Unemployment: Opportunities for small – scale businesses

Rural communities in Nigeria are mainly characterised by people with low levels of living. They are enmeshed in absolute poverty, low per capital income, consumption levels and, above all, poor health service, high birth rates with limited freedom to choose between variables that satisfy human wants. Subsistence farming, petty trading and small scale enterprises are their preoccupations.
And for sustainability and growth in trade, these rural communities mainly rely on traditional methods of financing such as personal savings, private money lenders and or thrift cooperatives. These opportunities for savings, no matter their limited income, provide credit facilities at little or no cost and they equally meet lending needs of investors.
Micro, small and medium-sized Enterprises (MSMEs) account for no fewer than eighty percent of the enterprises in Nigeria and the rest of Africa, and contribute a similarly high percentage of the continent’s jobs.
The MSMEs, in comparison with larger firms, provide greater benefits to society in terms of job creation alleviating poverty. In most cases, the enterprises’ inabilities to fulfill requirements for growth appear to be a big stumbling block to members’ dreams.
To fill in the void created by the lack of access to growth, a job creating organisation, Kajaura International Consults Ltd, provides these micro, small and medium enterprises with the needed capital and business development services.
This body works in tandem with the Central Bank of Nigeria (CBN), employing a three-pillar framework, namely, access to finance, business development services and markets to enable the MSMEs thrive in today’s competitive global economy.
To promote the flow of financial services to rural communities, Ana-Elim (2008), posits that government had in the past initiated a series of publicity financed micro/rural credit programmes and policies targeted at the rural areas.
Notable among them were agricultural credit guaranteed scheme, Nigeria Agricultural and Cooperative Bank Ltd, the Peoples Bank of Nigeria, National Directorate of Employment and the National Poverty Eradication Programme.
The condition of poor people in the society calls for programmes, policies and strategies to address their plights.
The next thing that comes to mind is the safe keeping of the capital and the former community banking initiative which now metamorphosed into micro financing banks comes to mind.
The changing and multiplicity of programmes such as NDE, DFRRI, FEAP, among others, was intended to make the subsector effective to achieve poverty alleviation, rural empowerment and economic development. Yet, the frequent change of programmes and policies in the micro finance initiative indicates that this subsector is has not brought smiles on the faces of the Nigerian poor.
According to CBN (2006), micro finance in Nigeria had been characterised by weak institutional capacity. The report said: “Most, if not all of these institutions,’ poor performances are due to inept management, weak internal control, lack of insurance scheme, lack of well defined operations and inadequate regulatory framework”.
It was in its resolve to address these identified lapses that the apex bank came out with the CBN Supervisory and Regulatory Framework in 2005.
It showed that the institutionalisation of microfinance in Nigeria is in line with the global strategy of helping the poor people.
In the course of my own investigation which led me to speak with some potential borrowers of the N220 billion intervention funds meant for MSMEs, the inadequate number of these microfinance banks appears to be discouraging.
They are of the opinion that the current 949 microfinance institutions in Nigeria are few, when compared with the country’s poor population of over 80 million.
How many of these banks are in the rural areas? Why should the operators cluster in the urban areas, discarding the rural areas, where majority of the poor people are based?
The onus is on the regulatory authority of the microfinance institutions to encourage the rural bankers to establish such institutions in the rural areas where their services are needed. To be a more result-oriented institution, microfinance banks should be classified into first tier and second tier.
While the first tier should be used to describe the urban microfinance bank, the second tier should describe the rural microfinance banks.
Their legal operational requirements should be in the order of classification which should be tougher for the first tier. Their ‘paid-up’ capital should be different too. The ‘paid-up’ capital for rural microfinance banks should be lower in order to attract investors to the rural areas. The three tiers of governments should help the microfinance banks. In the 2005 CBN Microfinance Regulatory and Supervisory Framework, it was outlined that for this subsector to survive, the federal, state and lgas should provide basic infrastructures.
Ten years down the line, the condition of most of these banks are terrible. The governments, possibly, contributed to the failure of the over 2,000 microfinance banks, bringing the figure to a little over 900 today.
There should be a relief from taxes to operators of microfinance banks and their borrowers so MSMEs businesses will get a boost and grow stronger.
Edward Wabundani wrote this piece from Abuja