Hope Rises for MSMEs as Federal Government Rolls Out Growth Plan

By November 30, 2017 Investment News

The Office of the Vice President is stepping up interventions in the micro, small and medium enterprises (MSMEs) sector with a view to bringing real change in the fortune of the operators. Consequently, after many years of neglect, hopes appears to be rising for sector as a number of measures are already being rolled out both in the 2017 and in the 2018 fiscal plan.

The initiatives of the Federal Government is expected to address traditional headaches such as improving access to finance, tackling the issues of multiple taxations and addressing the challenges of infrastructure deficit. President Muhammadu Buhari and Vice President, Yemi Osinbajo However, the Office of the Vice President which is spear-heading the measures, have also planned to step-up its key activities of involving the MSME operators in the measures through its MSME Clinics.

The Clinic was designed and launched this year as a grass-roots parliament where the Vice President, Prof. Yemi Osinbajo, himself meets and parleys with the MSME business owners in a bid to hear from them directly, understand the challenges confronting them, and take decisions on the spot.

This strategy is made possible with Osinbajo bringing all government agencies responsible for providing support services and other regulatory requirements into the on-the-spot parliament.

This year, about four of the parliaments have held across four states of the federation. But the Special Assistant to the Vice President on MSMEs, Mr Tola Adeniyi-Johnson, said last week that in months ahead into through 2018, this engagement would be intensified covering other states of the federation, indicating that all general and local issues militating against MSME growth would have been addressed through the grass-roots parliament.

The International Finance Corporation, IFC, a subsidiary of the World Bank Group, disclosed that about 96 per cent of Nigerian businesses, from manufacturing to services, are MSMEs, compared to 53 per cent in the United States and 65 per cent in Europe. Of this number, the IFC declared that about 99.87 per cent of MSMEs in Nigeria are micro-enterprises, adding that with a total number of about 17.4 million MSMEs contribute about 48 per cent of Nigeria’s GDP. However, in one of its latest studies, the National Bureau of Statistics, NBS, disclosed that Nigeria has about 37 million MSMEs. Speaking at the just concluded Fourth Presidential Economic Communications Workshop in Abuja, Senior Special Adviser on Media and Publicity to the Vice President, Mr. Laolu Akande, said the President Muhammadu Buhari-led administration is aware of the critical role of MSMEs in the economic development of any country.

This, he said, had driven the Federal Government to adopt a pro-small business approach in its economic growth plan. He said, “This government recognized the significance of small and medium scale businesses; that is why the advisers come up with the idea of these SME clinics.

The truth of the matter is that we are in a clear direction that is pro-small business. That is what we intend to continue to do.” In an effort to boost their internally generated revenue, the Federal, states and local governments had increased the number of taxes to be paid by businesses, while in most cases, small businesses are confronted with double and multiple taxations. Also, the notion that most businesses in Nigeria do not pay tax has made governments at all levels to introduce obnoxious means of tax collection, with some agencies resorting to the use of touts and other unwholesome practices in tax collection.

To address the issue of multiple taxation and harassment of small business owners by touts and tax officials, the Federal Government had stepped up its collaboration with states and local governments to curb unfair tax practices and also ensure that small businesses are not suffocated.

Confirming this, Akande said, “What we are doing as the Federal Government is to try and rally everybody; set the standard and they are cases where you cannot force down the policies of the Federal Government on the States.

They are issues that needed to be dealt with at the state and local government levels and we are very much advocating for that and working with the other levels to ensure that these issues are taken care of.”

Access to finance had remained a perennial challenge to MSMEs across the country, with less than 10 per cent of the about 40 million MSMEs in the country able to access loans from banks.

Also, high interest rates had been a major discouraging factor for MSMEs in accessing loans from banks, while the various intervention funds set up by the Central Bank of Nigeria, CBN, the Bank of Industry, BoI, and other government agencies had remained inaccessible to the MSMEs due to stringent conditions.

To promote access to finance and address the issue of high interest rate, the Federal Government said it is working to cut down the cost of doing, which would indirectly help in bringing down interest rates. It however, noted that it is not planning to fix or legislate on interest rates. “We are trying to de-risk lending.

We are not going to get to the point of legislative interest rate, if you do that, we will end up having capital rationing; it would also lead to sub-optimal outcome, which would in turn subvert the growth potentials of our economy. When lending is de-risked sufficiently, you would find out that bank would by themselves bring down the rate at which they lend out money to businesses,” Akande said. Infrastructure deficit had over the years become a normal singsong in Nigeria, with small businesses struggling with issues of epileptic power supply, bad roads, poor communication facilities, as well as some other social infrastructure among others.

To address this, the Federal Government has set up the Nigeria Industrial Policy & Competitiveness Advisory Council to see how public, private partnership can lead to the implementation of projects that accelerate and boost power supply to industries; improve road access to areas which benefit the Nigerian business community as a whole and improve Broad Band coverage. In addition, Programme Coordinator of the Nigeria Industrial Policy & Competitiveness Advisory Council, Edirin Akemu, said the Council is advocating compliance with the 2015 Approved List of Taxes & Levies, adding that it is consulting with State Governments to implement compliance. She said the Council was engaging state governors to discuss the proposed framework, while also ensuring that a framework is developed for implementing collection of a once-off fee for all levies and fees and a single collection point for state and local government taxes.

To tackle the issue of poor road networks, she said the Council was in talks with the private sector to see how they can complement public funds and increase the pool of resources required to close the infrastructure gap. Akemu added that the Council is providing a provide a framework for the private sector to earmark tax payable by them towards provision of roads and designated infrastructure and raising much needed funds for this purpose amongst numerous contributors. She said the government would then grant the amount invested as a tax relief, either as a tax credit or capital allowances claimable over 3 years. Furthermore, the Federal Government’s determination to support the growth of MSMEs, was given vent by the Executive Order 003, issued May 18, 2017, by the Presidency.

Read more at: Vanguard