SMEs call for reforms as doing business ranking fails to improve
Operators of micro, small and medium enterprises want reforms that will improve the doing business index in the country.
Though there are a few positives in the recently released 2017 World Bank Doing Business Index, the result shows the country still ranks 169 out of 189 countries.
The report shows Nigeria lost one point on Starting a Business Index, ranking 169, which operators say is not encouraging.
On Dealing with Permits, the country ranked 174 as against 173 in 2016.
The country gained two points on Getting Electricity, ranking 180 as against 182 in 2016.
The country remained stagnant on registering property, ranking 182, while Africa’s most populous country was 44 on getting credit as against 60 last year.
The country was stable on Paying Taxes at 182, while losing a point on Resolving Insolvency at 140.
Nigeria was also stable on Enforcing Contracts (139) and Trading across Borders (181), according to the report.
“This shows the Corporate Affairs Commission must rise up and face up to the challenge,” said Ike Ibeabuchi, CEO of MD Services Limited.
“We also need to make it easier for young people with viable ideas to start what they want to do,” Ibeabuchi said.
“It also means that we need to ensure businesses understand global market dynamics. Yes, electricity may have improved on that ranking, but how many SMEs have four-hour electricity in a day? How many can get credit at commercial banks at even 15 per cent?” he asked.
According to Frank Jacobs, president, Manufacturers Association of Nigeria, the country needs to ensure better business environment for small businesses, especially those in manufacturing.
Jacobs said Nigerian firms are not competitive because the environment makes it so, stressing that electricity and credit are still areas Nigerian businesses are looking forward for reforms.
“What we need is an interest rate of five percent. We also want the recapitalisation of the Bank of Industry as this will enable the financial institution to do more,” Jacobs said.
Nigeria has 37 million SMEs, some of which are facing tough times as the country mires in recession and foreign exchange crunch.Nigeria’s small businesses currently contribute 47 per cent to the GDP
“We still struggle in the area of access to market, caused by poor road network. There is also a challenge with how to move our goods round the country,” said a tech start-up owner Madumere Okere.
Already 222 of small businesses have shut down in the last one year due to monetary policy issues and instability in the economy.
“You need a consistent monetary policy to stimulate businesses,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), recently. Yusuf had told Start-Up Digest that the environment must be convivial for SMEs to thrive, adding that the country must revise its energy policy to make fuel, diesel and gas available for businesses.
He said SMEs should be able to access credit at a single-digit rate if the country is indeed serious with the sector.
According to Jon Kachikwu, chairman of SME Group at the Lagos Chamber of Commerce and Industry, small businesses need easy credit access.
Kachikwu said at a period China is charging between one and two per cent lending rate, Nigeria is charging well above 20 per cent, adding that even Britain charges about one per cent, despite that its inflation rate is over five percent.
Friday Opara, director-strategic partnership, Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), said: “The FX issues have made the Nigerian business environment tougher. We need to look at our funding position for SMEs because businesses cannot access cheap funds, and this is why the government should fast track central bank movable asset collateral initiative.”
ODINAKA ANUDU