SMEs Development Crucial To Nigeria’s Economic Recovery – Analysts

In order to turn the Nigerian economy around and return it back on the path of sustainable growth, the Federal Government of Nigeria should adopt a robust approach to the development of Small and Medium Scale Enterprises (SMEs).

Specifically, the government needs to accelerate economic diversification, reactivate and re-energize the Nigerian Stock Exchange’s Alternative Securities Market (ASeM), streamline taxation, promote ‘Made in Nigeria’, and improve lending to SMEs.
This view was expressed by two analysts, Brainerd Odiete and Obinna Igwebuike, both partners at Sawubona Advisory Services Limited, a Lagos-based research, advisory and venture management company, in a recent paper.
“As we write…oil price is around $30 a barrel, from the heights of over $110 less than two years ago. The dynamics of the oil economy have changed and countries like Nigeria are left holding the bag. Expanding the government’s resource base is no longer a romantic idea prescribed from a position of strong petrodollars, but is a reality that circumstance has pushed the country into,” said the analysts in the paper titled “SMEs development: 5 things the Buhari government needs to do”.
“With SMEs, many of whom generally operate below optimal capacity, contributing close to 50 percent of Nigeria’s productivity, we can conclude that a significant boost in their productivity will have material positive impact on GDP growth,” they said.
Quoting the Survey Report on MSMEs by the Small and Medium Scale Enterprises Development Agency of Nigeria (SMEDAN) and the National Bureau of Statistics (NBS), the analysts noted that Nigeria’s 37 million MSMEs employed 59,741,211 people, representing 84 percent of Nigeria’s total labour force, and that in terms of impact on the Gross Domestic Product (GDP), MSMEs contributed about 48.47 percent to the country’s GDP in the period under review.
While admitting that Nigeria’s economic challenges cannot be overturned overnight, they called on government to immediately unlock the vast potentials in the solid minerals, agriculture, ICT and financial services sectors, which they believe can significantly catalyze the rebound of the economy.
According to the analysts, given that SMEs need access to long-term capital from the capital market at relatively low cost, allowing them to grow and institutionalize, there is need to mainstream the ASeM platform as a viable alternative for business funding.
There is also an urgent need, they said, to address multiple taxation and multiple agencies, streamline tax administration and create tax incentives for SMEs and start-ups in order to encourage them and improve their chances of long-term survival, adding that in order to promote domestic manufacturing and industrialization, local manufacturers also need to be protected from threats from low quality foreign products.
“Buying Nigerian-made products will not only help SMEs thrive but also enable them employ more people, reduce FOREX exposures expenses and stimulate the growth of our local economy,” they said.
Source:http://footprint2africa.com