Small business continues to groan under headwinds
Small businesses are finding it difficult to make strides as they continue to groan under harsh regulatory headwinds, a situation that is regrettable given the country’s high unemployment rate.
Stakeholders explained with gloomy faces how they are forced to pay heavy taxes through their nose. This huge tax payment eats all revenues and profits leaving them with operating losses.
Emeka Uzoma, a 49 year old, owns a computer accessory shop in computer Village Ikeja Lagos and has a staff strength of 15 said he is will soon close shop as multiple tax payment otherwise known as double taxation is eating dip into his bottom line.
“I have been handed a penalty of N7.5 million for late filing of returns by the relevant tax authorities in Abuja the headquarters of the body. It is ridiculous because I have always been paying my taxes as at when due, “said Uzoma
“You don’t expect me to do the rigorous job of planning a business amid tough environment and at the same time travel to Abuja to file returns. I can no longer cope with the predicaments. Banks are not ready to give loans and even when they are willing the interest rates are outrageous. The only option left is to wind up the business and state a new life,” said Uzoma.
When entrepreneurs like Uzoma are planning on wounding up and throwing workers into the bleak labour market, it means government should redefine its policy and regulatory framework for Micro Small and Medium Enterprises (MSMEs) given the county’s unemployment rate.
Unemployment rate in Nigeria increased to 7.50 percent in the first quarter of 2015 from 6.40 percent in the fourth quarter of 2014. Unemployment rate in Nigeria averaged 11.93 percent from 2006 until 2015, reaching an all time high of 23.90 percent in the fourth quarter of 2011 and a record low of 5.30 percent in the fourth quarter of 2006, according to data by the Nigeria Bureu of Statistics (NBS).
Analysts say in spite of the difficult and harsh economic environment in Nigeria, there has been a phenomenal growth of micro and small scale enterprises due mainly to the people’s quest to be self-employed and not because it is easy to establish or manage.
“97 percent of all manufacturing activity in Nigeria are carried out by the micros. All of this effort is 1 percent of GDP, “ said Oluseye Arowolo Partner, Tax and Regulatory Services, Akintola Deloitte, a leading accounting firm, at the stakeholders’ round table forum on MSMEs policy frame work in Nigeria.
“There has to be policies that reflect the aspiration of the people involved. We need to review the connection between the SMEs and the banks,” said Arowolo.
Of the 469,070 jobs created in the first quarter of the year, the informal sector contributed 338,129 jobs as against 130941 jobs created by the formal sector.
The 469070 jobs were 99,485 jobs or 26.95 per cent higher than the 369,485 created in the fourth quarter of 2014.
“Entrepreneurs have to restructure their business. They need a solid business plan,” said Bayo Rotimi, an entrepreneurship teacher at the Lagos Business School (LBS).
BALA AUGIE