As part of renewed efforts to diversify the economy as pursued by the present government, experts in business developments and operators are now giving ideas on how best to create jobs.
Whereas the government seems carried away by what can be quickly gained from boosting mining, agriculture and manufacturing, business development experts say the fastest way to go remains empowering the youthful population with facilities to start their Macro, Small and Medium Enterprises (MSMEs).
Mr. Emeka Igbokwe is a Keke NAPEP operator in Lagos. In an interview, he said “It is the responsibility of government to provide employment and security for the people, among other things”.
However, since government cannot provide full employment for the people, what it should do is to provide the enabling environment for non-state actors to bridge the gap.
Emeka, a 2009 graduate of Government and Public Administration argued that “These non-state actors include small and medium scale enterprises, among others. Small and medium scale enterprises are the ‘engine of growth and catalyst for socio-economic transformation of any country’, especially in a developing country like Nigeria”.
In the position of Mr. Deolu Adebayo, an Economist, he described the SMEs sector as “a veritable vehicle for the achievement of national macroeconomic objectives in terms of employment generation at low investment cost and enhancement of apprenticeship training”.
According to him, running small and medium scale enterprises in Nigeria is a most difficult thing because of the harsh economic environment. It is as a result of the harsh economic environment that many Small and Medium Scale Enterprises collapse or are operating on the margins. The increasing demand for consumer products has created a large market for small and medium enterprises in the country.
However, Mrs. Ann Salami, hair stylist, living in FESTAC Town, Lagos was of the view that “Small and Medium Enterprises have contributed immensely to the growth of Nigerian economy”, stressing that that the sector also contributed to the national objective of creating employment opportunities, training entrepreneurs, and generating income and providing a source of livelihoods for the majority of low-income households in the country.
To her, a key challenge facing small and medium enterprises operators is lack of finance. Lack of capital has been identified as the most serious problems of establishing and running small and medium enterprise as other problems can be solved with adequate capital.
Explaining more on the problems of the sector in an economy in recession, Dr. Ken Igboanugo, financial expert and capital market analyst, he said “The federal government through the CBN introduced Microfinance Policy in 2005”.
“The policy provided the legal and regulatory frame work for microfinance banking in Nigeria so as to create sustainable and credible micro finance banks that is capable of mobilizing and channelling funds to the MSME sub – sector. However, this policy led to the introduction of microfinance banks.
“Today, the microfinance banks provide partial financing medium to address the inadequate access to finance confronting the Micro and Small Enterprises in Nigeria. The Small and Medium Enterprise Equity Investment Scheme (SMEEIS) This scheme is a voluntary initiative of the of the bankers’ Committee approved at its 246th meeting held in 1999 but started operating in 2001.
“The initiative was in response to the Federal Government’s concerns and policy measures for the promotion of Macro, Small and Medium Enterprises (MSMEs) as a vehicle for rapid industrialization, sustainable economic development, poverty alleviation and employment generation.
“The scheme requires all banks in Nigeria to set aside 10 % of their profit After Tax (PAT) for equity investment and promotion of small and medium enterprises. The 10% of the profit After Tax (PAT) to be set aside annually is to be invested in small and medium enterprises as the banking industry’s contribution to the Federal government’s efforts towards stimulating economic growth, developing local technology and generating employment.
Igboanugo added further that the funding, to be provided under the scheme shall be in the form of equity investment in eligible enterprises and or loans at a single digit interest rate in order to reduce the burden of interest and other financial charges under normal bank lending, as well as provide financial, advisory, technical and managerial support for the banking industry. However, the scheme did not achieve the desired impact as most MSMEs were not interested in the equity participation for fear of losing control of their enterprises.
Ibrahim Musa, a retired banker who corroborated Igboanugo’s submission added that “Within the period, most of the Startups lacked the 60% equity contribution which resulted in delay disbursement as the borrowers were deemed to be uncooperative”.
“In addition to this challenge, most MSMEs lack proper bankable business plan, marketing strategy, thorough accounting systems and do not run their transactions through the banking system. Other challenges include: Management problems which include lack of manpower and training plus inadequate infrastructure. Socio-cultural problems, unstable policy environment, multiple taxation.
Generally, respondents on this matter agree that among the best bet to shore up jobs delivery remains empowerment of youths who are more in population, but are now confused on how best to navigate an economy that seems too hostile to many of them.