By Vincent A. Yusuf & Grace Adetutu
For Mrs Grace Olayemi Oke, an entrepreneur, the operating environment is getting tougher. Her condiment-making enterprise faces a lot of hurdles from the regulatory, financial and operating environment.
For close to 10 years, she has been struggling to remain in the business of making spices; and her dream is to be active along the whole value chain, from production to processing and packaging.
Sometimes she runs out of raw materials before another season of farming because she does not have enough money to store the raw materials she needs at the pick of production.
“A regulatory agency like the National Agency for Food, Drug Administration and Control (NAFDAC) is not making things easier for us. What they want from us most of the times is to have a structure of our own, not a rented apartment.
“I was told to have a stainless grounding machine, which I have to get from China. I have to get a dehydrating machine so that I will not be sun-drying and all that. The structure (building) has to be a four-bedroom flat that has a storage room, offices, raw material room and others. You need money to do all of these things, but access to money is very difficult,” she lamented.
Mrs Oke said what small and medium enterprises (SMEs) like hers want is a structure and equipment that would enable them to operate, adding that they do not need money directly but a system that would allow them acquire the necessary tools and structure.
“I have been trying to produce my spaces organically from farm to table because of the rising cases of cancer among women, she said,” but it has been challenging because of the operating cost.
Like Mrs Oke, Joy Forogbong, who produces bottled groundnut in Abuja, described the current business environment as very challenging, saying, “I am surviving by the grace of God,” she said.
She said things had changed significantly in the last few years and small businesses like hers were surviving at the edge of the sword.
In Nigeria, SMEs contribute 48 per cent of the national gross domestic product and account for 96 per cent of businesses and 84 per cent of employment. Even with the significant contribution of SMEs to the Nigerian economy, challenges still hinder the growth and development of the sector.
Mrs Rose S. Gyar is the director-general of the Global Centre for Human Development and Entrepreneurship Development (GLOCHEED), who is also an official of the Federation of Agricultural Commodity Association of Nigeria (FACAN) in the Federal Capital Territory (FCT) said, “The survival of SMEs in the country is by the grace of God. They are surviving through excruciating pains of difficult business environment, uncoordinated regulatory policies with duplicating functions among agencies, poor market access and retention, poor and inadequate availability of long term affordable business funds, financial services and technology for easy access, lack of adherence to competitive processes, unstructured business operations, inadequate capacities to engage with stakeholders, etc. The list is endless and is shared between the government and the operators themselves.”
She said the small and medium enterprises had diminished to micro enterprises following the description of the Small and Medium Enterprises Development Agency (SMEDAN) in terms of the number of employees and amount of business capital, adding, “It is, therefore, necessary that we include the micro strata in our discussions; they occupy over 98 per cent of the 41million MSMEs in the country as reported by SMEDAN and the National Bureau of Statistics (NBS) in July, 2019.”
Mrs Gyar stressed that the multiplicity of associations, organisations and groups formed by the operators affected the advocacy strength, such that they do not come together to address cross-cutting issues that would give them a loud voice to be heard by government to influence policies and decisions to surmount these challenges
“As if the above challenges are not enough, the emergence of the global pandemic, COVID-19, with all its protocols worsened the situation of MSMEs, especially the traditional operators who offer physical services to their clients.
“However, it was a boost to the digitally compliant operators who were very few among the operators as at the emergence of the pandemic,” she said.
The sector’s near absence of infrastructure and dysfunctional services offered by the managers to support business operations is also a factor that has stamped the growth and development of the MSMEs.
The expert also noted that the latest fuel scarcity which has affected transportation of goods and services added to their cost with minimum returns on investment.
The MSME operators in the country are subsistence in operations and merely existing, not surviving because they no longer can afford savings from their investments.
The way forward
Mrs Rose, who has decades of experience in entrepreneurship mentorship, said both operators and relevant agencies must come together in sincerity to work towards surmounting them with defined timelines and deliverables. Most importantly, government must reestablish trust with the operators in the implementation of their interventions; that is the appropriate operators in every sector must be on the decision making table, while these interventions are formulated and involved in the implementation process with transparent procedures and mechanisms for monitoring, evaluation and feedback instituted for the purpose of tracking.
“Operators themselves must resolve to approach their businesses as their investments, and therefore, be ready to enhance their capacities according to emerging global trends like adoption to best practices, technology and alternative financing options for their businesses other than the traditional physical cash funding, and be willing to see government as partners to create enabling business environment to facilitate easy access and not sponsors of their businesses,” she said.
The operators must also be determined to grow their businesses by collaborating within their respective sectors to form coalitions for easy engagement with the government. This will provide opportunity for structured relationships that would yield better results in surmounting their challenges rather than the individual group engagement that provides opportunity for divide and rule where government identifies favorable ones among them who may not be the real practitioners. This makes no impact from the numerous interventions that usually go down the drain and multiplies the citizens’ complain of absence of good governance.
She explained that women have peculiar challenges in addition to the usual MSME challenges mentioned above. In addition are the traditional encumbrances on poor access to personal land, ownership of assets that would facilitate access to business development services like collateral for funding support; lack of access to quality inputs, and the male dominance syndrome that women farmers are not usually very visible in leadership of the farmers groups that would give them a good representation and voice.
“Most funds outside the government are more for trading because of their short term repayment period. Agricultural activities go through gestation periods of at least four months, and most financing channels require repayment to be done within three months. Interest rate on agriculture should be less than 9 per cent benchmark of the Central Bank of Nigeria (CBN) lending and should be on a long term basis.
“Insurance and other risk mitigation factors should be enhanced and such institutions strengthened to deliver timely services; government collaborates with the operators at different levels.
“Finally, it is important that there is a credible data system that would provide information about every MSME operator in the country for effective planning and efficient dissemination of information and delivery of services to operators and for informed policy decisions.
“It is heartwarming to say here that the operators themselves have come up with a forum for MSMEs Business Membership Organization of Nigeria, a platform that accommodates registered groups, associations and organisations of MSME operators across agriculture, manufacturing, mining, services and gender. This forum is supported by the Raw Materials Research and Development Council (RMRDC) for structured engagement with the government and other stakeholders,” she said.