THE cost of registering Small and Medium-scale Enterprises in Nigeria has been slashed by 60 percent. Olusegun Aganga, minister of industry, trade and investment, disclosed this while speaking at the 8th annual Micro, Small and Medium Enterprises’ finance conference in Abuja, August 19.
The conference, with the theme: ‘MSME Financing in Nigeria: Past, Present and Future,’ was organised to look at the MSME finance sub-sector from a holistic perspective. Aganga said the directive for the reduction of the business registration costs was given by President Goodluck Jonathan, adding that the development underscored the importance of the sector to poverty reduction, job creation and inclusive growth.
He said since SMEs accounted for about 80 percent of businesses registered with the Corporate Affairs Commission, CAC, as well as contributing about 50 percent to the country’s Gross Domestic Product, there was a need to remove all factors that would impede their development.
“The administration of Mr. President has made it a matter of importance to support MSMEs in certain key areas – access to affordable finance, which we are doing here today; access to markets, formalisation of businesses, skill acquisition, and provision of infrastructure to reduce the cost of doing business for SMEs. Already, the President has approved a reduction in the cost of setting up SMEs by 60 per cent and the idea is to reduce the cost of doing business. So, today, if you are going to the CAC to set up a company, then know that the costs have been reduced by 60 per cent already,” he said.
According to Aganga, the N220 billion facilities whose disbursement was inaugurated at the event by President Jonathan would help not only to empower the SMEs, but also address the access to financing needs of the sector in an efficient and sustainable manner. President Jonathan, while speaking at the event, commended the Central Bank of Nigeria for providing the fund for the development of the sector at an interest rate of nine percent. He added that the decision of the bank to set aside 60 percent of the fund for women was in line with his administration’s commitment to women empowerment.
The President said that MSMEs had been recognised globally as the engine of growth in any development-oriented economy. He added that due to their inherent labour-intensive production processes, MSMEs were also providing a veritable platform for job creation. “All over the developed world, the contribution of the MSMEs to GDP is on the average of about 47 per cent; this shows clearly how important the MSMEs are to us. With about 17.3 million SMEs in Nigeria, there is a need for more concrete and concerted efforts to expand the activities of the MSMEs in our country,” he said.
According to the president, the focus of this year’s conference, which was aimed at enhancing access to finance, was appropriate and that a vibrant MSME sub sector was indispensable to achieving sustainable transformation of the Nigerian economy.
Increase in Public Debt Portfolio
NIGERIA’s public debt is on the rise. According to Abraham Nwankwo, director general, Debt Management Office, DMO, the country’s current public debt portfolio both domestic and international borrowings stands at about N10.5 trillion compared to about N10 trillion in December 2013. He said the debts were sustainable and tailored to reflect challenges and aspirations of the country.
Speaking in Abuja at a seminar organised for finance correspondents on understanding the bonds market, Nwankwo explained that the total domestic debt stock stood at about N8.9 trillion while “its external component is valued at about $9.38 billion.” He said though Nigeria’s Debt to Gross Domestic Product, GDP, ratio remained low at 12.51 percent after the recent rebasing, allowing for more capacity to borrow, it could not afford to borrow without adequate precaution.
He said there were concerns the country’s tax GDP ratio which remained low at about six per cent compared to 18 per cent with peer groups. He lamented that many economic agents operating within the country do not pay tax according to their output and called for change of attitude.
The DMO boss said there were serious revenue leakages characterised by low tax returns to tax authorities. He said sustaining the current macroeconomic achievements so far recorded, there needed to be improvement in productivity and timely payment of taxes.
Specifically, he stressed the need to improve revenue generation since “you don’t service debt with GDP but with revenue” He also disclosed that the proposed Sukuk bond offering was still a product in the pipeline and undergoing designing and evaluation, adding that it would be introduced at the appropriate time.
On state government’s renewed appetite for borrowing even at the eve of elections, the Nwankwo said all borrowings are adequately monitored to ensure they meet developmental objectives. He said there are sufficient controls put in place to forestall abuse and mismanagement of borrowed funds.
Compiled by Anayo Ezugwu
— Sep. 1, 2014 @ 01:00 GMT