One thing is certain, small and medium-sized enterprises, whether a corner barbershop or a dry cleaning shop down the street, are the engines that propel national economies, VICTOR NWEGEDE writes.
The favourable contributions of entrepreneurs, mostly small company owners towards advancing humans and their environments around the globe have shown that Small, Micro and Medium Enterprises (SMEs) control economic growth and development nationwide to a very greater extent.
By implication, SMEs should be seen as an engine room of every economy, in considering their roles in job creation, encouraging innovation, market regeneration, increasing business competition and stimulating the thrifts.
Ignorantly, some people specifically the leaders in the Nigerian States may have wondered about the value of SMEs to the national economy, but they have to understand it as the nucleus of any economic sector.
SMEs as non-subsidiary or independent firms require a few employees, and most of them exist because they are less capital-intensive and more flexible in filling niche markets’ needs. As such, their contribution drives the economic and industrial transformation of the nation.
An inquiry uncovered that Small firms usually have fewer than 50 employees while micro-enterprises have at most 10, or in some cases 5, workers. But they represent about 90 per cent of businesses and more than 50 per cent of employment worldwide. They also contribute up to 40 per cent of national income (GDP) in emerging economies.
Today globally, SMEs are recognized as critical stimulators of economic growth. The reason is their potential to create jobs and boost production. They also generate income, reduce poverty, and contribute significantly to the employment ratio. Let’s look at the importance of SMEs to the Nigerian economy.
Small businesses and entrepreneurship are essential drivers of economic growth. Similarly, entrepreneurship is an integral activity that drives a wedge between knowledge and total factor productivity by bridging the gap between inventions and specific sections of technological knowledge by establishing new businesses.
SMEs have two features that explain why they are financial stimulators. First, they create competition, and second, they provide a vehicle for market regeneration.
Small businesses increase competition leading to less static market structure measures like concentration. They also provide a mechanism for regeneration. In a market, SMEs act as change agents. Despite the lack of systematic evidence to determine whether small businesses are more productive than larger businesses, it was discovered that small businesses contributed to the net employment rate, particularly during times of economic mistrust, while their larger peers reduced employment.
Small businesses are said to create jobs. SMEs were responsible for eight out of ten new jobs. Smaller firms have a faster rate of net job growth than larger businesses. Across all income groups in the country, small businesses provide the most employment.
Small and medium-sized businesses (SMEs) play a key role in the global economy by contributing to employment, as well as input and output. There are a few things to keep in mind here. SMEs are responsible for the majority of the formal jobs available in developing markets. That’s nearly four out of every five positions on the market. In developing countries, SMEs generate roughly 33 per cent of national income and 45 per cent of total employment at any given time.
The SMEs give a steady supply of new skills and ideas to the economy and make the marketplace more dynamic. When you consider the success of companies like Bolt, Jumia, and Gokada, which have all disrupted their respective industries, it’s evident that SMEs have a strong presence at present, thanks to technological advancements. Entrepreneurs are exploring new markets and establishing SMEs to tap into them.
One thing is certain, small and medium-sized enterprises, whether a corner barbershop or a dry cleaning shop down the street, are the engines that propel national economies. One of the issues, given the potential of SMEs to unlock Nigeria’s economic growth, is access to credit. For numerous years, the government and private organizations have prioritized addressing the problem.
It is light of the background that through the stakeholders' platform of the African Union, the African Diaspora Alliance (AfDA) Inc has established a strategic engagement and collaboration with the Diaspora networks around the world, including the United States of America, the Caribbean, Brazil, Canada, Guyana, Fiji, Trinidad, Australia, Europe and the 'Diaspora in Africa," which included those who reside, work and/or operate businesses in other countries other than their own.
AfDA is championing Pan-African initiatives across the world to congregate, exchange on and build a Pan-Africanism for the future. These initiatives include the Pan African vision of the African Union (AU) agenda 2063 and the provision for the African Diaspora as the 6th region of the AU; the increasing collaboration between the AU and the Caribbean Community (CARICOM); CARICOM's call for reparatory justice, the Black Lives Matter (BLM) movement across the world; and the UN International Decade for people of African Descent 2015-2024. To advance this, the AfDA instituted annual International Conferences where African Diaspora could congregate to brainstorm on topical affecting the African Diaspora on a global scale, beginning with its symposium held in Ghana in the year 2000.
Against the backdrop, the Governor of Ebonyi State, Chief Francis Nwifuru has to consider unlocking the potentials among Ebonyi entrepreneurs, especially those in Small Micro and Medium Enterprises in his administration as an urgent task.
It was a welcome development having passed into law the bill seeking to establish Ebonyi SME Development Agency by the 7th State House of Assembly under the Speakership of Moses Odunwa.
The passage of the bill into law came up a few days after the proclamation of Ebonyi 7th Assembly by Governor Francis Nwifuru.
The law which is deemed to have come into effect on 27th June 2023 will be cited as Ebonyi State Small and Medium Enterprises Development Agency.
Though the enactment of the law by Governor Nwifuru presses up for action, it should be recalled that the government-approved African Association of Micro, Small and Medium Enterprise (AAMSME) Council had on 10th February 2023 through a letter notified the former Ebonyi State governor, Engr David Umahi of the organisation's representative in the state.
Also recalled that on 8th December 2022, AAMSME, Coalition of Business Groups and Association of Nigeria (COBGAN) and Dar-Sento Organisation inaugurated the Governing Board of the World-African SME Knowledge Hub and Peace Building Project.
