By Babajide Komolafe
The Lagos State Government recently held the first exclusive fair for Medium Small and Micro Enterprises (MSMEs). In this interview, the Lagos State Commissioner of Commerce, Industry and Cooperatives, Rotimi Ogunleye spoke to Vanguard on the lessons from the fair, and what the efforts of the ministry to facilitate development of MSME sin the State.
What is the rationale for organising the 1st exclusive fair for MSMEs?
The rationale behind the fair was to give the MSMEs a platform to exhibit their goods because of the problems we have in the country which is the existence of mono product economy. We have come to realise that Nigerian economy has to be diversified. Because of my experience and many years of study, I know that the MSME sub-sector is a vital tool for economic transformation and development.
So, we came up with this idea that MSMEs should be given a platform to display their goods so that people could see them and by that, they could be assured of patronage.
What were the major lessons from the fair?
One thing about this event is that we really partnered with some private sector operators such as the online e-commerce operators, who gave incentives to the SMEs by listing their products on their e-mall platform. This means that, we have achieved what we set out to achieve from the fair.
The visibility of operators and their accessibility to the market matters a lot including patronage. Quite a lot of them told us during the fair about the benefits they got in terms of visibility from the people that came to the fair. This is because many of them did not know before, that one could produce good soap from carrot, that one could bathe with. They did not also know that one could recycle waste sachet water nylon into very good nylon bag that could be used as containers. They all saw those things at the fair and they were very happy.
A lot of business deals were done and that is what we set out to achieve. By this, many of our country men will be able to patronise many of locally produced goods. This will, in effect, lead to reduction of our import dependent attitude because our tilt towards foreign goods and foreign items has been the bane of this economy.
In addition to the fair, in what ways is the ministry assisting MSMEs?
I have told you about the platform provided by Konga-the e-commerce operator that listed them on its platform. This is to make it possible for any interested party to see their products and make order. From us in government, we have incentives for the operators such as the N25 billion packaged by the government to assist the SMEs. Out of this, N6.25billion will be put in charge of board of trustees in charge every year for the SMEs to access. It is three per cent interest rate and it is the cheapest you can get anywhere.
We have also spoken to a number of financial institutions for the conventional bank loans. They have their own excuses because they have the monetary policy rate at 12 percent, which is double digit. They will add their own margin which does not allow them to come below the MPR rate.
But we have also spoken with the Bank of Industry because they have 5 per cent interest rate which we have encouraged the SMEs to look out for. Incidentally, BOI was also at the seminar to display their products. Their forms were available and they attended to people at the fair. We spoke with them to assist the SMEs at the fair.
I equally know that at the level of CBN, there is a pool of fund for the SMEs. Conventional banks should look at this in conjunction with the CBN so that we give loans to the SMEs at a lower rate. We should not use the market rate for the SMEs because if we want to grow the economy and diversify it, we must develop the SME.
The fair done by the Lagos State has shown clearly that the Nigerian creative spirit is high. Our people have the creative ability to produce locally made goods. The skill could be low because of lack of fund. This could have enabled them to produce on a larger scale. Financial institutions should assist the SMEs.
I was reading a story recently that there was SME intervention fund in CBN that was grossly under-utilised. Why should that be when we have a lot of SMEs looking for funds to develop products. If we want to assist the SME, we must make sure that interest rate on their loans is not more than five per cent. That is why Lagos State has used the benchmark of three per cent interest rate for the SMEs and I believe that appropriate policy should be put in place to allow interest rates come down for the SMEs like what is done by Lagos State.
Are you suggesting that CBN should bring down the MPR?
Yes. CBN should bring down the MPR for the benefit of SME operators. Double digit lending rate is not good for these operators. If we are talking of diversification, the key lies in that sub-sector.
What are you doing to assist the SMEs to package their proposals to banks?
At the last fair, there was business clinic where agencies like NAFDAC, SON, LIRSI, FIRS and others attended to people and many operators were very happy. The fair was not only for them to display their goods but for them to get services.
This was done to further enlighten the operators on the need to package their products very well so that they could be more competitive. This will enable them to stand the test of time and standardise their production processes. It will also enable them to package their business profile very well to reflect identifiable team of operators and not “I and my wife” business.
This is necessary so that they could approach financial institutions for loans and get good response. BoI actually mentored quite a number of these operators at the fair and many of them confessed that they received good service from the bank.
This mentoring issue has been part of the negative factors that has been used by many people to withdraw attention from SME and to score them low. We were able to address that problem at the fair and many operators said they left the exhibition as better operators and that they are looking forward to another one.