By Yinka Kolawole, with agency report
The Micro, Small and Medium Enterprises (MSMEs) sector represents one of the most important sectors of our economy. Statistics show that the sector represents 96 percent of the businesses in Nigeria and contributes 75 percent of the national employment. Of the 17.2 million MSMEs in Nigeria, over 17 million are micro-enterprises.
Thus, growth in this sector is directly correlated with growth in the economy as a whole and in the level of employment throughout the country.
Most countries all over the world have used the MSMEs platform to combat unemployment. The sector has been known, all over the world, to be engines of economic growth, industrialisation and contributors to employment generation, wealth creation, poverty alleviation and food security.
In fact, the 2010 National MSMEs Collaborative Survey puts the number of MSMEs in Nigeria at 17,284671 with a total employment of 32,414,884 and contributing 46.54 percent to the GDP in nominal terms.
A a nurtured and well structured MSMEs sub-sector can contribute significantly to employment generation, wealth creation, poverty reduction and sustainable economic growth and development in Nigeria.
However, a number of challenges are inhibiting the potentials of MSMEs in Nigeria. Prominent among these challenges are: Very low access to affordable finance; Poor access to Business Development Service (BDS); and Inadequate infrastructure/high cost of doing business.
A survey of MSMEs conducted by National Bureau of Statistics (NBS) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) reported that 73.24 percent of the topmost priority of assistance needed by MSMEs’ operators is finance.
It also noted that only 4.2 percent of 17.2 million MSMEs have been able to access loans or overdrafts from financial institutions while new entrants or start-ups find it practically impossible to access funds from banks.
The National Enterprise Development Programme (NEDEP) was initiated to tackle some of the aforementioned challenges. The programme is being piloted by SMEDAN with other public and private partners such as Bank of Industry (BOI) and the Industrial Training Fund (ITF).
It is specifically aimed at generating an estimated 5 million jobs by the end of 2015 by focusing on skills acquisition, entrepreneurship training/business development service (BDS) and access to finance.
Skill acquisition & training
The Industrial Training Fund (ITF) provides direct training, core crafts skills acquisition, research and consultancy service. ITF also provides human resource development information and training technology service to industry and commerce to enhance their manpower capacity and in-house training delivery effort.
SMEDAN assists businesses by providing business services including model business planning skills training, organization of MSMEs into clusters and co-operatives to enhance their productivity and have easier access to factors of production, arrangement/facilitation of trade and technological exposition, technology Assessment, and legal and taxation advisory services.
Bank of Industry provides financial facilities to: Small, medium and large enterprises, excluding cottage industries; New or existing companies, seeking expansion, mordenisation or diversification; Credit worthy promoters who will be required to prove their commitment to the project by contributing at least 25 percent of the project cost excluding land;
Borrowers whose management capability, financial situation (including availability of collateral and guarantee), character and reputation are incontrovertible; Clients with demonstrable ability to meet loan repayments; Borrowers with no record of unpaid loans to erstwhile development finance institutions and other banks.
At the launching of the programme, former Minister of Trade and Investment, Mr. Olusegun Aganga, said that for the country to achieve her National Vision 20:2020, all efforts must be put in place to grow the MSMEs sector.
“In order to properly position and develop this all-important MSMEs sub- sector in Nigeria in a structured and efficient manner to generate the much needed employment for the teeming youth population of this country, the Federal Ministry of Trade and Investment evolved an innovative and inclusive national enterprise development and wealth creation programme that will facilitate the creation of five (5) million jobs between 2013 and 2015,” he stated.
The target areas by the programme are: Agro and Agro-allied enterprises; Housing related enterprises; Manufacturing enterprises; Industrial skills; Artisanal Miners; Sports and Entertainment enterprises; and Oil & Gas local content enterprises.
The total number of jobs generated by the programme as at end of December, 2013 was 268,960. Lagos State has the highest, with 25,697 jobs, followed by Ekiti State and Ogun State with 25,110 and 24,475 jobs respectively. Others are: Adamawa 20,905; Anambra 21,672; Bayelsa 22,330; Benue 20,506; Gombe 22,335; Kaduna 21,500; Kano 20,120; Katsina 21,560; and Osun 22,750.