Poor management skills are a huge impediment to SMEs

Experts say many operators of micro, small and medium scale enterprise (SMEs) in Nigeria lack the required management skills to run businesses.

According to them, management capacity gaps are evident in finance, human resources, marketing or other areas where the entrepreneur lacks manifest expertise.

The experts who spoke at ‘My Business Summit’, organised in Lagos by BusinessDay in collaboration with Innovate One Company and Mara Mentor, said SME owners must acquire the necessary management skills to enhance revenue base and grow their businesses.

“The biggest challenge facing SMEs is not actually funding, but lack of management capacity to run the business,” Dave Uduanu, managing director, PAL pensions said. 

“Skills are required to run a business but most SMEs are people that just left school who don’t have the experience to run business”, Uduanu said.

“It is important for government to create a platform for training of SMEs on how to run business so that they can write better business plans to access loans from banks, because Investors look out for management capacity before they can invest in any business,” he added.

A recent national MSMEs survey conducted by the Small and Medium Enterprises Development Agency (SMEDAN) in collaboration with the National Bureau of Statistics (NBS) shows that the number of MSMEs in Nigeria has jumped from 17.2 million (2010) to 37 million in 2013

However, only about 20 percent of MSMEs survive beyond the fifth year, and this is largely as a result of poor power supply, policy inconsistency and multiple taxation, the experts say.

“In Nigeria, the tax structure is the same for all irrespective of the business type and it is usually 30 percent of total profit,” Sope Williams Elegbe, senior lecturer, University of Lagos, said.

“In other countries, tax policy is designed to favour small firms because they realise the importance of SMEs to their economy,” Elegbe said.

The experts also urged SMEs to prioritise taxation so that payment does not become an issue when tax authorities come for clearance. They admitted that governments at various levels are not making enough progress on the issues of multiple taxes for SMEs in the country.