News
How and Why 95 Per Cent of SMEs Die- Elumelu
Tony Elumelu, chairman of Heirs Holdings, has said multiple taxations and levies kill 95 percent of small and medium scale businesses in Nigeria.
Elumelu made this statement while speaking at the Lagos Business School Alumni Association 2017 Alumni Day in Lagos.
He said five percent of the small businesses that survived after one year was a big disincentive to the nation in terms of employment creation.
The entrepreneur said multiple business regulation, multiple taxation and inconsistent government policies affect SMEs competitiveness and their ability to attract capital in their investment climate.
He said despite the multiple taxation, Nigeria remains the lowest in the world with 10 percent tax contribution to gross domestic product (GDP).
“It seems we have a big problem, because, with high taxation and multiple levies, it is expected we should have very high tax revenue,’’ he said.
He said the government should find out the reason for the discrepancy between desired growth and development.
He urged the government to create a more conducive environment that would encourage survival of SMEs in order to reduce the unemployment rate.
“Government doesn’t create jobs, it is the right enabling environment for SMEs that create jobs.”
He urged the government to streamline all taxation and levies across the three tiers of government to avoid the collapse of SMEs.
Taiwo Oyedele, head of tax and corporate advisory services, PwC Nigeria, called for the amendment of the constitution to ensure coordination among the three tiers of government and their agencies.
Oyedele said the multiplicity of government agencies with the same work function was becoming worrisome.
“You don’t need tax incentives for people to do business, we just need to remove the disincentives,” he said.
EFCC
The African Development Bank Group last week approved an investment of €6.5 million in the Saviu II fund in order to support technology start-ups through their seed phase and first institutional fundraising, mainly in French-speaking Central and West Africa.
The Bank will invest €4.5 million as equity and €2 million as a first-loss hedging tranche on behalf of the European Commission, under the Boost Africa Programme.
This participation of the Bank Group will enable the Saviu II fund to give priority to companies with a strong technological or digital component.
Saviu II, the second investment vehicle of Saviu Partners, plans to invest between €500,000 and €3 million in about 20 technology or technology-oriented business-to-business start-ups in the seed phase or carrying out first institutional fundraising.
The Saviu II venture capital fund aims to make at least 60% of its commitments in the French-speaking countries of West and Central Africa: Côte d ‘Ivoire, Cameroon, Benin, Senegal, Togo, Burkina Faso and Mali.
The fund can also co-invest in promising technology companies in East Africa that have a strong team and business model, and whose strategy includes entering the market in French-speaking West African countries and establishing a strong presence there.
In addition, the fund will devote a dedicated envelope to pre-seed investments, focusing on minority equity investments, usually in co-investment with studios, incubators or other ecosystem partners.
Nigerian Government has signed a $1.3 billion Memorandum of Understanding (MoU) with Africa Finance Corporation (AFC) via the Solid Minerals Development Fund (SMDF) to fund an alumina refinery, national geoscience mapping, and a strategic investment vehicle for mining growth.
Special Assistant to the Minister of Solid Minerals Development, Segun Tomori, said the refinery will process one million tonnes of bauxite yearly using a modern Bayer process, powered by an on-site gas-fired cogeneration plant.
Minister Dele Alake called it a transformative milestone boosting GDP, aligning with reforms that improve investment climate, regulations, and licensing to attract private capital. He directed agencies to fast-track permits.
The 20-year project at 95% utilization eyes 19 million tonnes total output, $1.2 billion annual GDP addition, $25 billion economic impact, and $8 billion forex earnings, per feasibility studies.
SMDF Executive Secretary Fatima Shinkafi termed it the agency’s biggest funding deal, supporting value-addition policy.
The partnership extends to geoscience mapping for mineral data, de-risking exploration, and a joint vehicle for mining assets.
Permanent Secretary Engr. Farouk Yabo praised the reforms. Shinkafi signed for government; AFC’s Franklin Edochie for the corporation, witnessed by AFC CEO Samaila Zubairu.
Tomori positioned it as Nigeria’s largest private mining investment and FDI magnet.
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