Economy
By Lucy Ogalue, News Agency of Nigeria (NAN)
SMALL businesses are crucial for ensuring the growth of a nation’s economy. In Nigeria, small businesses employ more than 80 per cent of the workforce, according to PricewaterhouseCoopers International Ltd. (PwC) Micro Small and Medium Enterprises (MSMEs) Survey.
In spite of this, small business owners are seen as among the most neglected; thus, their resilience and ingenuity are being tested daily by challenges and government reforms.
There is a mixture of hope and hardship for MSMEs in the country as the nation grapples with rising costs and regulatory changes.
The removal of fuel subsidies, a significant move aimed at reducing government expenditure and freeing up funds for critical infrastructure projects, has had immediate and far-reaching impacts on citizens and businesses.
While the policy’s long-term benefits are yet to be seen, the short-term consequences have been stark. Fuel prices skyrocketed almost overnight, leading to increased cost of transportation and production costs.
Small businesses, which often operate on razor-thin margins, were squeezed from all sides. For many, the only viable option is to close their doors, as they were unable to absorb the additional expenses.
Some small business owners, who narrated their ordeal to NAN, decried the difficulties they encountered in doing business in the country in the last one year.
An entrepreneur, Mr Cletus Faga, who shared his experience, said a hike in electricity tariffs compounded the woes of small business owners in the country.
He said: “reliable and affordable electricity is the lifeblood of countless enterprises, from small-scale manufacturers to retail shops.
“The higher tariffs have translated into increased operational costs, forcing most businesses to scale back operations or shut down entirely.
“For a country where small businesses are a critical component of the economy, these developments have been nothing short of devastating.’’
Another entrepreneur, Mr Isah Ibrahim, said power fluctuations were a nightmare for manufacturers.
“Every time the lights flicker, our machines grind to a halt, which means lost productivity.
“We have had orders delayed, deadlines missed, and customers left disappointed. Moreover, the damage to our equipment is a constant drain on our finances.
“The more downtime we have, the more money we lose, and the harder it becomes to stay afloat,” Ibrahim said.
Mr Smart Ekpeyoung, a businessman, said the broader macroeconomic landscape had added to the difficulties of business owners in the country.
According to him, Nigeria’s business environment has been characterised by soaring inflation, a scarcity of foreign exchange, and significant currency depreciation.
He said the value of the Naira has battered steadily, making imports more expensive and squeezing profit margins even further.
“For small businesses that rely on imported raw materials or products, the scarcity of foreign exchange has made it challenging to keep the shelves stocked and operations running smoothly.
“The high inflation rate has also taken a toll on consumers’ purchasing power, reducing demand for goods and services.
“Going by the importance of small businesses and their contributions to the economy, the government and relevant authorities must support them to drive the nation’s economy,’’ Ekpeyoung said.
As small businesses navigate these turbulent times, their expectations for the future are cautiously optimistic.
There is a strong desire for more robust government support, particularly in financial aid and policies that reduce business costs.
Access to affordable credit remains a critical need, as does the stability of key economic indicators such as inflation and foreign exchange rates.
To improve the ease of doing business, small business operators are seeking a stable and affordable energy supply, reduced electricity tariffs to lower operational costs, and reduced dependency on expensive generators.
According to Nguamo Ganga, access to finance is another critical area that should be tackled because we need easier access to affordable loans and credit facilities to grow and expand.
She said: inncreased support from microfinance institutions, providing small-scale loans tailored to our needs will also be beneficial.
“Additionally, we need better access to foreign exchange to purchase raw materials and equipment from abroad, along with stability in exchange rates to plan and budget effectively.’’
Ganga said regulatory simplification was also essential to reduce bureaucratic delays, especially in business registration processes, and consistent regulatory policies to avoid frequent changes that can disrupt operations.
She called for tax reforms and incentives to help alleviate financial burdens and ensure businesses’ easy compliance.
“Infrastructure development plays a crucial role in easing business operations. Improved transport infrastructure and better road networks can significantly reduce logistics costs.
“Ensuring access to essential utilities like water and telecommunications at affordable rates is equally important.
“Support for digital transformation is another priority. Small businesses will benefit from digital literacy programmes to adopt new tools and technologies, along with support to establish and grow their online presence through e-commerce,” Ganga said.
Similarly, Mr Amos Abayol, a businessman, also called for more government support to the MSMEs subsector in terms of favourable policies to ensure a conducive environment for businesses to thrive.
“Government should ensure policies that specifically target the needs of small businesses, ensure wider domestic and international markets, and provide incentives for export activities to boost competitiveness.
“Training and capacity building are crucial for sustainable growth. Small businesses need programmes to build entrepreneurial skills and business management capabilities.
“Providing technical assistance and advisory services can also help improve their operations.
“If these changes are implemented, they can significantly enhance the business environment for small enterprises in Nigeria, enabling them to overcome current challenges and thrive in the long term,’’ Abayol said.
Amid these challenges and optimism for a more conducive business environment, the regulatory environment has also undergone some rapid changes and reiterated commitment to the growth of small businesses.
As part of efforts to promote small businesses, the Corporate Affairs Commission (CAC) has spearheaded a digitisation drive, streamlining business registration processes to create a more business-friendly environment.
The Business Facilitation Act (BFA) 2023 of the CAC has emerged as a significant force in shaping Nigeria’s corporate landscape, thereby, creating glimmers of hope.
The CAC’s digitisation efforts and the implementation of the BFA are expected to simplify bureaucratic processes, potentially reducing the time and cost associated with starting and running a business in Nigeria.
Moreover, the growing emphasis on sustainability and Environmental, Social, and Governance (ESG) criteria is gaining traction, thereby, offering new avenues for investment and growth.
The Minister of Industry, Trade and Investment, Doris Uzoka-Anite, described MSMEs as the lifeblood of our nation’s economy.
According to her, they are engines that power our growth and innovation; thus, our duty (government) is to provide them with the necessary support and assistance to flourish.
Similarly, the ministry’s Permanent Secretary, Amb. Nura Rimi emphasised MSMEs’ important roles in ensuring job creation and national development.
Rimi restated the deliberate effort by the President Bola Tinubu-led administration and stakeholders to provide an environment that enables MSMEs to thrive sustainably.
For Charles Odii, the Director-General of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), the agency is determined to remove all obstacles to the growth of MSMEs in Nigeria.
While speaking on SMEDAN’s GROW Nigerian Strategy, Odii said Small and Medium Enterprises (SMEs) are central to Tinubu’s mission to eradicate poverty and ensure prosperity to all Nigerians.
“We are not only going to protect them from inflationary pressures but also empower them to drive down such trends.
“We will work with sister government agencies to streamline regulations and optimise them for growth and productivity.
“We will remove obstacles that hinder formalisation and growth, and with the GROW Nigerian strategy, SMEs will get affordable financing opportunities, access to markets and support, ’’ Odii said.
Meanwhile, financial expert Mary Ugochukwu reiterated that MSMEs worldwide are the missing link to creating inclusive, dynamic, and prosperous societies.
“There is no denying that MSMEs worldwide are the missing link to creating inclusive, dynamic, and prosperous societies.
“Invariably, Nigeria and even the continent suffer from marginalisation as reflected by the difficulties they face in accessing finance, markets and opportunities for growth in general.
“I am urging the government at all levels to invest and support the MSMEs sub-sector to ensure growth and development of the country,’’ Ugochukwu said. (NANFeatures)
F.A
June 24, 2024
Tags: X-raying the plights of small businesses in Nigeria
