Connect with us

News

SMEs as a Key Driver to Economic Growth in an Emerging Market

Published

on

Kindly share this post

Adewale A. Adeyipo

In spite of the harsh economic conditions Nigeria is faced with, recent trends have shown there are opportunities for growth of the SME Industry in Nigeria. As reported by Nigeria Bureau of Statistics, 2019 Q1 GDP grew by 2.01%, with majority of this growth being associated with the Non-Oil Sector which is a positive sign and indicative of Nigeria’s possible diversification and less reliance on the oil sector to drive her economy.

The International Monetary Fund forecasts that GDP will increase by 2.1% in 2019, which would make Nigeria one of Africa’s slowest-growing economies and means that growth is negative in per capita terms.

While inflation is at 11.4% and has been above the Central Bank’s target of 6% to 9% for almost four years. How then can Nigeria survive the next four years of uncertainties in revenue generation, debt recovery rate, a further devaluation of Naira, low FDI flows into Nigeria in 2018, expected high fuel prices and insecurity? A recent report from Trading Economics shows that Nigeria’s all-time low of FDI inflow for 2018 Q4 was $314 million.

Nigeria’s population median age is 18 years that is made up of young, vibrant, skilled, and unskilled youths. With this youthful population and despite the tough economic conditions, I firmly believe Youth engagement through the SME approach can drive economic growth.

One of the key drivers to economic development in an emerging economy has been the successful engagement of SMEs, while the growth of economic development has been an essential goal for many developing nations of the world.

I wonder sometimes how a country with a 23% unemployment rate, inflation rate of 11.4% plans gets her citizen out of poverty which currently stand at 33.1% if not by empowering the populace that are living below the ‘Poverty Line. i.e. they live and sustain with less than $1 a day. The more people we have actively engaged, the better we are as a nation and with poverty alleviation.

The contribution of SMEs has been accepted as one of the primary supports for economic growth because of its ability to enhance economic output and improve human welfare. With so many challenges faced with SMEs in Nigeria today, low FDI inflows in 2018 is another critical indicator showing why tech firms like Google would establish an AI lab in Ghana and not in Nigeria despite current economic indicators showing that the Nigerian economy is stronger than Ghana’s economy.

Before a technological investment is made in any economy, the investing party measures the opportunity for growth, existing infrastructure, and innovation. Such parameters have side-lined Nigeria for several years. FDI inflow in Nigeria for Q1 2019 was recorded at $1.1 B (Trading Economics Reports).

Though many argue that FDI in Nigeria is usually low after a general election. The point remains that investors must see the basic amenities on ground before coming into any nation which of course stability and security is essential.

Jeff Dean’ the leading AI software engineer at Google, stated that Ghana is the ‘Future of Africa’ and it had to do with the robust network of academic institutions as well as infrastructure in place which was a significant factor on establishing an AI lab in Accra. – Aside from the ‘not too deliberate approach’ from the Government, inadequate Private-Public partnerships and collaborations amongst Government agencies.

The SMEs in Nigeria also lack access to relatively cheap and effective sources of funding, which hinders their growth and contribution to economic growth.

Agencies like SMEDAN can emulate Malaysia NSDC (National SME Development Council) as a use case where they demonstrated a positive impact on their economy since it was established in 2004.

As at 2015, the contribution of SME to the Malaysian economy was measured in terms of their share of the total number of businesses (97.3%) and share of the total number of jobs created at 59%. (Department of Statistics Malaysia)

International Finance Cooperation & World Bank’s Support on SMEs

Without a doubt, Government policies are one of the essential drivers for SMEs developments in any nation.

Two decades ago, Global Financial Institutions and Economic Organizations like World Bank and International Finance Corporation (IFC) emphasized the significance of small and medium-sized enterprises (SMEs), especially in developing regions like Nigeria, these bodies had consistently sought the support of the Government to implement policies for sustainable growth in human capital, financial inclusion, and technological advancement.

According to the World Bank Group, ‘The country partnership strategy period (FY2014-FY2019) has an investment of $8.8 billion through the International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD).

Nigeria has been one of the International Finance Corporation’s (IFC) fastest growing portfolio and represents IFC’s fifth largest global country exposure, with a committed volume of $1.8 billion. Their support for Nigeria is structured around several priorities, which include promoting diversified growth and job creation with a focus on youth, women and the poor in marginalized areas; whilst improving social and financial inclusion.

