The odds have always been stacked against Nigerian SMEs. Their fortunes were further compounded by the COVID-19 pandemic, with many of them reducing the number of employees/workers, as well as reporting lower sales.
Despite the negative outlook, SMEs remain a crucial part of the Nigerian economy, with figures from the National Bureau of Statistics (NBS) showing that they contributed about 48 percent of the national Gross Domestic Product (GDP) in the last five years.
They also account for 96 percent of businesses and 84 percent of employment. Their significant contributions notwithstanding, they have several challenges. These include rising inflation, inadequate access to finance and markets, tech disruptions (in some instances), multiple taxations and sometimes unfavourable policies, insufficient technical know-how, and scarcity of suitable human resources.
The SMEs were still struggling with these issues when COVID-19 came and dealt some of them mortal blows. A survey published by the Fate Foundation and BudgIT on the ‘Impact of COVID-19 on Nigerian SMEs’ had 94.3 percent of the total 1,943 respondents said the pandemic had negatively affected their business. It further showed that 72.1 percent had cash flow issues to continue operations among those afloat, while 59.2 were struggling to increase their revenue base.
Asked for areas in which they need support, 72.1 percent said cash flow; 67.7 percent said they’ll need help to make sales, and 89.4 percent want the federal government to provide them with funding. 33.8 percent mentioned access to markets; 74 percent urged the private sector to support with funding, and 62.9 percent want business support.
But overcoming these challenges also requires knowledge that some of the SMEs don’t have. Indeed, inadequate knowledge has been identified as the biggest challenge for small businesses in a demanding economic landscape like Nigeria. People establish businesses, but challenges arise and eventually derail them because the owners lack requisite knowledge. Some new business entrants underestimate the importance of training, with the likelihood of business failure or death higher when technical difficulties arise.
Aware of this knowledge gap, Nigeria’s leading digital-driven financial institution, Wema Bank, has resolved to assist SMEs to fix it through a novel and impactful SMEs Business School initiative. In a recent appearance on Arise TV’s Global Business Report, Arthur Nkemeh, head, Small and Medium Enterprises (SMEs), Wema Bank, reiterated the importance of possessing a deep knowledge that would empower SMEs for business survival and marketplace success. He also referenced the Business School and its objectives.
Nkemeh noted that equipping SME owners with critical knowledge, including sources/types of finance, management, and marketplace trends, is vital to connect them to finance suitable for their particular needs. This is in addition to the requisite skill to thrive in their competitive spaces.
According to him, “Nigerian SMEs are mostly interested in knowing about financing options available to their businesses. However, they need much more: knowing where the finance opportunities exist is one thing.
“Understanding the regulatory implications of compliance as it affects their businesses, as the cost of not knowing could be very devastating, is another thing. Having the right knowledge is, therefore, the most important support for SMEs to meet these dynamic demands of the new normal.”
The SME Business School is a free training program comprising online and in-class sessions happening across Nigeria, starting with Lagos. The first edition, held from August 16 to 20, featured 50 participants trained in finance, marketing & sales, leadership, technology, branding, strategy, innovation & business transformation.
First-rate consultants from the Frankfurt School of Finance and Management, Germany, Ernst & Young, Matt Anthony Consulting, IBFC Alliance, and Kuhl-Cher facilitated the training.
Beneficiaries’ course content included Introduction to MSME Customer Perspective, Growth & Opportunities, Understanding Financial Marketing & Selling, Leadership & People Management, Strategic Growth through Operations et cetera.
But it wasn’t just training for its sake, as Nkemeh disclosed that Wema Bank was exploring funding options for the trainees.
“We are working with Development Financial Institutions (DFIs) and other regulators to make funding options available to these MSMEs in bespoke styles to suit their various needs. We are also keen on lending to these MSMEs in a very sustainable manner that will also ensure that they are productive and profitable”, Nkemeh explained.
Nigerian SMEs are innovative and resilient, but the power that comes from knowledge cannot be over-emphasised either for an individual or organisation. More proactive initiatives like the Wema Bank SME Business School that improves the ability of MSMEs are welcome. It would increase their bottom line and optimise their contributions to economic development.