SMEs Are The Bedrock Of Nations’ Economy

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It may be a culture or inherited beliefs but the greatest thing to happen in a civilized country is focusing attention on the development of Small Scale Enterprises.

Nigeria is facing an herculean task of inhibiting the promotion of medium enterprises, which is dated back to Babangida ere of Betterlife for Rural Drivellers established by Late ex First Lady Mariam Babangiida who is regarded as the patriot of women involvement in governance.

Today, Nigeria’s economy is growing, although the domestic growth per capital or state is 7% compared to the era of petro discovery dated back to pre-civil war period in our match to political and economic emancipation of our people from squalor and oppression.

Modern day concepts and theories reveal that no meaningful success could be achieved without cognizance of developing Small Scale Enterprises which comes under the umbrella of micro-economy policy of the Central Bank to assist farmers, traders, artisans in the country.

In Nigeria, Small Medium Enterprises could flourish where the government of the day lay emphasis on assisting peasant farmers to grow Cash and Food Crops for subsistence and promoting homemade goods and foreign exchange reserves.
The Macro-economy of the nation’s systematically gives reliance on production as the life-wire of our existence.

Hitherto factors that promote production economy are Land, Labour, Capital and Entrepreneur. Nigeria’s reliance on oil boom era spell dooms because our leaders are unable to activate the gains of oil exploration within the period 1970 – 2016, which is forty-six years of match to greatness.

United States of America was on the limelight of preserving oil for forty years whereas Africa or say Nigeria has NO RESERVOIR for oil which may fall in the OPEC market.

FOCUS ON NACCIMA

One of the fore fathers of SMEs is the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture – NACCIMA, which one of the aims is to assist Small Medium Enterprises to grow and provide the people with daily wants.

No meaningful success can be achieved by Small scale Enterprises without the assistance of the banks to providing loans to improve the sector.

NACCIMA, is geared towards finding a lasting solution to the small scale enterprises, and in doing so, the organization according to First Deputy President Iyalode Alaba Lawson, “we are working on the review and monitoring of policies guiding access to loans since the SMEs are the bedrock of the economy, government has to provide the enabling environment and loans to entrepreneurs”.

However, SMEs are faced with problems among are inadequate loans, interest payable on loans has risen to 24% instead of 7%, raw materials availability, power generation is a big blow to sustainability of the sector, land for agriculture is another problem, nowadays granting usage of land for agricultural development rests on government intervention for land owners to provide hectares of land to cultivate farm projects, yet if money is provided, SMEs owners need education to help manage the business, training of manpower to effectively have knowledge of modern day equipment eg: tractors, ploughs, fertilizers and the application of management techniques on irrigation which will hitherto help farmers to harvest abundant crops for subsistence.

In Nigeria or the world, the economy has gone to low level with oil not able to solve OPEC members’ problems. The global recession is a bane to our development, and for a nation to manage her economy, the leaders must be above corruption, such a country must provide for working class, widows and old age people, then there will be a smooth running of the government.

Ipsofacto, let us examine the advantages of Large Industry over Small Scale Enterprises.

COMPARISIM

Large Scale industry

Small Scale Enterprises

1.   Capital higher, and requires collateral security. Capital is low and may not require collateral since govt. atimes assist farmers through Fadama and others.
2.   Land to site an industry is usually inflated considering European partners participation. Land is provided by govt, to farmers and even NYSC members are assisted on land Development for subsistence.
3.   Labour force are on the increase and are paid heavily. Labour force is low, workers may not be remunerated largely due to capital and turnover.
4.   The turnover is high which gives room for expansion and wide profit margins. The turnover is low thus expansion may not fluctuate as expected in SMEs.
5.   Training of workers in other countries assists the large scale industries to progress and availability of skilled workers. Less workers are trained and may not require money to expand the scope of business integration.
6.   Borrowing power is not limited in large scale industries where collateral are available. Borrowing power is low and collateral may not be required.
7.   Transportation of goods and services are provided on demand. Transportation of production goods may not require big money hence per capital gains are on a low level
8.    Advertisement of goods and services in Newspapers, magazines, Radio, Tv stations are provided on a large format. Advertisement rate is low and may not be necessary where owners are semi-literates.
9.   Banking and insurance services are provided on a large scale even marine insurance assist goods to move from one country to another. Banking and insurance services are on low demand hence profit margins may be low.
10.                Security Guards services are provided even money are being moved by security vans to far destinations. Often security services may not be provided due to availability of capital for such infrastructure.

In summation thereof, having compared the merits of large scale industries over the small medium enterprises, it is necessary to assert that dependence on manpower training, availability of constant power generation, provision of loans will hitherto contribute to expansion but in a growing Small Scale Enterprises little capital is requires but are often being funded by governments, which is aimed at assisting peasant farmers to produce for subsistence, the margin of ratio of profits are higher in large scale industries, and this will help fluctuation of prices in the market.

But largely the participation of governments in Small Medium Enterprises are on the increase nowadays since they are the bedrock of the down trodden economy.

Prof Rev Aderemi Ayoola
Chairman Editorial Board of Landmark Africa, Management and Public Relations Consultants.

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