It was estimated that most developing economies have a high potential in ensuring diversification, inclusiveness, and expansion of industrial production as well as the fulfillment of the fundamental objectives of development. As reported by the World Bank Group, the Country partnership period (FY2014 – FY2019) for Nigeria is expected to have achieved:

  1. 16% increase in power generation capacity; 8% increase in transmission capacity
  2. Improved access of small farmers to inputs and technology and improvement in their average income
  3. Improved road access for two million people in rural areas.
  4. Additional two million micro-entrepreneurs provided with financial services.
  5. Additional 100,000 loans provided to Small and medium enterprises (SMEs).

World Bank has estimated the growth rate for Nigeria’s economy in 2019 at 2.1% with job creation rise of 10% quarter-on-quarter if local or raw materials and resources are well utilized. SMEs depends on the use of raw materials and innovative technologies to further assist them in achieving their goal of self- reliance.

For example, Provision of starch as a raw material to the market can provide jobs for three different levels in starch production, Starch for consumption, starch for clothing, starch for pharmaceuticals. In this ecosystem, the raw material provider and the user creates more jobs and keep the SME ecosystem sustainable.

Adewale A. Adeyipo is Ag. CEO CWG Plc


Kindly share this post

Dear Reader, Your support matters. But we believe that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. That is why, we have devoted our energy to independent reportage of technology and finance and how they affect lives. Our incisive and analytical view of how technology news affects the daily life help individuals and organizations make up their minds. Quality journalism costs money. Today, we're asking that you support us to do more. Kindly support our effort to deliver technology and finance journalism to everyone in the world. Donate as little as N1,000. Bank transfers can be made to: UBA Plc 1017156876 Communication Week Media Ltd

News

RMRDC Urges Investors to Patronise Research Outputs, Embrace Domestic Resource Based Manufacturing

Published

on

Kindly share this post

The Raw Material Research and Development Council (RMRDC) is wooing Nigerian investors to patronise its research outputs by embracing domestic resource based manufacturing that would end Nigeria’s industrial dependency.

The RMRDC made at the Nigeria Manufacturing and Equipment/Nigerian Raw Materials (NME/NIRAM) Expo 2025 through its Director Agricultural and Agro Allied Raw Materials Department, Raw Material Research and Development Council (RMRDC), Dr. Sab C. Ebiriekwe, and the Managing Director of Jola Global Industries Limited, Dr. Moses Omojola, who was formerly a director with RMRDC.

They pointed out that the Nigerian manufacturing sector is relying on importation for over 75 per cent of its industrial inputs while about 80 per cent of manufacturing firms in Nigeria are owned by foreigners.

Ebiriekwe said in his presentation titled “Harnessing Local Resources: Enhancing Value Addition Through Innovation in Raw Material Sourcing” that Nigeria is grappling with industrial dependency despite being endowed with vast natural resources, adding that no country industrialises sustainably without local raw material transformation through innovation.

He said that despite the abundance of local raw materials, only 35 per cent of local manufacturers in Nigeria could rely on steady access to local raw materials.

He added that a gap exists between research outcome and practical application as “only 5.0 per cent of research outputs reach commercialisation.”

According to him, Nigeria’s failure to beneficiate and industrialise its raw material is hindering its bid for economic diversification, jobs creation and export competitiveness.

“As value of industrial raw material imported in 2023 was N2.41 trillion; share of imported manufacturing inputs are over 75 per cent and non-oil export is dominated by unprocessed raw/agro products.”

Omojola, who retired as a director with RMRDC, said during the panel session that about 80 per cent of industries in Nigeria are owned by foreigners, especially Asians.

He asked: “How come Nigerians are going into manufacturing? I have lectured in the university and have worked in RMRDC for 25 years but I told myself that it will be disservice to leave RMRDC without taking home one project. And to the glory of  God I am today a manufacturer in Ekiti State.”

According to him, manufacturing “is very stressful but more rewarding,” which is the reason Asians are coming to Nigeria? “When I ask my Asian friends why they are in Nigeria they will reply that Nigeria is good. And now that I have started manufacturing, I have known that Nigeria is good,” he said.

