SME sector and economic growth

Nigeria is a trading economy. This is not in doubt. The April 2014 GDP rebasing exercise bears this out too, having revealed that the service sector which, in our circumstance, is mostly about import trade, accounts for over 50 percent of the GDP size.

In all of this, the small and medium scale enterprises (SMEs) sector occupies a central position as a major driver of the economy. Unfortunately, this growth sector is not receiving from the government the kind of attention it deserves, even in the present sorry state of the country’s oil-dependent economy.

The growth of this sector has, for decades, been stunted by multiple taxation, inadequate power supply and over-dependence on imported finished goods, hence the need to repackage it in a cost-effective, operationally-efficient and investment-friendly manner so as to engender economic growth and development.

International trade is mainly about competition through the exploitation of individual country’s comparative advantage and, to come off free and fine from this competition, countries have to encourage their enterprises, especially the small scale, by removing all barriers to trade facilitation.

In Nigeria, high tariff on imported raw materials for production contributes significantly to frustrating SMEs in the country, making locally-made products non-competitive in the global market.

Similarly, transport infrastructure and facilities deficit in the country is a major challenge to the SMEs. The road system, which is the dominant transport mode, is not well developed and there is poor connectivity with other modes like rail, inland waterways and air transport.

Power remains a big challenge and has worked against efforts at preserving farm yields, processing agro products to add value, and application of advanced techniques like seed banking in the agricultural sector to enable the SMEs push their products favourably into the world market.

Also, delays experienced at the ports are not helping the manufacturing sector and this is caused by multiple agencies, obnoxious practices, and corrupt regulation at the ports.

No SME, anywhere in the world, can thrive in the face of these hurdles, hence our appeal to the President Muhammadu Buhari government to come out with a policy aimed at encouraging the growth and full development of this important sector of our economy.

Analysts hold the view that economies thrive on the efficiency in the conduct of international trade. We can’t agree more, because we believe that the phenomenon of globalisation has created new opportunities for countries to access global markets for economic growth and development.

To achieve this access to global markets, Nigeria must be able to move its products across its borders not only rapidly and reliably, but also cheaply so that such products can compete in the global market.

To underscore the importance of trade in national economic growth and development, many more nations have joined the World Trade Organisation (WTO) since the turn of this century, all in a bid to improve their access to international markets. Nigeria cannot afford to miss out in all of this.

It is pertinent to point out that many countries of the world generate employment for their people through investments in SMEs, but this is not the case here where small scale entrepreneurs are not adequately encouraged as import trade outweighs export to the detriment of the local economy.

We, therefore, urge the government to reverse this trend by ensuring that SMEs are export-oriented. This has become imperative now that oil revenue has nosedived to a level that has left the economy gasping for breath.