The Federal Ministry of Commerce and IndustryÂ in December 2009Â approved the handing over of 22 Industrial Development Centres (IDCs) across the country to SMEDAN. What impactÂ do you think this would haveÂ on the economy?
The benefits of the hand-over are far-reaching. The agency will re-position these IDCs to serve as Industrial Parks and Enterprise Clusters. The IDCs will also serve as centres for vocational and entrepreneurial trainings as well as business support centres and state offices of SMEDAN. In that capacity, the services of the agency will move closer to the grassroots in order to foster economic growth and development. We are expecting that this will also stimulate an increase in the number of entrepreneurs and employers of labour in Nigeria â€™s economy.
The number of small businesses will increase and there will be employment generation to enhance rapid economic growth, such thatÂ the non-oil export will increase its productivity.Â Besides,Â the Gross Domestic Product (GDP) growth rate will increase.
SMEDAN intends to reach out to SMEs in rural areas and also partner with cluster groups to help them access funds from the Bank of Industry (BOI). What measures have you put in place to achieve this?
Not all rural entrepreneurs may qualify for Bank of Industry (BOI) loans, but they can qualify for micro-finance bank loans and other finance windows with less stringent requirements.
FirstÂ the agency, through the Business Information Centres located in some rural communities and Headquarters of Local Government Areas, build the business capacity of theÂ rural entrepreneurs. We are developing key rural products like sheabutter for export.
The agency has selected shea-butter as one of the target products for development and promotion in the international market. As an outcome of the sensitisation and needs assessment exercise conducted by SMEDAN at a shea-butter cluster located in Kwara State in 2008 for about 50 rural women, we intend to hold a National Sheabutter Summit this year to bring all relevant stakeholders together to discuss their role in the development of this product.
Earlier in 2007, SMEDAN entered into collaboration with the International Fund for Agricultural Development (IFAD), aimed at carrying out comprehensive appraisal of its proposed Rural Micro Enterprises Development Programme (RUMEDEP) , including an assessment of the institutional capacity of SMEDAN as the lead national implementing agency for RUMEDEP. The programme with a total budget portfolio of $57.90 million is being reviewed by IFAD and the Nigerian government.
What is the agency doing in the area of start-ups, especially assisting entrepreneurs who have good business concepts with access to capital?
SMEDAN believes that the road to a successful, profitable and sustainable business starts with good business idea or concept. This is the key to wealth creation. When you talk of â€œgood business idea or conceptâ€, who evaluates the idea or concept? Who certifies that the idea is good? What makes a business idea good? There are many criteria for judging the â€œgoodnessâ€ of a business idea or concept. It must meet the needs of the target market.
It must be commercially viable. It must be profitable over a long period. That means the business must be sustainable. The idea must be bankable. It must have possibility of high return on investment. The business must be able to break even within a very short time.
So a good business plan must pass through the â€œlaboratoryâ€ of a competent enterprise development professional before it can be ascertained to be good. This is one of the functions of SMEDAN. We also guide the entrepreneur in preparing his own business plan which is the road map to the success of the business. At SMEDAN, we believe that access to working capital comes after the entrepreneur has acquired the requisite business management capacity and, where necessary, the relevant vocational skill.
Without these fundamentals, any money given to the person will ultimately go down the drain. Now to your question,Â we have a number of approaches to access business finance. First, we try to educate the entrepreneur to â€œTHINK BIG but START SMALLâ€. Of course, this is our slogan. Start with what you have before you begin to talk of loans. You can raise money from personal savings, family members, relatives and friends. Secondly, there are opportunities for grants.
To this end, we are collaborating with Eco-bank, Vitamalt, Inspire Media Production Company and Growing Business Foundation to sponsor The Entrepreneur Television Series where entrepreneurs with brilliant business ideas get some grants to finance their business.
The television series began in 2008 and about 46 young entrepreneurs have benefited from the grants from Ecobank and Vitamalt. We are also linking entrepreneurs with development finance institutions like Micro-finance Banks, BOI and so on. The National Economic Reconstruction Fund (NERFUND) is making a come-back to serve as additional finance window.
The agency, during the tenure of the former Director-General, said it would work with Micro-Finance Banks Association of NigeriaÂ to provide access to finance for small businesses. How far have you gone with that initiative?
The agency at that time met with representatives of over 50 micro-finance banks to discuss strategies for providing cheap and unencumbered working capital for micro-entrepreneurs.
We are building on the foundation of that meeting. SMEDAN has signed Memorandum of Understanding (MOU) with some MFBs and more MOUs are readyÂ for signing, as the MFBs are coming up voluntarily for that exercise. At the end of the day, we are going to work with those MFBs that signed MOU with SMEDAN. The agency is canvassing for cheap, long term credits for entrepreneurs. Very soon, Nigerians will begin to reap the benefits of these efforts.
What is SMEDAN doing in the area of educating micro-finance clients on acquiring entrepreneurial and vocational skills?
The agency has been doing a lot of sensitisation and public enlightenment campaign in this regard. SMEDAN appreciates the roles played by private and public sector organisations toward the realisation of the nationâ€™s collective economic goals and aspirations. Part of the agreement we are signing with micro-finance banks ensures that beneficiaries of micro-credits from MFBs first receive entrepreneurial and vocational training so that the money does not go down the drain.
Are Nigerians in the diaspora responding to your call to take advantage of their exposure and experience to start micro, small and medium businesses in the country?
We are making significant progress, especially with Nigerians in Switzerland who are voluntarily returning annually to re-settle in Nigeria . This is made possible through the cooperation with the Swiss Government.
The Agency in collaboration with the Swiss Government â€“ backed International Office for Migrants (IOM) commenced training of Nigerian returnees from that country in entrepreneurial and vocational training. The Agency also provides business information, counseling , mentoring and advisory services to the Nigerian returnees.
The Swiss Government, through the IOM, provides the returnee with about USD7000 to finance their business in Nigeria . Since the programme commenced in 2007, about 100 Nigerian returnees have benefited from the rehabilitation programme. Besides, as a result of the global economic melt-down, many Nigerians in the Diaspora have been relocating to Nigeria to establish one business or the other. They have found that there is no place like home.