The World-African SME Knowledge Hub and Peace Building Project is the first in Africa with over 35 components. The body is a prolific centre for wealth creation through knowledge for the African development economy to the world with a mind-blowing value.
AAMSME in its letter which was signed by its National President, Ambassador Darlington Onuoha Kalu and addressed to the office of the Ebonyi State Governor (David Umahi's regime) acknowledged one Pastor Friday Ezeh as the Team Lead on African Continental Free Trade Agreement Area (AFCFTA), for having been contributing to the state, national and individual economic development.
The organisation urged Umahi to consider Pastor Ezeh as worthy to contribute to the affairs of the African SMEs in Ebonyi State Nigeria. It requested that Umahi should give Ezeh maximum support for the development of the MSMEs in the state and region. The body noted that it would reward the former Ebonyi governor, Umahi who chaired the Southeast Governors' Forum during his regime in developing the Ebonyi State and the Southeast region - African economy.
The crux of the AAMSME letter to the former Governor Umahi was to ensure Ebonyi citizens who are their members at least five persons would have been incorporated into the business trade mission to the People's Republic of China on Economic Development of the Organized Private Sector of the SMEs.
Umahi's apparent reluctance or crash meaningless sentiment to urgently address the requests of the AAMSME letter as the then Chief servant of Ebonyi had turned the state SME seats in China desolate. It is not only a damage to the great possibilities but a ruin of substantial struggle for the State SME leaders and the members to get abreast of the global council assistance in economic growth and development.
Recall that the AAMSME letter to Umahi has attached a notification letter by the Federal Ministry of Industry, Trade and Investment Abuja, Industrial Development Department which was addressed to the office of the AAMSME President.
The notification letter by the Federal Ministry of Industry, Trade and Investment Abuja was also signed by Adawale Bakare, the Director of the Industrial Development Department for the then Honourable Minister.
Another attachment to the AAMSME letter Umahi was a receipt for a memorandum of association dated 1st July 2013, considering the laws setting conditions of existence and operating procedures of non-governmental organisations and their apex organisations.
Though it is understood that governance is transitional, the strengths and weaknesses of former Governor Umahi in the office will be a great challenge to his successor, Chief Francis Nwifuru.
It is important to note that Nwifuru in his manifesto anchored on "the People's Charter of Needs - Divine Mandate Consolidation and Continuity," vowed to build human capital and a healthy environment for businesses to thrive in Ebonyi.
Nwifuru said: "I am convinced that developing human capital is the surest route to empowering citizens and adding value to our economy; and that a well-ordered society is a function of reformed minds. My administration shall commit to growing a large number of skilled and knowledgeable citizens with attitudinal formations through the establishment of the Directorate of attitudinal change and discipline, and the profiling of skilled citizens whose products and services will be needed both within and outside the State.
Other pledges by the governor were "Promotion of vocational and technical education for skills enhancement, partnership with local technologists and fabricators (artisans), strengthening of Micro, Small and Medium Scale Enterprises, paying attention to the wellbeing of the people (Stomach Infrastructure) and improvement of Ebonyi State Transport System and Services."
On ease of doing business, Nwifuru observed, "A basic condition for businesses to thrive is security. In Ebonyi State, the introduction of 24-hour lighting of the streets has greatly improved the security of business and longer hours of business operations in the State.
"I am aware that the business community is a crucial partner in the development of every society. Conscious of the need to provide a favourable business climate, my administration will establish a Business Community Forum for regular review of business activities in Ebonyi State."
He also promised to harmonize and liberalize taxation, eliminate third parties in the revenue collection mechanism, provide an enabling environment to attract local and direct foreign investments and enhancement of the business environment for job and wealth creation.
Recall that AMSME focuses on SME development, finance and as well addresses issues of multiple taxation.
Currently, AAMSME is working on a medium-term development plan vision 2021 - 2015, on economic growth competitive trade and investment, African Continental Free Trade Agreement Area (AFCFTA) on Manufacturing sector Group Southern Nigeria and AAMSME & AFCFTA African International SMEs Economic Summit 2023.
AASME is working on SME development that will catch up with potential investors to develop the SME sub-sectors. The need is to boost the economy of every nation, especially through Knowledge, innovation and creativity. Membership is entitled to become a community member of the International Council for Small Business (ICSB-USA) as ICSB proposed to United Nations on World SMEs Day on the 27th of July every year.
However, the challenges most felt when establishing and developing an SME are the financial ones. It is very difficult for the members to receive loans, for example, as SMEs constitute a financial risk for funding institutions.
Governments could assist in numerous ways, including providing collateral, creating and supporting specific loans to SMEs or grants to those that achieve certain goals, like improving productivity or hiring additional personnel. They could also favour our members in their taxing policies.
Often governments wish to encourage doing business with SMEs, but they do not do enough business with the members. Their tenders frequently demand financial requirements that are rarely realistic for SMEs, leaving the members out of the game. Barriers could be in some specific cases. Additionally, governments often delay payments, which might be tolerable to big businesses but could be disastrous for some SMEs.
The AAMSME Team Lead in Ebonyi, Pastor Friday Eze Nwaze who gave the above hints while interacting with the Nigerian Pilot in Abakaliki, has expressed confidence that the Ebonyi state government led by Governor Francis Ogbonna Nwifuru would address all these challenges having heard that the government plan to execute the SME law when enacted.
"We expect that our members will have access to an SME business clinic centre in the state, to signpost Ebonyi, the Salt of Nation to international communities," Nwaze added.
