The Value News

SMEs Heave Sigh Of Relief As federal Government Intervenes With N2.3 Billion In Post-COVID 19 Recovery

   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

Elumelu: Group Chairman, UBA plc

. 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.  

Yusuf: DG, LCCI

  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.                  

Stephen Ubanna

Add comment

Categories

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Follow Me

ADVERTISEMENT

http://www.ubagroup.com/
NIMASA
NPA
July 2021
M T W T F S S
 1234
567891011
12131415161718
19202122232425
262728293031  

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.