Tuesday, May 23, 2006

Who Cares for the Small Business Enterprise in Nigeria?

The Nigerian Small and Medium Enterprises Equity Investment Scheme (SMEEIS) was established in December 1999. The scheme required all banks in Nigeria to set aside 10% of their profit before tax for equity investment in small and medium scale industries.

A recent report in the Nigerian financial newspaper, Business Day, indicate that just 29% of this fund has been released since its inception!

Despite the presence of some well-hailed economic VIP comprising of the big thinkers and heavyweights of the financial world- people who should know better- the economic focus of Mr. Obasanjo's administration appears to have completely missed the Nigerian small businesses!

My limited knowledge of economics, buttressed by data, suggest that small businesses/enterprise (SME*) are the workhorses of any economy be it in Africa or elsewhere. Using the United States as an example, small businesses create "two out of every three new jobs and account for nearly half of America's overall employment and are 97% of America’s exporters and produce 26 percent of all export value", according to the United States Small Business Administration (SBA).

In fact, the SBA was established by the U.S Congress in 1953, solely to "aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns." According SBA, its charter states “the SBA would ensure small businesses a fair proportion of government contracts and sales of surplus property."

The Nigerian SMEDAN (Small and Medium Scale Industries Development Agency) is analogous to SBA, but very much younger, weaker and limited in scope and reach. In fact, I’m at a loss on how this agency can assist any entrepreneur wanting to start a small business in Nigeria.

It is just not right when economic policies are predominately geared toward big business and mainly service consolidation oriented, the two major economic signposts of the Obasanjo's administration. Who really cares for the small businesses? Would the Nigerian SMEs get more respect and attention from the government in 2007 when a new administration takes over?

*SME, as defined by the Nigerian government, is any enterprise with a maximum asset base of 200 million Naira excluding land and working Capital and with the number of staff employed not less than 10 or more than 300.