With Nigeria’s unemployment rate jumping from 13.3 per cent in the 2nd quarter of 2016 to 13.9 per cent in the 3rd quarter of the same year, there are concerns that the nation must do all it can to create jobs. SMEDAN is faced with the task of facilitating the growth of micro, small and medium enterprises to end unemployment and poverty in challenging times. PEMBI DAVID-STEPHEN and AGBO-PAUL AUGUSTINE report.

Small and Medium Businesses play important roles in the economy of nations the world over. The United States Bureau of Censors 2010, revealed that 50 percent of private non-agricultural GDP had been contributed by SMEs during the last decade and were also responsible for 98 percent of the total share of exports.

In Nigeria, there are over 17 million of such small businesses that generate employment in various sectors of the economy. The problems however, are that they: operate an informal structure, lack skill and experience to grow their businesses from one level to another, maintain no financial record and as such can’t quantify the value of their businesses or the actual value they add to the economy and have no bank accounts and so the culture of savings and financial management is not imbibed.

It is in recognition of this fact that the Nigerian government proposed a bill seeking to establish an agency that would facilitate the development of small and medium businesses. In 2003, the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) bill was signed into law by the administration of Chief Olusegun Obasanjo.

The Act seeks to establish an agency that will facilitate the growth and development of small and medium businesses in the country. The primary objective is to promote the growth and development of Small and Medium Enterprises so that remarkable improvement could be achieved in their activities and that will lift them out of poverty and lead them to financial well-being.

SMEDAN, therefore, began the challenging journey of formalising this large and diversified sector into an articulated economic hub for the benefit of its stakeholders.

Micro, Small and Medium Enterprises (MSME) is a broad spectrum of economic operators that consist of Artisans, Craftsmen, Weavers, Traders, Carpenters, Street Hawkers, Vendors down to Shops and Supermarket retailers, Bakers, Factory owners and so on.

Meanwhile, MSMEs are recognised based on accepted criteria as encapsulated in the National Policy Framework for MSMEs and each group was defined using Assets and Employment parameters thus:-micro with less than 10 employees, less than N10 million asset; small with between 10 and 49 employees and less than N100 million asset; and medium employing between 50 and 199 and asset of between N100 and N1 billion.

This way, it is easier to group and rank different businesses within the sector for training, financing, counseling and other business development support needs. It will also facilitate seamless transition of businesses from one group to another.

In the year 2010, a survey of Micro, Small and Medium Businesses was conducted by SMEDAN in collaboration with the National Bureau of Statistics (NBS) and the results were startling. Out of the 17,284,671 MSMEs in the country, about 17,261,753 (99.87%) were Micro enterprises while 21,264 (0.12%) were Small and only 1,654 (0.01%) were Medium. In a nutshell, the entire MSME sector was at Micro level; informal and under developed.

The challenges faced by the sector were included among others, lack of basic business skills to develop their businesses; lack of standardisation of products; lack of access to available market; high operating cost mainly due to poor power supply which shifts the burden to alternative power sources leading to high production cost and low profit margin and lack of affordable finance.

Responding to the challenges, SMEDAN launched the National Enterprise Development Program (NEDEP) to arrest the problems militating against the development of SMEs in the economy.

According to a document obtained by LEADERSHIP, it is strategically structured to deliver the cardinal objective of creating at least one million jobs every year within the MSME sector. SMEDAN came up with nine priority agenda to be anchored by the trio of SMEDAN, Bank of Industry (BOI) and Industrial Training Fund (ITF).

The trio aimed to achieve an Institutional Frame work, developing a revised National Policy on MSME, implementation of a robust delivery and monitoring structure, increasing access to affordable finance, increasing access to market and Promoting Youth Inclusion among others.

Many agreed that the inclusion of youth into the NEDEP agenda was the most revolutionary notion that would not only broaden the horizons of SME businesses in the country but would equally address the challenges of unemployment and youth restiveness.

Seventy five percent of the population of Nigeria fall within the youth bracket, the nation can’t progress without taking into cognisance, the role its youth would play in shaping the destiny of the country.

The engagement of youth in NEDEP was in two categories: the Tertiary Institutions Entrepreneurship Development Program (TINEDEP) meant to develop entrepreneurship talent at the undergraduate level and entrench the program framework in all universities across the country and the National Students’ Entrepreneurship Program (NSEP) anchored by SMEDAN in collaboration with an NGO called The Student Advancement of Global Entrepreneurship (SAGE).

It is a global enterprise development program that encourages young students to form and run social enterprise businesses. It teaches students how to create wealth, help others and their communities.

The third silent arm of the youth engagement is the Youth Corps Entrepreneurship Program which targets Youth Corp Members at camps. It is run by NYSC secretariat in collaboration with the Bank of Industry which provides seed capital of up to N2million to graduating entrepreneurs.

Top on the agenda of the new management team of SMEDAN, led by Dr Dikko Umar Radda, was the need to review the Act establishing the agency to position it properly for the discharge of its mandate. A team was drawn up to review the act and make necessary amendments. Sources at the National Assembly indicated that, the bill has scaled through second reading, public hearing had been concluded on it and it is awaiting passage by the National Assembly for the President to assent to it.

The NEDEP program, which started earlier on, recorded limited success due to enormity of the tasks involved and the diversity of issues in it. To realign the program for proper implementation, the minister of Trade, Industry and Investment, Mr. Okechukwu Enelamah, ordered the widening of the stakeholders to include all agencies under the ministry so that they will be able to provide a one stop shop model of dealing with the issues involved.

