By Elizabeth Chukwuma
Tony Elumelu, Foundation, popular ,TEF, a Philanthropic Organisation, founded by Tony Elumelu, Group Chairman, United Bank For Africa, UBA, plc, a Pan African Bank, appears to have set the pace for the Federal government to follow in Funding Small and Medium Scale Enterprises, SMEs.
The UBA Group Chairman, may have been encouraged to provide Funds to support the SMEs because of what he may have seen as their high share of economic activities in the developed economies, providing employment and bringing the informal business activity into the formal economy and achieving results. The current estimates had put the SMEs funding gap across Africa at $80 billion.
He had committed $100 million into the Foundation, for a ten year period based on a research that was said to have been carried out with Lion Heads Global Partners to look into the finding solutions to the Funding gap. There had been reports from the banks, showing that the SMEs had stagnated over the years in the country. Take for instance the credit that was said to have been allocated to the SMEs in 2011. It was said to have fallen to 1 % from the peak 9% in 2002. The problem of the SMEs in the country, according to a source, may have been made worse as the rate of their access to finances which is their number one barrier to growth dropped.
Between 2010 and now, 9, 631 Entrepreneurs from 54 African countries including Nigeria were said to have benefited from the Foundation Funding and were actually making appreciable impact in their respective economies. Following the ten years impact of the Entrepreneurship propgramme, the Foundation Board of Directors, according to insider sources were said to have concluded arrangement to empower more African Entrepreneurs
. The success achieved by the Foundation described as a flagship may have informed why Muhammadu Buhari administration had intensified the government Financial support of the SMEs seen as the egine of the economy. The Wuhan Town in Hebei Province of the Asian country of China, may have provided an opportunity for the government to rekindle its efforts in in further providing soft loans to the SMEs.
Going by the Corporate Affairs Commission, CAC, records, there are currently over 13,000 SMEs, in the country, with a yearly turnover of between $32,000 and $3.2 million. Recall that the UBA group Chairman, had said that ‘’the key to solving the funding gap of SMEs across Africa is only to understand its key drivers and then, implement the targeted solutions for this discrete and active market’’.
Given that the country’s economy had suffered major disruptions due to a four months lockdown, the LCCI, in its recent survey had reported that over 50% of the businesses in the state, were truly under the adverse impact of the pandemic.
The Magazine findings shows that as a result of the lockdown, some of the existing SMEs including startups, were said to be losing between N500,000.00 and N2 million daily which had affected their operation. The modest estimation by the Chamber of the amount that had been lost by the Manufacturing sector and the SMEs during the lock down of the economy was said to have been put at about n2.7 billion. This, according to Muda Yusuf, Director General of the Chamber, translates to trillions of naira losses for thousands of Manufacturers and the SMEs operating in Lagos, the nation’s Commercial nerve center.
As a prelude to the revival of the economy the government had launched the Economic Sustainability, Plan, ESP, that would make the SMEs, lead the charge for the country’s economic growth and development in post-COVID 19.
Appearing at the virtual edition of the LCCI, Presidential policy Dialogue, last Friday, Vice President Yemi Osinbajo, disclosed that the government had set aside N2.3 billion ‘’to give fillip to the various sectors of the economy because of the disruptions caused by the COVID 19 in the last four months’’ . He noted that the financia l package may not have been what the government could have liked to dispense to the SMEs both for the existing Fiscal and Monetary Policies which was a major constraint.
he had disclosed of government’s plan to support the SMEs across the country. As part of the palliatives that the government had lined up was the E-Registration SMEs and their products at 80 percent discounted rate over a period of six months. Also included in the palliative measures was a Zero tariff for the first 200 SMEs to register on the E-platform. This is in addition to a waiver on administrative charges for overdue late renewal of expired licenses of the SMEs products for a period of 90 days.
The Vice President may have gladdened the heart of the SME operators when he disclosed that the government would continue ‘’to adopt and implement practical measures to ensure that the projected growth in the country’s SMEs was not seriously affected by the government policies or the pandemic. He had alluded to the fact that the government was not only interested in giving succor and assistance to the existing SMEs but also ensuring that ‘’there is a practical and active fillip to new SMEs.
Osinbajo, who could not hide his feelings had used the opportunity of the virtual policy dialogue to encourage the SME Entrepreneurs, ‘’to be proactive in leading the charge against economic recession and poverty in the country’’. He noted that the government is not under any illusion that it could bring the country’s economy which had been disrupted by COVID 19 out of the woods alone.
Many believe that with the ESP, which is now being implemented by the Buhari administration, the SMEs , have the opportunity in the short term to invest in agriculture, housing construction, infrastructural development , renewable energy and digital technology development, mining , financial inclusion, health care and pharmaceuticals which are on the priority list of the government. Appealing to the SMEs to take the bull by the horn, he had said that ‘’it is the only way to make the government policy a reality’’.
The importance attached to the SMEs, may have informed why the government had negotiated a $268 million Fund with the Akiwumi Adesina, led African Development Bank, ADB, to be disbursed, as part of efforts to diversify the economy from 100 percent dependence on earnings from Crude oil exports.
The first tranche of the $248 million, it was gathered would be dispensed by the Central Bank of Nigeria, CBN, as soft loans to the SMEs in Agricultural businesses, while the remaining $20 million would used to provide funding support to young innovators in technology.
Niyi Adebayo, a former governor of Ekiti state and now minister of Industry , Trade and Investment had told those that cares to listen that the current focus of the Buhari administration in the Manufacturing sector is on prioritising local production especially in the importation of machineries that utilise local raw materials in the production of goods.
This is where the SMEs may have to step up their local production efforts in order to compete with the Foreign SMEs to produce quality goods. Most of the SMEs that were said to have benefited from the Tony Elumelu Foundation soft loan were across Africa are currently producing quality products that Competes with similar products produced abroad.
Business analysts believe that if past and present administrations had committed Funds to support the SMEs as Tony Elumelu Foundation had done in the last ten years, the country may have been on the part to Industrialisation.