Franca Ochigbo writes on stakeholders’ expectations from the new helmsman in the ministry of Trade and Investment
All over the world, countries have recognised the impact of Small and Medium Enterprises, SMEs in the creation of jobs and reducing of unemployment rate. These businesses which generally have employment of over 25 staff and make a turnover of between five to N10 million monthly have not just become the backbone of many economies worldwide but have also become major contributors to the development of many countries.
In Nigeria, the Ministry of Industry Trade and Investment is supposed to be the doorway to achieving these through supporting the growth of SMEs but this has not been the case as the unemployment rate is still very high.
A 2017/2018 report by the Nigerian Bureau of Statistic on unemployment showed that unemployment rate rose from 18.1% in 2017 to 23.1% by September 2018.
The new minister of Industry Trade and Investment, Richard Adeniyi is presently saddled with the task of creating employment for the teeming youths of the country through the Micro Small and Medium Enterprises, MSMEs. There have been a lot of programmes on ground to enable the minister kick the ground running, loose ends to be tied and implementation of programmes not completed by past administrations.
First is the Trade Department of the Ministry where a trade negotiation office was recently created. Does this mean that the Trade Ministry was redundant before the negotiation office was created? One question the minister should provide answers to is if there will be a harmonization between the trade department and the trade negotiation office. Will the minister revive the trade ministry or fall back to the office of trade negotiation?
The Office of Trade Negotiation was established in May 2017 by Dr. Okechukwu Enelamah, what are the gains of this office? Duties to be carried out by the office is to be an enabler for achieving sustainable development, inclusive growth and job creation, but has these all been achieved since its inception and how many jobs has the office created?
The former Minister, left a lot of programmes incomplete especially in the areas for job creation through SMEs, ease of doing business, Presidential Enabling Business Environment Council, PEBEC and partnership with African countries for free flow of trading activities. In these areas, we have seen efforts being made but there is still a long way to go.
PEBEC is to further reduce the challenges faced by MSMEs when getting loans, paying taxes or transporting goods across the country, but how effective has these been? One of the major goals of the business is the removal of bottlenecks and bureaucratic constraints to doing business in Nigeria, has this been so?
Adeniyi would have to look deeper to bring the benefits of this programmes to the business of the ordinary man on the street.
Another poser for the Minister is the registration of small businesses; it is not just for the Corporate Affairs Commission, CAC to say it is easy and go to sleep. One of the most difficult challenge SMEs face is access to electricity as without electricity operating small business is very difficult.
Another very challenging area is access to bank loans. The interest rates are very high even when some banks say they are government banks and the money domicile in the bank is for MSMEs.
These loans come with a lot of hidden charges which cause paying back the loans to become very difficult because of other needs like power, transportation, etc, which of course takes a lot of money and then the little profit they make go into paying the loan and the hidden charges.
For commercial banks the interest rate is as high as 21per cent per annum, while for micro finance bank it is about 35per cent per annum. With this situation how do they repay in due time. For MSMEs to strive there should be steady electricity supply, and reduction in interest rate to single digit.
The MSMEs fund is another area to deeply look at. CBN launched the MSME Development Fund on August 15, 2013 with a share capital of N220 billion. The Fund was established in recognition of the significant contributions of the MSMEs sub-sector to the economy and the existing huge financing gap, but unfortunately, this fund has not been accessed.
The former Minister of State, Industry, Trade and Investment, Aisha Abubakar rolled out framework on MSME, like reviewing the CBN MSMEs development fund guidelines and making it up to date in facilitating access to finance by MSMEs. This is a wakeup call to the minister.