Omojola also challenged politicians to invest the money they have made from politics into manufacturing in order to create more jobs in the economy.

“We should be going into resource based industry. I produce vegetable oil. Today, Indonesia and Malaysia cannot bring in vegetable oil into Nigeria because our own price is cheaper than their own. Therefore, no imported vegetable oil can compete with us,” he said.

The Founder of AfricanFarmer Discovery Hub, Mr. AfricanFarmer Mogaji, said that chemical extracted from water leaf had been used to coat mugs by Oluwa Glass in Ondo State.

“That was innovation. But unfortunately, it was not scaled. In Ibadan, the shell of the cashew nut had been used in making brake pads. We can revisit these innovations at Small and Medium Enterprises (SMEs) level,” Mogaji said.

He also urged retire military generals to invest in manufacturing like their counterparts in Malaysia that funded Malaysia’s turn around.

However, the Managing Director of Spectra Industries Limited, Mr. Duro Kuteyi, said that absence of government’s policies that could protect the SMEs is one of the reasons Nigerians are not going into manufacturing.

Kuteyi said: “Unless government will come up with policy the way India is protecting its products and SMEs, it will take time for us to grow.

“I started using Nigerian raw materials to make products like natural cocoa powder that is good for diabetics, hypertension, etc. We also use soya as one of our basic raw materials.

“But as it is currently, SMEs are finding it difficult in the market place where they are competing with multinationals that are ready to kill them and kill them totally.

“A multinationals firm went to the market and offered generators to my customers to stop dealing on my products.”

The Managing Director of FACCO West Africa, Mr. Femi Adelayo, said that wealthy Nigerians should be encouraged to embrace manufacturing rather than buying houses in Dubai.

Adelayo also said that manufacturers should be supported with a holistic robust policy to ensure their survival and enable Nigeria to withstand the emerging global trade dynamics that is being characterised by punitive tariffs.

He appealed to the RMRDC to help his livestock feed manufacturing firm with raw materials that could substitute for maize and soya. He said: “We work in the feed mill industry where we produce livestock feeds. But maize and soya are major challenges. We will like RMRDC to help us to have alternative protein production.”


Kindly share this post
Continue Reading

News

Zinox Chairman Leo Stan Ekeh Donates State-of-the-Art Tech Experience Centre to Federal University Birnin Kebbi

Published

on

Kindly share this post

Federal University Birnin Kebbi (FUB) received a significant boost in its quest to produce globally competitive graduates, following the donation of a multimillion-naira Tech Experience Centre by the Leo Stan Ekeh Foundation (LSEF).

The facility, donated by Mr. Leo Stan Ekeh, Chairman of Zinox Group and Founder of LSEF, was commissioned on his behalf by the President of the Nigeria Computer Society (NCS), Dr. Muhammad Sirajo Aliyu, FNCS.

The centre is equipped with the latest Zinox computers, powered by the iPower renewable energy suite, which features high-performance solar panels and certified lithium batteries. It is also connected to a 24-hour, non-disruptive satellite internet service powered by Starlink, a service that the LSEF has committed to funding for the next five years.

According to Mr. Ekeh, the Tech Experience Centre is dedicated to the use of students and knowledge workers at FUB, with the aim of equipping them with the digital skills and resources required to compete with their peers globally and contribute meaningfully to Nigeria’s economic development.

This centre is one of several cutting-edge technology hubs donated by the Leo Stan Ekeh Foundation to tertiary institutions across Nigeria. It supports the Federal Government’s vision to upgrade the nation’s higher institutions to world-class standards.

For over 25 years, Mr. Ekeh and the Zinox Group have consistently invested in promoting digital education by donating tech laboratories and innovation hubs. In recent years, the Foundation has delivered and equipped centres at St. Augustine University, Lagos, and Imo State University and refurbished older facilities it had donated in the past. According to Mr. Ekeh, the next phase will see the Foundation extend similar interventions to secondary schools across the country.

He called on politicians, government agencies, and wealthy Nigerians to intentionally invest in the nation’s education sector, stressing that a well-educated populace is the Foundation for national development.