SMEDAN convened the first all stake holders meeting in Abuja. In attendance were: Bank of Industry, Corporate Affairs Commission, Nigerian Export Promotion Council, National Automotive Design and Development Council, Nigerian Investment Promotion Council, Standard Organization of Nigeria, Industrial Training Fund, a representative of the Federal Ministry of Industries, Trade and Investment and the host, SMEDAN.

The aim was to make all the agencies to put heads together to provide common solutions to problems affecting the SMEs in the business environment. At the end of the deliberations, a technical committee was set up and charged with the responsibility of designing a framework that will guide the agencies on how to deliver the mandate of NEDEP.

In order to corroborate the effort of the agencies and the ministry in general, SMEDAN is coordinating the launch of Business Clinics across the country. Such programme has been launched in Aba, Abia State and Ilorin, Kwara State.

LEADERSHIP Friday learnt that the clinic is to serve as a one stop shop for advisory services to MSMEs. Issues of registration, product standardisation, business development plans, access to finance and financial management could be addressed by staff of different agencies pooled together.

Access To Market And Made-in- Nigeria Products

The penchant for foreign goods has impacted negatively on Nigeria’s economy with local industries going into extinction, leaving a large cache of articulated factories. The closure of local industries has created unwarranted levels of unemployment across the nation.

To reverse the trend, the federal government, through the made-in-Nigeria products show, commenced the production of essential products consumed by the local markets.  It has promoted SME products through trade shows. One example in focus is the Made in Aba Trade show organised in collaboration with Senator Enyinnaya Abaribe of Abia South Senatorial District.

This annual event has culminated into trade deals between the Aba Shoe Manufacturers and the Nigerian Army for the production of foot wears worth hundreds of millions of naira. It is working assiduously to promote information exchange on agricultural commodities and other SME products nationwide. MSMEs would fill gaps in the supply chains of the corporate giants for the benefit of all.

While made in Nigeria is necessary panacea to the lingering unemployment problems in Nigeria, access to finance has stunted growth in the MSME sector. The 2010 Survey revealed that funding in the sub sector (Micro enterprises) was mainly from personal savings as commercial lending rates from banks were as high as 20 – 30 percent for MSMEs.

The survey indicated that less than one percent of SMEs had accessed bank finance in the last three years. The reasons are not far-fetched; those enterprises are not registered to give them legal status that can borrow for commercial undertakings, they can’t absorb high cost of borrowing from the banks and because of the way they operate, recovery is a very daunting task. Additionally, many of the entrepreneurs reside in rural areas where banking services are not available.

A relief has come the way of MSMEs in Nigeria with the commissioning of the Development Bank of Nigeria (DBN). The bank is financed by the trio of the World Bank, Federal Government of Nigeria and The African Development Bank. With the seed capital of US$1.3billion, DBN would certainly fill-in the funding gaps in the MSME sector. It would run a wholesale window, lending directly to Micro Finance Banks who will in turn lend to MSMEs. This way, most of the problems associated with access to finance in terms of rates, conditions and outreach would be addressed.

Industrial Development Centres

Industrial Development Centres (IDCs) are workshops created by the federal government to train and develop middle level manpower in woodwork and metalwork for our industries. This is government’s strategy to complement technical manpower deficiency in the industrial axis of the economy.

It started in the 70s and run through to the 90s. All in all, there are a total of 23 such IDCs spread across the country. Some of them have been operating epileptically while others have become moribund. A more alarming problem is that of encroachment. Most of the lands allocated to such centres have been encroached on over time due to lack of perimeter fencing occasioned by poor funding, while in some cases equipment have been vandalised.

In 2012, the Federal Ministry of Industries, Trade and Investment handed over those IDCs to SMEDAN. Recently, SMEDAN undertook tour of those IDCs in Kano, Zaria, Katsina, Aba, Bauchi, Ilorin, Lagos, Oshogbo, Owerri, Idu (Abuja) and Port Harcourt and studied the level of encroachment and dilapidation in the centres.

Have those IDCs lost their meaning  in our drive towards economic development? Responding, the DG SMEDAN, Dr Dikko Umar Radda said: “No, but their functions will have to change in tune with our transformations. I want us to know that we are not looking at Nigeria in isolation. We are looking at it from the global context.”

“Also, SMEDAN has secured grant from the African Development Bank (AfDB) to undertake a study of the IDCs and come up with a blue print on how to convert them to parks.

“Our products compete with imported ones that are products of high tech industrial equipment. The finishing and the quality are superior and superb. More so, economic diversification has transferred ownership of many government owned corporations to private individuals and institutions.

“The need to supply manpower to those industries may still be relevant but not in the manner the IDCs were designed. On the other hand, consider the hundreds of thousands of artisans, craftsmen and women, manufacturers and other menial job handlers who squat in many improper places to carry out their businesses. They provide jobs, pay tax and generate wealth and yet have no proper workplace.

“This is what informed the decision of SMEDAN to convert these IDCs to cluster parks. A cluster park is where several groups of similar vocations are assembled together under one roof to run their businesses. The advantages are that it makes them easily accessible by the customers, they can come together to form co-operative societies and benefit from financing and other incentives, it speeds up specialisation and would enable government to address their infrastructural needs such as electricity, water, road, etc. They can equally enhance security around the parks and most importantly reduce the level of environmental pollution and improve hygiene in the neighborhood,” Radda said.