Despite the negative outlook, SMEs remain a crucial part of the Nigerian economy, with figures from the National Bureau of Statistics (NBS) showing that they contributed about 48% of the national Gross Domestic Product (GDP) in the last five years.
They also account for 96 per cent of businesses and 84 per cent of employment.
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The significant contributions of the enterprises notwithstanding, they have several challenges which include rising inflation, inadequate access to finance and markets, tech disruptions (in some instances), multiple taxations, unfavourable policies, insufficient technical know-how and scarcity of suitable human resources.
While SMEs had lived with these challenges, the COVID-19 showed up and dealt some of them mortal blows.
A survey published by the Fate Foundation and BudgIT on the ‘Impact of COVID-19 on Nigerian SMEs’ had 94.3% of the total 1,943 respondents say the pandemic negatively affected their businesses.
It further showed that 72.1 per cent had cash flow issues to sustain operations among those afloat, while 59.2 were struggling to increase their revenue base.
Asked for areas they need support, 72.1 per cent said cash flow; 67.7 per cent said they’ll need help to make sales, and 89.4 per cent want the federal government to provide them with funding, with 33.8 per cent needing access to markets; 74 per cent urging the private sector to support them with funding, and 62.9 per cent requiring business support.
But overcoming these challenges also requires knowledge which some of the SMEs don’t have. Indeed, inadequate knowledge has been identified as the biggest challenge for small businesses in a demanding economic landscape like Nigeria. People establish businesses, but challenges arise and eventually derail them because they lack requisite knowledge.
Some new business entrants underestimate the importance of training, with the likelihood of business failure or death on the high side when technical difficulties arise.
Aware of this knowledge gap, Nigeria’s leading digital-driven financial institution, Wema Bank, has moved to assist SMEs to bridge the gap through a novel SMEs Business School initiative.
In an interview with Daily Trust, the Head, Small and Medium Enterprises (SMEs) at Wema Bank, Arthur Nkemeh, stressed the importance of possessing a deep knowledge that would empower SMEs for business survival and marketplace success.
He noted that equipping SMEs owners with critical knowledge, including sources/types of finance, management and marketplace trends, is vital to connecting them to finances suitable for their particular needs. This is in addition to the requisite skills to thrive in their competitive spaces.
According to him, “Nigerian SMEs are mostly interested in knowing about financing options available to their businesses. However, they need much more: knowing where the finance opportunities exist is one thing. Understanding the regulatory implications of compliance as it affects their businesses, as the cost of not knowing could be very devastating, is another thing.
The SME Business School is a free training programme comprising online and in-class sessions happening across Nigeria, starting with Lagos. The first edition, held August 16 to 20, featured 50 participants were trained in finance, marketing and sales, leadership, technology, branding, strategy, innovation and business transformation.
First-rate consultants from the Frankfurt School of Finance and Management, Germany, Ernst & Young, Matt Anthony Consulting, IBFC Alliance and Kuhl-Cher facilitated the training.
But it wasn’t just training for its sake, as Nkemeh disclosed that Wema Bank was exploring funding options for the trainees.
“We are working with Development Financial Institutions (DFIs) and other regulators to make funding options available to these MSMEs in bespoke styles to suit their various needs.
“We are also keen on lending to these MSMEs in a very sustainable manner that will also ensure that they are productive and profitable,” he said.
Nigerian SMEs are innovative and resilient, but the power that comes from knowledge cannot be over-emphasised either for an individual or organisation.
More proactive initiatives like the Wema Bank SME Business School that improves the ability of MSMEs are welcome. That would increase their bottom line and optimize their contributions to economic development.
