Home Editorial Making micro and medium enterprises thrive

Making micro and medium enterprises thrive

The recent inauguration of the National Council on Micro, Small and Medium Scale Enterprises, MSMEs, by President Goodluck Jonathan is a step in the right direction, provided government makes concerted efforts to ensure that enabling environment is created for the smooth operation of this category of businesses in the country.
This proviso is also critical so that the N220 billion being earmarked as support for the programme is to achieve maximum result.
Coming at a time when millions of unemployed young Nigerians are roaming the streets in search of unavailable jobs, this initiative could make a major impact on the economy and the society in general if government ensures that its functionaries do not sabotage the implementation of the programme as has been the case in the past with many other such initiatives.
Poor policy implementation, decayed infrastructure and unstable business environment which have led to high cost of doing business in the country have, indeed, been at the root of the failure of most micro, small and medium scale enterprises and for the MSMEs programme, as now designed by the Federal Government to succeed, these factors must be frontally addressed.
A country like Nigeria that has a huge youth population and a yearly average of 1.6million fresh job seekers cannot afford to trifle with the MSMEs sub sector which has capacity to absorb a significant percentage of the unemployed.
Inaugurating the MSME Council in Abuja, President Jonathan noted thus: “We must ensure that this economy works for all our people. That we indeed, become a land of opportunities for all, and a land where hopes become reality regardless of who you are, where you hail from or what belief you hold.”
He added that Nigeria “must be where our youth have jobs and our people can take their destinies in their hands, it must be a land where poverty is eradicated and our people can live in dignity.”
With an initial funding of N220 billion, the Council has the responsibility of selecting the MSMEs that would benefit from the facility, and advancing the money to them using appropriate channels to reach the beneficiaries. The involvement of the states, according to the Central Bank of Nigeria, CBN, which is managing the loan intermediation, is to ensure that all the MSMEs beneficiaries are easily accessible and identifiable.  The loan has one digit interest rate and has a repayment period of over five years.
The point must be stressed that the country has, in the past, initiated some robust industrial policies and programmes that ended up gathering dust on the shelves of ministry officials or becoming white elephant projects, drain pipes, through which public funds were wasted.
For instance, the country’s integrated steel development policy which led to the establishment of the Ajaokuta steel company, the three Inland Rolling Mills at Osogbo, Jos and Katsina and the Delta Steel Company has remained comatose. The same is the case with the country’s auto policy which led to the building of the Peugeot Automobile Nigeria, PAN, in Kaduna, the Automobile Manufacturing Company, ANAMCO, in Enugu and, the Steyr Vehicle Assembly Plant in Bauchi.  Today, these laudable programmes have completely failed with the country almost starting afresh as exemplified by the recent launching of another auto policy by the present government.
This is why the government must do everything practicable, especially the provision of enabling environment, to ensure that the new MSMEs initiative is not allowed to fail.
For instance, investors, including the small scale entrepreneurs would not easily come into any country with their own power plants, road networks water works and other essential public infrastructure.  They expect governments to provide these essentials which, in most cases, serve as incentives.  While we are aware that government has, in the last few years, done a lot of work in the power sector, the point must be stressed that the dividends of this effort, which should be steady and affordable electric power supply, is yet to be widely felt.
The Organised Private Sector, OPS, especially the Manufacturers Association of Nigeria, MAN, just recently raised  the alarm that the high cost of doing business in the country was hindering business expansion and job creation, and making it difficult for their members to remain in business. In the last two decades, more than 500 firms have shut down with over 90 per cent of the textile firms located in Kano, Kaduna, Lagos and Onitsha also affected, according to MAN.
Like any other investor, the MSMEs are subject to the country’s fiscal and monetary policies.  As it is, there are allegations that banks in the country have a lot of hidden charges despite their cut throat interest rates.   Besides, the country’s tax regime is equally unfriendly to investors, especially as it concerns the vexed issue of multiple taxes and levies – ranging from the federal and the states to the local governments.  For instance, while Value Added Tax, VAT, is collected by the Federal Government and shared among the three-tiers of government, it is strange that some states still go ahead to collect sales tax in their various jurisdictions.
There is need for the economy to be made more investor-friendly, if MSMEs are to thrive and make the level of impact they are supposed to make.
For instance again, the clearing of goods, especially as at the nation’s seaports has defied the 72- hour target, despite promises made by the government.
In fact, any cargo cleared within seven days from the ports is considered as having been very fast by operators.  This is contrary to international best practices where the clearance of goods is expected to complete within 48 hours.
Similarly, business incorporation with the Corporate Affairs Commission, CAC, now lasts several weeks if not months, whereas the CAC has in the past claimed that it could incorporate companies within 24 hours. At present the website of the agency has been down for weeks, thereby, making it impossible for any meaningful business transaction to be effected.  Lawyers are even threatening legal action against CAC for this lingering down time.
These problems are serious hindrances to businesses generally but MSMEs particularly. But perhaps, the greatest challenge to the survival of MSMEs in the country has to do with the mindset of the individuals involved in the enterprises.  In the days of Chief Jerome Udoji Award and Alhaji Shehu Shagari Green Revolution agricultural loans in the 1980s,  it was not unusual for the beneficiaries to receive such monies and use them to increase the number of their wives, buy assorted cars and host lavish parties. Given the low interest rate placed on N220billion MSMEs’ loans, government must put machinery in place to stop beneficiaries of the facilities from diverting the funds to uses other than those for which they are meant.
Such strict monitoring regime would not only benefit the beneficiaries of the loans but would help to revamp the economy, provide direly needed jobs and significantly reduce the country’s poverty level.

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