Industrial clusters as catalyst for growth of SMEs

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The cost of production is one of the factors inhibiting the growth of Small and Medium Scale Enterprises (SMEs) in the country.

The small scale entrepreneurs are forced to provide virtually all the facilities at their industrial sites like roads, electricity, water and sometimes security.

Many who could have engaged in small or medium scale enterprises were deterred   because of the huge capital outlay required to provide the infrastructure before the commencement of their businesses.

Governments worldwide  know about these constraints on the growth of SMEs and have always encouraged the development of industrial clusters.

Cluster is an assemblage of SMEs in a given locality, sharing common facilities like electricity, water and access roads.

Prof. Peter Onwualu, the Director-General, Raw Materials Research and Development Council (RMRDC), says that the development of clusters will “ assist in reducing the rate of unemployment in Nigeria as some of the SMEs employ up to 200 workers”.

Onwualu who is also Chairman, Pan African Competitiveness Forum (PACF), also says that clusters could help in the utilisation of Africa’s vast natural resources.

“Cluster is like a cooperative set to solve the challenges of Small and Medium Enterprises (SMEs) across Africa’’

According to the director-general, PACF will establish 1,000 knowledge-based clusters in Africa in five years.

Onwualu says that the objective of the PACF is to enhance Africa’s competitiveness through innovation by promoting clusters.

Onwualu stresses the need to strengthen and restructure policies in favour of rapid development of SMEs so that they can serve as the hub for industrial transformation.

“In Nigeria, SMEs are struggling to survive under intense competitive environments both domestic and international.

“There is an urgent need to provide the required enabling environment so that they can adequately play the roles required of them in the economic transformation.

“The inability to apply technology made most of our sectors not to be productive as they should be. Transformation Agenda is aimed at developing key sectors,’’ Onwualu says.

He says the major strategy adopted by PACF is to promote a continent-wide sharing of experiences and best practices in developing the means of infusing innovations and competitiveness in SMEs clusters.

Alhaji Mohammed Umar, the Director-General, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), says there is the need for synergy among SMEs in Africa.

He explains that it was through such collaboration that SMEs can develop and achieve the desired results.

“SMEDAN is partnering with 11 other government agencies and is still open to more collaboration.’’

He notes that SMEDAN, as an agency of government saddled with the responsibility of developing Micro Small and Medium Enterprises (MSMEs) has adopted clustering as one of its strategies for the quick development of MSMEs.

Umar says the agency has partnered with the United Nations Industrial Development Organisation (UNIDO), to adopt the Sub-Contracting and Partnership Exchange (SPX).

SPX is an investment facilitating tool, which serves as a repository of technical information and match-making centre for industrial sub-contracting and partnership, between buyers and suppliers, to strengthen the MSMEs.

Other interventions of SMEDAN built around the cluster strategy to include specialised training programmes, accessing finance and advocacy.

Others are provision of workspace, through the agency’s Industrial Development Centres (IDCs) and borrowing from international models through partnerships with OSTRIM of Turkey.

Umar says “OSTRIM is an existing cluster established by cooperatives in Turkey, with 5,000 enterprises and 50,000 employees within a five million square metres area.

“SMEDAN plans to partner OSTRIM to replicate this model in Nigeria.

He also stresses the need to engage indigenous technology in running SMEs in Africa.

Dr. Ousmane Dore, the Resident Representative, Nigeria Field Office, African Development Bank says the cluster concept is to tackle common problems “via a productive synergy.’’

According to him, SMEs are faced with common challenges such as power, transport, and opportunities like proximity to a sea port and free trade zones.

The resident representative says the essence of clusters is to maximise resource use in alleviating all bottlenecks.

Meanwhile, Dr Olusegun Aganga, the  Minister of Trade and Investment has restated government’s commitment to  assist the private sector through favourable fiscal  policies.

He hopes that the support will engender large-scale private driven industrial investments in the real sector of the economy.

“Government cannot do it alone and therefore, sees the private sector as a crucial partner in its desire to improve the living standards of its citizens through the successful implementation of Vision 20:2020.

“As long as the government controls major finances, it must still perform a pivotal role in stimulating investment processes in terms of provision of enabling environment, infrastructure and security in a sustainable manner.”

Aganga says that government will leverage on the value chain approach and link the sectors to industrial clusters of Small Growing Businesses (SGBs) and SMEs.

He lists the sectors as agriculture, accounting for more than 40 per cent of the GDP and 60 per cent of employment, manufacturing, building and construction.

Stakeholders, however, want government to ensure that the cluster initiative go beyond policies and conferences.

They say like India, Iran, Indonesia, Malaysia, Singapore among others, Nigeria cannot be categorised an emerging market in global economy if its SMEs sector is not vibrant. (NANFeatures)

By Chijioke Okoronkwo, News Agency of Nigeria (NAN)

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