Africa’s most populous nation, Nigeria, has one of the largest economies in the continent. Despite the fact that crude oil is its major source of revenue, Micro, Small and Medium Enterprises (MSMEs) play a huge role in contributing to the nation’s GDP, and providing employment for its citizens.
The National Policy on Micro, Small and Medium Enterprises, (a policy aimed at developing the sub-sector of the Nigerian economy in a structured and efficient manner) gives great insight into this sector. It classifies business entities based on size, sector, organization, technology and location. A Micro Enterprise is a business entity with less than 10 employees, and less than N5 million assets (excluding lands and buildings).
A Small Enterprise is one whose workforce is between 10 to 49 people, and has assets from N5 million and above, but less than N50 million (excluding lands and buildings). A Medium Enterprise is a business entity with a workforce of 50 to 199 employees. Furthermore, it has assets from N50 million and above, but less than N500 Million Naira (excluding lands and buildings).
According to a 2022 joint report by Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and National Bureau of Statistics (NBS), as at December 2020, Nigeria had a total of 39.7 million Micro, Small and Medium Enterprises (MSMEs). Of this number, 38.4 million (96.9%) were Micro Enterprises while the remaining 1.2 million (3.1%) were Small and Medium Enterprises.
According to the report, MSMEs in Nigeria contributed 46.31percent to the country’s gross domestic product (GDP) and accounted for 96.7percent of businesses. Furthermore, they accounted for 6.21percent of gross exports during the year under review.
In spite of these statistics, there is a high failure rate among MSMEs, about 80percent of them fail within 18 months. This view is supported by Bola Adigun, financial expert and director of corporate finance in Price Water House Coopers (PwC), who stated this at a Business Growth Seminar organized by Lagos based company, Enlite Global Services in March 2020.
This failure of MSMEs is attributable to several factors such as cash flow problems arising from poor financial management practices, inability to access finance from banks and other financial institutions due to lack of proper structures, low level of education of business owners, inadequate social amenities like good roads and electricity, multiple taxation, unforeseen events like pandemics, poor product quality/poor service delivery, poor marketing strategy, poor leadership among others.
Governor Emmanuel Udom, former executive director at Zenith Bank, understands the role MSMEs play in the development of the economy, and their importance as the engine that drives the economy.
Having done so much in terms of industrialization, Governor Udom in his 2019 Manifesto promised to establish an MSME One-Stop shop for incubation and training on basic business skills and SMEs potentials across the state; assist prospective indigenous entrepreneurs in the documentation process needed to attract financing as well as assist them in the preparation of business plans; source funds from the Bank of Industry, Central Bank of Nigeria, Development Bank of Nigeria among others, to power the MSMEs in the state; provide a good working environment for MSMEs that is secure and has basic amenities such as good roads and electricity. Furthermore, he promised to create an industrial hub for MSMEs and provide business equipment for local businesses after procuring them from international business organizations.
On Wednesday, May 29, 2019, when he was given his second inaugural speech, Governor Udom reiterated his commitment to revitalizing the MSME sector. He said “It is an acknowledged fact that SMEs are the drivers of the economies of the developed world. In our Completion Agenda, we will focus on this crucial area and will partner with relevant organizations and agencies both in Nigeria and abroad to execute this policy.”
Read also: Udom seeks partnership with NDDC for regional development
While presently the 2022 Budget tagged Budget of “Re-defining Standards,” Udom speaking about the policy objectives of the budget stated as one of its focal policies, the promotion of Small and Medium Scale Enterprises (SMEs) as well as enhancement of local capacities in manufacturing and use of “made in Akwa Ibom” goods and services to create jobs and achieve self-sufficiency in critical sectors of the state’s economy.
Throwing more light on the crucial role of MSMEs, he said, “Micro, Small and Medium Enterprises (MSMEs) constitute the engine of growth of any economy anywhere in the world. The 2022 Budget is a consolidation of the 2021 Budget with greater emphasis on the clustering of Micro, Small and Medium Enterprises (MSMEs) for greater efficiency and effectiveness.
This informs the provision for the establishment of clusters village for different vocations including ICT, craftsmen, footwear producers, textile production, designing and woodworks. To strengthen the MSMEs post Covid-19, the Ministry of Trade and Investment will implement the World Bank supported activities and interventions under N-CARES programme in the state.”
This article gives a report of milestones achieved the Governor in relation of MSMEs. In keeping with his promise to provide funds the indigenous businesses, the administration has provided over N2 billion interest free loans for small scale entrepreneurs and traders, provided business grants for over 300 widows to boost their businesses, carried out free business registration for MSMEs, and properly positioned them to gain access to grants and loans from the CBN, and other financial institutions.
The administration has completed the construction of a model skill development centre at Ikot Akpan Ndua, Ibesikpo Asutan LGA for training of youths and women in specialized skills. It has also created the Akwa Ibom Employment Scheme (AKEES) whose objective is to promote entrepreneurship. Another notable milestone is the implementation of Ibom Enterprises Development Schemes (IBEDS) for the empowerment of entrepreneurs in the state, as well as the setting up of the Micro Enterprise and Development Agency through the enacting of the Akwa Ibom Micro Enterprise and Development Agency Law (AKMEDA). Women, youth and elders have also been empowered through Inter-Ministerial jobs.
It should be noted also that vocational trainings have been conducted for youths in different sectors of the economy include agriculture and power. In relation to agricultural MSMEs, the administration has engaged and empowered 150 young farmers in Ibom Community Farm, provided fishing equipment for groups in coastal communities, and provided food processing equipment and agricultural inputs for co-operative groups through Akwa Ibom State Life Enhancement Agency. The Udom led administration has also empowered over 60 co-operative societies across the 31 local government areas of the state and does a quarterly presentation of basic tools and equipment to ‘My Entrepreneurship Goals Programme’ (MEGP), an entrepreneurial development training programme which helps Akwa Ibom start-up founders in defining clear goals for their businesses.
Johnson, a social commentator, writes from Uyo
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
