Small and Medium Enterprises (SMEs) are the geese that lay the golden eggs of the wealth of nations but owners of these businesses in Nigeria require training and mentoring to excel.
Investments in the training and resourcing of these SMEs yield sustainable economic and social benefits as examples from Asia and America show. Japan, the United States of America and South Korea show how SMEs are the engines that power sustainable economic development.
In Japan for instance, SMEs account for about 99.70 percent of all businesses and employ over 34 million individuals, or approximately 70.10 percent of the private-sector labour force according to the Organisation for Economic Co-operation and Development’s (OECD) reports. Today, the Japanese economy is ranked the fourth biggest in the world. South Korea is another example.
SMEs in South Korea are responsible for more than 80 percent of total employment and about 50 percent of total value-added. SMEs also played a large role in the transformation of South Korea into a high-income industrialised country during the last quarter of the 20th century, positioning it for economic excellence in the 21st century. This is why SMEs are high on the agenda of the South Korean government.
When we consider the rate of unemployment in frontier markets across Sub-saharan Africa, one notable key growth impediment could be the low level of social investment programmes targeted at SMEs. SMEs require a growth enabling environment to thrive and scale.
In countries with low SMEs focused social investment, capacity building or lack of up-skilling opportunities for SMEs remain a key impediment to business and economic growth in any nation. Business owners in the SMEs space require skills and capacities needed to manage the resources that are available.
Some of the business management skills that are helpful to SMEs are customer acquisition and retention, finance and budgeting, procurement principles, taxation and human resource management, amongst others. In addition, with rapid digitalisation and globalisation, more businesses need to be familiar with technological applications needed for effective business operations to ensure longevity.
Spotlight on Nigeria
SMEs account for a large share of total employment, job creation, and the gross domestic product (GDP) in emerging economies. In Nigeria, SMEs contribute about 48 percent of national GDP and account for 96 percent of businesses and 84 percent of employment.
Some (medium and small-sized) are major drivers of growth, others also play a critical role in job creation. Conscious of this, the Bank of Industry and the Central Bank of Nigeria intervene regularly with funds in the form of low-interest loans to SMEs. One such government intervention is the Government Enterprise and Empowerment Programme (GEEP) executed by the Bank of Industry (BOI).
This was set up to fast-track the development of the manufacturing sector of the Nigerian economy by improving access to credit to manufacturers, improve the financial position of the Deposit Money Banks (DMBs) and increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide inputs for the industrial sector on a sustainable basis.
Another recent example would be the National Micro, Small and Medium Enterprises (MSME) Clinic set up by the Office of Vice President Yemi Osinbanjo, in partnership with the Federal Ministry of Industry, Trade and Investment and 11 other federal agencies.
For Nigeria to reap the end-toend dividends of the investments made towards SME growth, local SMEs must also improve their capacity and skills while also scaling up their integration into the global value chain.
Building Local Capacity
One of the proven ways to address the capacity shortfall amongst SMEs in Nigeria is a proactive collaborations between the private and public sectors.
An important case study is the partnership between Procter & Gamble (P&G) and the Nigerian government. For decades, the leading consumer goods company, P&G, has championed this concept of effective partnerships to help transform local communities in Nigeria.
One of its proactive initiatives, ‘ The SME Academy’ was birthed in partnership with the Federal Ministry of Trade and Investment (FMITI) and the Bank of Industry (BOI). Recently, this partnership held its second and first virtual SME Academy programme themed: ‘SME Development and Growth as a Precursor to Nation Building.’
The panel which featured Otunba Adeniyi Adebayo, Nigeria’s trade minister, Adil Farhat, P&G managing director and other private sector leaders highlighted strategies to adopt in order to tackle these challenges in the areas of creative risk management, insurance, capacity building, creative risk management, access to funding at rates that will facilitate repayments, adoption of digital technology, social impact and good inclusive culture for employees.
Due to nature of the partnership, the Vice President of the Federal Republic of Nigeria, Yemi Osinbajo, who gave the keynote remark identified initiatives that have been put in place to help the development of SMEs in Nigeria. These include ensuring that more funds are made available for lending through the CBN, availability of payroll support and provision of SME targeted credit facility.
The SME Academy was set up to build the capabilities of small and medium- sized enterprises in Nigeria through the delivery of structured skills training, advisory and mentoring activities and services.
This edition, which started from the 12th of February and ended on February 19, 2021, trained over 700 SMEs on basic business skills to improve their standards, sustain their business and facilitate their integration into global value chains.
With training like the P&G’s SME Academy, SMEs are given the opportunity to upskill and gain new insights on how to navigate their businesses with best global practises and standards- especially given the current impact of COVID-19 on the Economy.
The next edition of this SME Academy edition will be announced in the coming months. To learn more and register for the SME Academy, visit https://www.boi.ng/