Another shot in the arm – The Nation

  • Efforts to boost MSMEs commendable, but there is need for holistic solutions to the problems

For operators in the typically cash-challenged Micro Small and Medium Scale Enterprises (MSMEs) sector, this seems the best of times to play.

Last week, Minister of Industry, Trade and Investment, Niyi Adebayo, announced the coming of a $1billion syndicated-term loan, courtesy of the Bank of Industry (BoI), to support the sector. He also spoke of an on-going discussion with a foreign entity, Dunn & Bradstreet, to establish an SME risk rating institution – the SME Rating Agency of Nigeria (SMERAN), to facilitate credit delivery to the sector.

The initiative, according to the minister, is expected to enhance the capacity of the bank to support small businesses across key sectors of the economy through the provision of affordable loans of medium to long-term tenor with moratorium benefits.

Earlier, the Federal Government had instituted a N60 billion MSME Survival Fund in the wake of the COVID-19 pandemic, as part of efforts to support businesses overcome their associated challenges. The fund, a conditional grant, was designed to support vulnerable micro and small enterprises in meeting their payroll obligation and safeguard jobs in the MSME sector. The initiative was meant to save some 1.3 million jobs across the country, and to impact over 35,000 individuals per state.

There was also the N15 billion MSME Grant and Guaranteed Offtake Scheme (GOS) – a twin programme under which some beneficiaries are provided with a one-off grant of N50,000 as direct cash injection into their enterprise, while others, particularly those in the production sector, including those dealing in sanitisation/cleaning and processed foods, are availed funds to encourage direct local production, ensure the sustenance of their income and guarantee the off-take of their products.

The initiatives, as indeed others similarly birthed under the Federal Government’s National Economic Sustainability Plan (NESP) are as laudable as they are timely. Coming against the backdrop of the pandemic-induced meltdown, the measures underscore the Federal Government’s recognition of the role of the MSMEs as a necessary catalyst in getting the economy up and running again, and as a major force in the deepening and diversification of the economy in the medium and long term. In this, the Central Bank of Nigeria (CBN) deserves no less commendation for pooling lots of cash in intervention funds targeted at pulling the economy out of the doldrums.

As always, the real challenge is getting the funds across to the targeted beneficiaries, not just in a timely manner, but shorn of the corruption and the typical bureaucratic tardiness that such lofty interventions are known to suffer.

Then also is the so-called Nigerian factor – issue of moral hazard – the possibility of the funds being misapplied by beneficiaries. All of these highlight the need for effective safeguards to be in place if only to ensure that the beautiful intentions behind the fund are not subverted.

Yet, for all its acknowledged place in the MSME matrix, the problems of the sector are not always about cash. Aside the well-known factor of infrastructural inadequacies – particularly of power, transportation and logistics – all of which ensure that nary of basic operations could be carried out competitively, it equally bears stating that the cash factor is oftentimes a symptom of an underlying disease: a lack of capacity for which the sector has become notorious. From poor book-keeping as a result of which the MSME operative is rendered ineligible for credit; to poor product offering/packaging and non-adherence to globally established standards, which render the operatives as non-starters, the Nigerian MSMEs continue to demonstrate how far they still have to go to attain competitiveness and global acceptance.

Given the current state of the economy, there couldn’t have been a better time for the government and the operators, with active support of international partners, to jointly address these problems holistically. In fact, the government should be as committed to addressing them as much as the current efforts at channeling critical funds to them.

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