Small and medium enterprises (SMEs) are considered one of the most important industries required by developed and most importantly, developing countries for sustainable economic development. Through harnessing potential employment opportunities, improving local technology, output diversification and development of indigenous entrepreneurship, SMEs are known as major drivers of all economies, especially developing ones such as Nigeria’s.
According to the National Bureau of Statistics, small and medium scale enterprises (SMEs) in Nigeria have contributed about 48% of the national GDP in the last five years. With a total number of about 17.4 million, they account for about 50% of industrial jobs and nearly 90% of the manufacturing sector, in terms of several enterprises.
In Nigeria, however, SMEs face a myriad of problems. From the unfriendly/unstable business environment to the lack of accessible funding or finance, Nigerian SMEs are constantly in need of governmental and non-governmental support to thrive sustainably in the Nigerian business ecosystem. Despite the significant contribution of SMEs to the Nigerian economy, challenges persist that hinder their growth and development and although significant improvement has been achieved in recent times, there is still much work to be done.
The Nigerian government and several private organisations have made efforts to lighten the financial burden that startup SMEs may be faced with by establishing platforms that may provide existing and prospective SMEs with funding opportunities. This article will examine five of such avenues that SMEs in need of funding may explore to scale through their specific business challenges.
First, crowdfunding is an effective avenue for entrepreneurs to raise funds for the kick-off of their business ideas. It is the practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the internet. This fund-raising approach will be befitting of SMEs, such as social enterprises with operations that provide relevant solutions to existing problems. Small businesses can tap into this fund-raising opportunity and successfully harness available resources from the general public, usually by appealing to the solution-proffering nature of the said business.
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Next, The Bank of Industry (BOI) has recently launched a youth empowerment program for young and talented entrepreneurs looking to venture into various sectors of Nigeria’s economy. The Youth Entrepreneurship Support (YES) Programme is BOI’s effort at addressing the worrisome phenomenon of youth unemployment in Nigeria by building the capacity of the youths and funding their business ideas.
The YES programme is aimed at equipping young people with the requisite skills and knowledge to be self-employed by starting and managing their businesses. Also, The Lagos State Employment Trust Fund (LSETF), was established by The Lagos State Employment Trust Fund Law 2016 to provide financial support to residents of Lagos State, for job, wealth creation and to tackle unemployment. LSETF serves as an instrument to inspire the creative and innovative energies of all Lagos residents and reduce unemployment across the State. The Fund has the mandate to directly invest ₦25Billion in helping Lagos residents grow and scale their Micro Small and Medium Enterprises (“MSMEs”) or acquire skills to get better jobs.
Additionally, the GroFin Fund is a pioneering development financier specializing in financing and supporting small and growing businesses (SGBs) across Africa and the Middle East. GroFin combines patient capital and specialized business support to grow emerging market enterprises.
Lastly, the YouWIN Connect Nigeria program is a multimedia programme of the Federal Ministry of Finance. This platform aims to promote entrepreneurship, job creation and wealth via enterprise education for young Nigerians. Nigerian entrepreneurs will enhance their productivity through relevant SME development tools. These ventures are promoted by young Nigerians in target sectors that align with the government’s objective of diversifying the economy and promoting competition and transparency.
It is safe to conclude that as difficult as the Nigerian business environment may seem for SMEs, a few good opportunities abound for financial relief that may provide succour to their specific challenges. Also, there exists a number of target specific intervention funds for specialised SME sectors such as agriculture, technology, etc. Nonetheless, work still needs to be done by the government and stakeholders alike to ensure the economic sustainability of the Nigerian SME sector across all platforms as they serve not only as important industries but also as the backbone of the Nigerian economy.
