Business

By Tennyson Sampson

MUDA Yusuf, CEO, Centre for the Promotion of Private Enterprise, CPPE, has said that bigger priority should be accorded to the Micro, Small and Medium Enterprises, MSMEs, to mitigate the challenges facing them on daily basis.

Speaking at the NASME Business Roundtable on Tuesday in Ikeja, Yusuf noted that “many of our MSMEs have demonstrated resilience despite these headwinds”.

Yusuf, who was the guest speaker at the roundtable, with the theme, ”MSMEs : The Catalyst for Nigeria’s Economic Rejuvenation and Growth”, stated that the theme was apt and underlines the critical role of our MSMEs in our journey towards sustainable economic recovery and growth.

“The MSMEs are the pillars and the life wire of the Nigerian economy. They are the major sources of the resilience that the Nigerian economy had long been reputed for, amid numerous shocks. We are currently going through another round of shocks inflicted by the Fuel subsidy removal and the partial unification of the exchange rate. Even though these reforms were desirable, the social outcomes have been very profound,” he said.

He noted that the nation has seen significant surge in inflation across the broad spectrum of products, food and non-food, driven largely by sharp depreciation in the naira exchange rate and increases in energy costs.

According to him, these have taken a huge toll on business sustainability, profit margins, job retention, and capacity of small businesses to service their loans.

Harping on the role of the MSMEs on the Nigerian economy, Yusuf stated that the MSMEs deliver value as catalyst to the economy in several other ways.

These contributions include promoting competitiveness and entrepreneurship across sectors and the entire economy, enhancing efficiency, innovation and aggregate productivity growth and contributing a lot more to job creation more than large enterprises.

According to him, MSMES are largely more labour intensive and contribute immensely to poverty reduction, effective vehicles for the promotion of economic inclusion and promoting entrepreneurial development and accelerate the use of local raw materials among others.

He disclosed that the role of MSMEs fits perfectly into the eight-point agenda espoused by President Bola Tinubu, which include, among others, food security; poverty eradication; economic growth, job creation; and inclusion.

“Five of the eight-point agenda rest squarely within the MSME space. What this implies is that for the Tinubu administration to accomplish the eight-point agenda, the government must leverage and strengthen the MSMEs in the economy, across all sectors of the economy.

According to the Small and Medium Enterprises Agency of Nigeria [SMEDAN], we had 39.65 million MSMEs in Nigeria as at 2020. 96.9% of these MSMEs are micro enterprises; 3.1% are small and medium enterprises.

“The highest number of these enterprises are in Lagos. The key sectors to which they belong are agriculture, 38.4%; Trade, 33.3%; other services, 9.8%; Manufacturing, 4.2%,” he said.

He said that the SMEDAN survey revealed that 96.2% of the MSMEs are sole proprietors, while partnerships constitute a mere 3.3%. The survey, according to him, revealed that the biggest challenges of the small businesses were high energy cost, high electricity tariffs, multiple taxation, access to finance and high cost of funds. Lately the drastic depreciation of the naira has become a major factor impeding the growth of the small businesses. The same is true of the grave impact of insecurity on small holder farmers across the country.

He, however, stated that if the government must promote economic inclusion, the mainstreaming of the informal sector should be accorded a bigger priority than it is presently the case.

“There is need for deliberate policy to support and protect the informal economy given their strategic contribution to the economy, especially with regards to job creation and economic inclusion,” he said.

Yusuf lamented that many of our industrial estates have become a shadow of what they used to be. “Evidence of all of these can be found in industrial estates located in Ilupeju, Ogba, Ikeja, Sango-Ota, Agbara and many other parts of the country both in the eastern or northern part of the country the story is not different.

“It is therefore imperative to take urgent steps to stem the tide of deindustrialization if we must curb the growing unemployment and the increasing import dependence of our economy,” he said.

He said that some of the factors responsible for this deindustrialization include, the influx of cheap and substandard products into the country which creates unfair competition for our domestically produced goods, the crisis in our foreign exchange market which has elevated the volatility in the exchange rate and which has worsened the illiquidity in the foreign exchange, epileptic power situation and the high cost of energy especially diesel and gas.

Others are the phenomenon of multiple taxation imposed by the three tiers of government, the challenge of multiple taxation and excessive drive for revenue by agencies of government which imposes a huge burden on our manufacturing industry, especially those who are in the MSME category, poor domestic patronage of what is produced locally, paucity of basic industries to support our manufacturing enterprises. Such basic industries include the iron and steel industry and the petrochemical industry, policy inconsistency and weak infrastructural base – power, transportation, Apapa traffic issues, railway system, and the ports among others

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September 21, 2023 @ 20:15 GMT|

Tags: Muda Yusuf President Bola Tinubu