The Director General and Chief Executive, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Dr. Dikko Umaru Radda, has said Micro Small and Medium Enterprises (MSMEs) in the country would henceforth be recognised by their turnover rather than asset base.
Furthermore, he pointed out that under the reviewed National Policy on MSMEs, recently approved by the federal government, micro enterprises have been split into Nano/Homestead and Micro Enterprises.
Speaking at a media briefing on the reviewed framework, he said several reasons had justified the resolve to reclassify small business based on their turnover.
He said: “Inflation and naira devaluation have eroded the asset levels set in 2007 when the first national policy was approved.
“As a result, comparison of new investments with the old becomes clumsy and misleading – that’s not the case when comparing turnovers of the same time; certifying asset values are more complex than determining turnover values.”
Under the new regime, MSMEs are further categorised as nano, micro, small and medium enterprises.
The nano/homestead business units are required to have one to two employees with turnover of less than N3 million, while micro enterprises are required to employ three to 25 staff with turnover of N3 million to N25 million.
Also, small enterprises are required to employ between 10 to 40 staff with turnover of over N25 million while medium enterprises are to have between 50 to 199 staff and turnover of over N100 million before they can be qualified as such.
Among other things, Radda, said fintech and other tech-driven companies have distorted the traditional relationship between asset base and business turnover, adding that experience from comparable countries, including India, showed they have all shifted from using assets in classifying their MSMEs.
Radda, added that the company income tax waiver/incentive for small businesses under the Finance Act 2020 is also tied to turnover and not asset base.