‘Nigeria’s future lies on SMEs’
Tony Ejinkeonye is the president of Abuja Chamber of Commerce and Industry. In this interview with Harrison Edeh, Ejinkonye bares his mind on the performance of the micro, small and medium enterprises (MSMEs) and the real sector in the last one year.
As a key player in the real sector, can you assess the present administration in terms of macro and micro economic policies in the last one-year?
Government has not really articulated its economic policy clearly, but the key strategies driving government’s policies on the economy include- blocking wastes through fiscal discipline and control; widening tax nets and diversification of the economy from oil to other sectors such as agriculture; mining and manufacturing that can employ many people, as well as support the maintenance of macroeconomic stability.
Although, these policies are tied to the 2016 budget, we note, however, that apart from blocking of wastage through the Treasury Single Account (TSA), policies currently being evolved by this administration over the last one year are yet to boost domestic manufacturing and attract greater investment to Nigeria’s agricultural and mining sectors. Furthermore, given the current economic situation of imminent recession, foreign exchange crisis, energy crisis, rising unemployment and inflation, the business environment has become very hash.
The SMEs are the building blocks of every economy. How will you assess their performance so far in terms of contributing to the economic development of the country?
According to the 2012 Enterprise Baseline Survey, SMEs contribute nearly half of Nigerian GDP and accounts for over 25 percent of employment in the country. Furthermore, the survey revealed that there were 17 million Small and Medium Scale Enterprises in Nigeria, employing 32.41 million persons and makes a contribution of about 47 percent to the nation’s GDP in nominal terms. A research carried out by the National Bureau of Statistics and Small and medium Enterprises Development Agency of Nigeria (SMEDAN) last year, shows that SMEs are now 37 million.
In addition, SMEs play a major role in Nigeria’s economy in terms of job creation and income distribution. They are the bedrock that micro-enterprises thrive on. The future of Nigeria lies more on the leverage of SMEs because they contribute more in terms of investments. Reports indicate that in Nigeria today, 65-70 percent of its workforce is under small and medium enterprise
The Federal Government has been talking about economic diversification. How will you assess government support to the sector so far?
Successive governments in Nigeria have in the last three decades shown much interest in ensuring adequate financing for SMEs, by establishing various schemes and specialised financial institutions to provide appropriate financing to the subsector.
The failure of most of these schemes reveals that the problem of SMEs in Nigeria is not limited to lack of long-term financing, but also inadequate management skills and entrepreneurial capacity. The need to address these problems comprehensively for a sustainable source of long-term financing necessitated the introduction of the Small and Medium Industries Equity Investment Scheme (SMIEIS) by Bankers’ Committee at the initiative of the Central Bank of Nigeria.
President Muhammadu Buhari in a bid to help MSMEs overcome the problem of access to low-cost financing, last year, stated that the Federal Government will encourage making ‘well-planned concessionary funding initiatives’ available to them. And earlier this year, through the Bank of Industry, the government formally launched a N10 billion Youth Entrepreneurship Support (YES) project to empower youth with loans to start businesses.
Let us look at some of the FG’s schemes targeted at supporting the SME sector. How have they lifted or failed the sector in the past one year?
It’s too early to appraise FG’s support of SMEs in the past one year
Can we look at the ease of doing business in Nigeria as it pertains to MSMEs in the last one year?
According to the World Bank’s 2016 Doing Business report, Nigeria is ranked 169 out of 189 economies, up from 170 ranked in the 2015 report. However, the ease of doing business in Nigeria is becoming increasingly difficult, as most businesses continue to suffer a lot of misery aggravated in part by limited infrastructure, defective policies, to mention just a few.
Can we look at how inaccessibility of foreign exchange is currently stifling businesses in the country?
In recent times, non-access to forex has made doing business in Nigeria more difficult. Some companies are already divesting from the Nigerian market, and going to neighbouring countries because of growing insecurity on investments and harsh economic climate.
With the release from the National Bureau of Statistics regarding crash in the economy and looming loss of jobs, what are your key suggestions to the government?
The recent adoption of the managed float naira exchange system is a step in the right direction because it is more proactive and more appropriate to our situation. It will help address another major monetary problem of the CBN, which is the persistent excess liquidity in the system. It will also stimulate the banks to rightly intermediate the economy rather than their current rent-seeking contribution. Besides, government should implement the 2016 budget expeditiously with a lot of discipline – diversifying the economy from oil and creating jobs, among other strategies, to stimulate the economy.
Harrison Edeh, Ejinkonye