Monitoring & Research Division (UN-HABITAT). The presentation highlights the plights experienced by the common Nigerian, if such a term called "common Nigerian" do exist. A caption of that report states "In countries at same levels of development with Nigeria, SMEs contribute a much higher proportion to GDP than currently observed in Nigeria." Compared to other emerging markets, Nigeria has historically shown lack of commitment to building a strong SME sector; These economies have shown consistent commitment to the development of SMEs by implementing: access to finance and financial incentives, basic and technological infrastructure, adequate legal and regulatory framework, and a commitment to building domestic expertise and knowledge. In light of recent events in the Nigerian macroeconomic environment, SMEs have compelling growth potential and like other emerging economies are likely to constitute a significant portion of GDP in the near future.
The economist recently published a report titled "Enabling a more productive Nigeria: Powering SMEs". Adam Green of the Economist Intelligence Units took to Financial Times to write on Nigerian's SMEs: feeling every bump. Adam Green wrote this on June 2015. While there was nothing spectacular about Adam Green's writeup because the Nigerian SME problem is a well known problem to the common but Mahesh Sachdev a former Indian High Commissioner to Nigeria goes ahead to make interesting comment which am merely republishing it verbatim here:
As former Indian High Commissioner to Nigeria and author of a recently published book titled 'Nigeria: A Business Manual', I found this curtain raiser on the forthcoming EIU (Economist Intelligence Unit) Report on Nigerian SMEs to be very interesting on an important and often ignored aspect of the Nigerian economy. I wish to add a few points:
1. Nigerians, in general, and Igbo community, in particular, have great propensity for entrepreneurship which propels the growth of the country’s SMEs. They are mostly engaged in trading, retail and services (such as consumer delivery logistics and IT-enabled Services). Manufacturing is a small, but fast growing, component of Nigerian SMEs, even as it is often confined to assembling imported components and packaging them. If Nigeria is to address its formidable youth unemployment, SMEs and agriculture are likely to be the two main domains.
2. Despite grand and frequent announcements, the Nigerian official agencies such as Bank of Industry and SMEDAN have done little to render practical assistance to country’s SMEs. The funds earmarked for financing and training etc do not trickle down in large enough manner to make an impact. The incubation and facilitation activities are feeble at best.
3. Apart from well known strong headwinds faced by SMEs from rampant corruption, regulators, financers, poor logistics and infrastructure – some of them listed in the article – the SMEs face other difficulties too. These range from unreliable supply chains, dearth of trained manpower (which is also hard working, disciplined and honest) should be counted at the top. Further, fierce competition from low cost imports (mostly from China) has killed more Nigerian SMEs (esp. in textile-garments, food-processing and leather sectors) in last few decades than any other factor.
4. Surprisingly enough, recent expansion in large size enterprises in Nigeria in such sectors as cement, telecom, ICT, retailing, etc has not resulted in commensurate growth in ancillary activities - which would have boosted SME activity. In fact, most of the time, the big companies and the government fixation with top down growth have competed with SMEs to latter’s detriment.
5. Although SMEs face formidable odds in Nigerian eco-space, it would be wrong to profile them all as heroes waging a herculean struggle for survival and growth. Many of the ills that bedevil Nigerian economy today, from counterfeit medicines to sub-standard auto parts, illegal refineries, poor safety standards (which cause horrific accidents), frauds that sully Nigeria’s image, drug cartels, etc can be pinned to the widely prevalent tendency in some SMEs to make money at all costs and in shortest possible time. Nigerian authorities need to help the country's SMEs to help themselves rid of these tendencies.
Like they say every problem has a solution. My next article will try to look at how these problems can be solved.