associations saying their members have not benefited from the palliative.

Nano businesses are enterprises that have one or two workers and an annual turnover of less than N3 million, according to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).

The fund, whose disbursement started in March, is for one million nano businesses across the 774 local government areas in the country.

It is part of the Presidential N200 billion Intervention Fund created to support businesses to navigate current tough economic conditions.

“Our 27,000 members have not received any payment yet,” Femi Egbesola, president of Association of Small Business Owners, said.

“We only heard the news that they have started disbursing the money. There is a website for registration that our members have applied for and we have already submitted the details that contained their Bank Verification Numbers,” Egbesola said.

He described the N50,000 to small businesses as child’s play that is not sustainable.

“Rather than giving out the money, the government should begin to look at more sustainable ways of supporting businesses,” Egbesola said.

Savior Iche, national president of Association of Micro Entrepreneurs (AMEN), said his members have not received a dime.

“All that money they claim to disburse to entrepreneurs is only on newspapers, radio and other electronic devices. It’s just audio money. In Lagos State alone, we have about 800 members, and we cover other states. Nobody has collected a dime from the N50,000,” he said.

He added that many entrepreneurs are folding up because they cannot continue in business.

“About 62 percent of entrepreneurs have closed down and the remaining 38 percent are in a coma.”

Gertrude Aikhimien, chairperson, Lagos State Chapter of National Association of Small-Scale Industrialists (NASSI), said they have already submitted the names of their members who own nano businesses.

“They gave us a yardstick, and we filled out the forms. We gave them a list of over a thousand members from the association who fall into the list of nano businesses, but nobody has received it,” she said.

She added that NASSI is in every state of the federation with over 25,000 members across the country and that there are more than 5,000 in Lagos.

“Our president is pushing to receive the money state by state. We have a platform where we talk to every director from different states, and they claim to not have received it.”

Seun Olagunju, spokesperson of Bank of Industry (BOI), told BusinessDay that the details of members of the various business associations were being collated through the Nigerian Association of Small and Medium Enterprises (NASME) through the Federal Ministry of Industry Trade and Investment.

“The disbursement of the grant is ongoing and will be concluded by the end of May 2024. Disbursement to the members of the various associations will be made available once the collation and verification of their members’ details is concluded.”

Terfa Tilley-Gyado, special adviser to the minister of industry, trade, and investment, said they had not done up to 20 percent of the disbursements yet, adding that the process is still ongoing in phases.

He added that recipients’ names will be posted on the website post-completion and the ongoing disbursement process is expected to reach around one million individuals once concluded.

“Despite being in progress, the grant distribution has not finished. Interested parties must monitor the website for updates on successful applicants.”

The Presidential Conditional Grant Scheme, also known as the Trade Grants Scheme, offers financial grants, without repayment obligations, to eligible small business owners operating in various sectors such as trading, food services, ICT, transportation, creatives, and artisans.

Doris Uzoka-Anite, minister of industry, trade and investment, said in a statement last Monday that applications for the scheme have closed and that the government has commenced the loan disbursement process for the micro, small, and medium enterprises (MSMEs) and manufacturing sectors.

“We are pleased to report that the initial disbursement to nano businesses has been met with success, and we are well on our way to supporting one million nano businesses throughout the country. Thousands of beneficiaries have already confirmed receipt with many more to come,” she said.

Abdulrasid Yarima, president/chairman of the governing council of NASME, said his members have already started receiving the money.

“Our members have started getting it, but it doesn’t mean others won’t get it as long as they fill out the online form. I am a member of the palliative committee. The process isn’t stressful,” he said.

“When you go online, there is a form to fill where you provide your name, National Identification Number, Bank Verification Number, date of birth, business line, and skill. But unfortunately, some people are not too comfortable releasing their BVNs and NINs for security reasons,” he added.

According to Yarima, most of the associations have nano businesses as it comprises 60 percent out of 30 million MSMEs in the country.

“The N50,000 is worth something to some people, but not to everyone. Besides, the money is not expected to be paid back because it’s a grant,” Yarima said.

The Tinubu administration’s reforms including the removal of petrol subsidy and naira devaluation, implemented in the second quarter of the year, have pushed up the cost of living in the country.

The removal of the fuel subsidy tripled the petrol price to more than N600 from N184, causing public transportation providers such as buses, tricycles, and motorcycles to raise fares.

The floating of the naira increased the official exchange rate from N463.38/$ to N 1,309.9/$ on Thursday while the parallel market rate stood close to at N1,400/$.

The high cost of sourcing FX and petrol prices pushed Nigeria’s headline inflation rate to a record high of 33.20 percent in March, up from 31.70 percent in February, according to the National Bureau of Statistics (NBS).

The latest labour force survey by the NBS shows that the percentage of self-employed people dropped for the first time since the statistical agency adopted a new methodology for the country’s labour force.

It showed that the percentage of self-employed Nigerians which refers to own-account workers, contributing family workers, and employers, declined to 87.3 percent in the third quarter of 2023 from 88.0 percent in the previous quarter.

Olamide Adeyeye, a Lagos-based human development researcher, said it is tough to keep a surviving enterprise at this time.

“The model of a surviving business is to engage in business transactions that the profit is enough to keep the business owner’s sustenance for the day. But in an economy where inflation alone is almost 34 percent, profit margins will gradually become unsustainable for-profit survival,” he said.

Many small businesses in Africa’s most populous nation have been struggling to survive in recent years owing to the fallout of the COVID-19 pandemic and the Russia-Ukraine war.

They have been grappling with a combination of issues, including poor power supply, rising borrowing costs, soaring inflation, restrictive economic policies, foreign exchange volatility, and tax multiplicity.

A recent report by SMEDAN, said 80 percent of SMEs fail before their fifth anniversary due to harsh economic environments, lack of access to capital, and poor business practices, which have stunted the growth and transition of micro-businesses.

Aikhimien, chairperson of NASSI, recommended that the best way to ensure the funds are disbursed is by using Business Membership Associations.

“The associations know every member registered in their books. So, if we have these groups that already know their members, the money should be given to such groups and the executives of the organisations should now report back to the government, telling them of what they have done and giving the government the list where they can now verify,” she said.

Iche of AMEN added that the government should send the money to associations’ accounts where it would be managed properly.

“We will know how to manage it ourselves instead of telling someone to give us and it is not reaching us. They can also open an entrepreneurs’ desk in each commercial bank. The banks have our information and can know the performance of the money.”

Additional reporting by Favour Okpale