TheCable

By Olayinka Dada

SMEs are considered the engine room and heart of any nation, they are a major contributor to the drive to industrialize any economy through the production of goods and services and creation of employment, and they are also engaged in skill development and improvement of manpower.

Nigeria’s economic environment has always been challenging for SMEs considering the absence of good social amenities that can support the development of Small Businesses in the country. Promoters of SMEs are faced with Poor Road network, little or no power supply, thereby making business owners to provide their own power and other amenities, which increases the cost of doing business.

Funding has also been an issue, with no source of cheap funding and the scarcity of start-up fund, lack of capital has sank many ideas and expansion initiatives. Also, some government policies have not been favorable to SMEs, and they (SMEs) remain the worst hit during times of economic instability. Though, government has begun to provide intervention funds through the CBN and quasi government lending institutions (BOI, Bank of Agric, and Infrastructure Bank). Our prayer is for the initiatives to remain sustainable.

Originally, Nigeria have cluster Businesses locations around the country, From the Alaba Electronics Market Cluster,  to the Mile 12 Food Produce Market Cluster in Lagos, the Kano Leather Market Cluster in the North, to the Aba Shoe and leather clusters, these are potential low hanging fruits for commencement of development initiatives, which if we can harmonize their potentials, Nigeria can become an economic hub for SMEs, where foreign investors can come and set up their factories to boost local production.

Small Businesses in Nigeria are categorized into Micro, Small & Medium Enterprises, with Micro Units defined as any Organizational entities, that have less than 10 employees and N5 million asset, while Small Enterprises are Units having  between 10-49 employees and above N5m but less than 50m in Asset. Medium Enterprises are defined to have between 50-199 employees and above 50m and less than 500m in Asset.

In Nigeria, 95% of Businesses are MSMEs compared to 53% in US and 65% in Europe. SMEs in Nigeria represent 90% of manufacturing and Industrial Sector. MSMEs are very important to the economy, though, the contribution of MSMEs in Nigeria are not as high as other nations in emerging markets like Nigeria, Nigeria is pulling its weight in this regard.

MSMEs are also confronted with challenges in the areas of poor management and development of proper business planning initiatives. In addition to facing issues of limited or unavailable access to easy and cheap financing, likewise, access to market, poor book keeping and low technology infrastructure all remains hindrances for small business growth in Nigeria.

Any country that intends to grow its MSMEs, must show commitment to developing financial incentives, provide basic technological infrastructure, efficient Legal and other regulatory framework, and a honest resolve to developing capacity.

The segment continues to be a major area in the Nigerian Economy that remains untapped, with strong potential for foreign exchange earnings and opportunity to reduce unemployment in Nigeria. MSMEs in some developed and developing economies are boosters of new frontiers in Agric Value Chain, Manufacturing Hospitality, Entertainment and other novel initiatives.

To build MSMEs to last in the most populous Nation in Africa, promoters must have a compelling vision, the one that is more than making money, and not just building a business, but creating an institution that can stand the test of time.

Entrepreneurs should not be afraid of developing their people ware, because they might leave them, they should endeavor to impact relevant knowledge to enable them deliver on their job, that even if they leave, they will become brand ambassadors for their company, and be a source of new business development.

Business Owners must know where their customers are, and make all effort to meet with them. You do not have to be everywhere, you only need to be where your customers are, and customers remain the lifeblood of any business. Like any business category. Promoters of MSMEs need to continually network, both formally and informally, suppliers, investors and all forms of stakeholders are everywhere and can only be discovered through conscious and well planned networking activity. They must learn to attend Seminars, Lectures, Symposiums and other Public functions, and be ready with their elevator pitch to get a client, investor  or any other value add relationships.

Failure is surely an ally to any entrepreneur, business have various cycles and failure is part of it, they help you grow and teach you to do things in a new way. Therefore, business owners need to recognize failures as opportunities to redefine themselves and innovate. Positivity is a virtue required of any promoter that wants his/her business to grow, because your mind is a battle ground, you need to guide the thoughts that reside in your heart, and negativity should never be allowed to thrive.

SMEs are the multinationals of tomorrow, all the major brands of the world started as small business and have grown over the years. Your small business might be the next multinational if you resolve to make it so, despite all odds.

Dada is an SME specialist with frontline commercial bank, where he sees to the management of intervention funds and capacity building initiatives for SMEs. He can be reached on [email protected]