Mr. Ekeh expressed his appreciation to the Chairman of the University Council, the council members, Vice Chancellor Professor Muhammad Zaiyan Umar, members of the University Management, staff, and students of FUB, as well as the Honourable Minister of Education, Dr. Tunji Alausa, for their support in accommodating the LSEF’s vision.

Speaking on behalf of the university, Professor Muhammad Zaiyan Umar, Vice Chancellor of FUB, expressed deep appreciation to Mr. Ekeh and the LSEF for the generous donation.

“This Tech Experience Centre will make a remarkable difference in the academic and research output of our students and staff. We are grateful for Mr. Ekeh’s vision, generosity, and long-standing contributions to this institution and to digital education in Nigeria. This facility is more than a building with computers; it is an investment in the future of our graduates and the growth of our nation.”

Speaking on the sidelines of the commissioning, Mr. Chimezie Orisakwe, Head of Corporate Communications for the Zinox Group, highlighted Mr. Ekeh’s sustained promotion of digital learning across Nigeria — from interventions in the media sector to landmark projects with the media, Independent National Electoral Commission (INEC), the National Population Commission (NPC), and others.

He also highlighted Mr. Ekeh’s reflection on the current state of Nigeria’s education sector, warning that many institutions, both public and private, face severe funding deficits. This, he noted, raises the risk of closures, which would deprive graduates of the enduring legacy of their alma maters.

To address these challenges, the Zinox Chairman proposed that the Federal Government adopt a college system and reclassify existing universities. He recommended granting approvals for specialized professional colleges affiliated with reputable universities, similar to the Lagos University Teaching Hospital (LUTH) model with the University of Lagos.

Ekeh emphasized that the quality of an institution’s academic content now matters more than its physical size. Those passionate about establishing tertiary institutions must be focused on their core mission, be willing to invest adequately, and possess the mental and financial capacity to sustain standards.

He further urged that educational institutions be regulated even more stringently than banks, given their central role in producing the human capital that drives both the public and private sectors.

“Educational institutions are not limited liability companies that can be liquidated at will. Their true profit is not in short-term returns but in the quality of graduates they produce, men and women who can lead this nation and give back to the institutions that shaped them,” Ekeh stated.

The donation to FUB is the latest in a long list of interventions by the Zinox Group to support Nigeria’s technological advancement. Through the Leo Stan Ekeh Foundation, the Group has also funded thousands of scholarships, donated modern digital learning facilities nationwide, extended non-interest loans to budding entrepreneurs, and supported churches, hospitals, and humanitarian causes.


Kindly share this post
Continue Reading

News

No More Leaks: FIRS Slaps ₦5m Fine on Info Disclosure

Published

on

Kindly share this post

Nigeria Revenue Service (NRS) Act has introduced strict penalties for the unauthorised disclosure of confidential information and documents by its staff, with offenders facing fines of up to N5 million, imprisonment for up to three years, or both.

The NRS Act is one of four bills recently signed into law by President Bola Tinubu, alongside the Nigeria Tax (Fair Taxation) Law, the Nigeria Tax Administration Law, and the Joint Revenue Board (Establishment) Law. The regulations will take effect on January 1, 2026.

In Part VI of the NRS Act, covering miscellaneous provisions, the law designates all internal records—including institutional information, memoranda, and communications—as confidential.

“Without prejudice to the provisions of any other Act concerning data privacy or data protection, institutional information or communication, all internal information, communications, documents or memoranda of the Service are confidential,” the law states.

It further warns that, “Except as otherwise provided under this Act, any other law or any enabling agreement or arrangement or as otherwise authorised by the Executive Chairman or management of the Service, any person who discloses or attempts to disclose institutional information, communication, document or memorandum of the Service is liable on conviction to a fine not exceeding N5,000,000 or imprisonment for a term not exceeding three years or both.”

The provision applies to all officials and individuals involved in the administration of the Act. The NRS also specified that business records, tax returns, notices, assessments, and documents relating to a person’s assets, liabilities, or profits must be “treated as secret.”

Exceptions to the confidentiality rule include disclosures authorised by the service, those mandated by court order, or situations where the information is needed for the enforcement of Nigeria’s tax laws.

The development follows a February 20, 2024, warning from the federal government cautioning civil servants in ministries, departments, and agencies (MDAs) against leaking sensitive documents to the public.


Kindly share this post
Continue Reading

Trending