As a follow up to earlier policy survey on Small Medium Enterprises (SMEs) by Federal Government, Aganga said Wednesday that the new policy was to prepare the economy away from stronghold of oil.
The Minister of Industry Trade and Investment, Mr Olusegun Aganga on Wednesday unveiled a new policy for Micro, Small and Medium Enterprises (MSMEs) in Nigeria. This actually, is a follow-up to the Federal Government nationwide survey on the MSMEs in the country earlier released on Wednesday on August 15, 2012.
Aganga who described the policy as an enviable model to developed SMEs in Nigeria, argued that any tier of government that ignores these stronghold of the economy stands to fail.
Describing the policy as crucial to the SMEs’ growth, he said the revised National Policy is necessary, especially as Nigeria most requires a diversified economy, divergence from oil and increase in non-oil output has become inevitable to sustain growth and keep the country out of risk.
Aganga maintained that necessary mechanisms must be put in place to support MSMEs. He nsisted that for industrialization to succeed, a robust MSME subsector is required, insisting that it is not the government that creates jobs but rather enterprises.
According to the minister, this has been the fact that SMEs represent over 90 percent of the businesses in Nigeria and employs over 84 percent of the country’s labour force, insisting that it requires a policy that attracts the appropriate investments on that sector.
His words: “As at 2010, when the first ever national MSMEs survey was conducted in Nigeria, there were about 17.3 million MSMEs employing 32.4 million persons and contributing about 46.54 per cent to the nation’s GDP in nominal terms.
“The statistics have increased five years later, and the outstanding results have given key players in the commerce sector reason to revisit the national policy in the sub-sector towards guided economic growth and development.”
it could be recalled that the minister had at the unveiling of the first national SME findings retreat in Lagos, said government was surprised to find that nearly all the businesses operating in the country under the SMEs umbrella were in fact, micro enterprises, stressing that this finding should have influence the way policies driving the sector are crafted from the beginning.
The survey, which was conducted by the Federal Bureau of Statistics (FBS) across the 36 states of the federation and the Federal Capital Territory (FCT) was analyzed by Aganga at its inaugural presentation, and it showed that there were a total of 17.28 million SMEs in the country out of which 17.26 million are micro enterprises valued at less than N5 million.
“I am sure many of you are surprised at the revelation of this survey but that is what statistics says. Out of the total of 17.28 million SMEs in the country, 17.26 million are micro enterprises, which means that micro enterprises represent about 99 per cent of MSMEs in the country,” the minister said.
Aganga said the survey also showed that only three per cent of the SMEs in Nigeria were accessing export market, a situation, which he said was adversely inimical to the development of the nation’s economy.
He said the findings of the survey, showed that Lagos State had the highest number of SMEs in the country with 17 per cent of the national figure, followed closely by Kano State, with Osun state hosting the fewest SMEs with only 0.4 per cent of the national figure.
According to the survey, SMEs in the country currently employs 32.4 million people and the minister stressed that to achieve the Federal Government’s transformation agenda the sector, which is expected to drive growth, must perform much better. He said: “It aims at improving the ability of Nigeria’s MSMEs to compete effectively in local, regional and global markets.”
The National MSME Policy, according to the minister, envisions an MSME sub-sector that can deliver maximum benefits of employment generation, wealth creation, poverty reduction and growth to the Nigerian economy. This is because everywhere in the world, MSMEs are the biggest employers of labour.
The Policy also outlines the general parameters, benchmarks and directions within which MSMEs’ programmes, interventions and initiatives will be designed, implemented, monitored and evaluated.
“In a Nutshell, it is a guide to all measures, programmes, incentives and initiatives targeted at the MSMEs.”
Aganga said, based on the United Nations Conference on Trade and Development’s SME framework, and with the collaboration of the different states, represented at the retreat by their Commissioners of Trade and Investment, the Federal Government would ensure a robust SME sector in the very near future.
He reiterated that the fact that Nigeria was ranked first in the top 5 host economies for Foreign Direct Investment in Africa in 2011 showed that the environment was conducive enough to support good business growth and give high returns on investment, noting that this was also a sign that “with the right policies, SMEs have good growth prospects.”
The National MSME Survey which was also explained by the National Bureau of Statistics, showed that “an estimate of 83.2 per cent of the enterprises have initial start-up capital of below N10 million, while seven per cent of the enterprises have initial start-up capital of between N10 million and N20 million,” adding that the main source of capital is personal savings, with 54.4 per cent; followed by loan (22.0 per cent); and family source of capital (16.7 per cent).
“The source of capital of most micro enterprises are personal savings, which represents 84.6 per cent; family source (29.8 per cent), loans (9.2 per cent) and cooperative/Esusu (8.0 per cent) were other major sources of capital,” the survey notes.
Government’s priority target areas for SMEs, according to the minister, are Micro Cottage Food Processing Enterprises, Cottage Arts And Crafts, Mining, Textiles and Clothing, Leather and Leather Products, Basic Metal, Metal Fabrication and Engineering Enterprises.