SMEs: OPS decries gradual growth decline

By: Taiwo Hassan

Members of the Organised Private Sector (OPS) have lamented that several issues impacting on Nigeria’s business environment are causing small businesses to go under.

Indeed, the first quarter Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS) gave an insight into the state of the country’s fragile economy.
Specifically, the NBS reported that the Nigerian economy grew by 2.01 percent year-on-year (in real terms).
However, the year-on-year comparison showing that economic growth of 2.01 percent increased by 0.12 percentage points when compared with 1.89 percent recorded in the first quarter of 2018.
Most worrisome, however, was the performance of the manufacturing sector for the Q1’19, which showed 0.81 percent, falling to 2.59 percentage point when compared with 3.4 percent of Q1 2018 and by 1.54 percentage points as against 2.35 percent of Q4 2018.
With the above statistics, the OPS insisted that contraction in the country’s economic performance in the first quarter of 2019 indicated that the economy was still fragile and government needs to pay more attention to the challenges hindering optimum utilization of the capacity in the manufacturing sector and the economy at large.

Volatility

However, the uninspiring confidence in the economy has shown that all is not well mostly with the manufacturers and SMEs operators operating in the real sector of the economy and there is constant need for improvement.
Undeniably, the current constraints impacting the country’s business environment have no doubt put imbalance in the survival of SMEs businesses in the country.
Particularly, at a Manufacturers Association of Nigeria’s (MAN) forum in Kano, Kano state recently, the association explained that constraints had continued to limit manufacturers’ capacity to compete both within and outside the country.
MAN pointed out that in the domestic market, its members were struggling against unfair competition from goods imported or smuggled into the country from low cost and relatively advanced economies.
“Outside the country, our exports are not competitive because of the inadequacies of the macroeconomic environment, including infrastructure and export facilitation policies,” the association said.
It listed major constraints bedeviling the country’s manufacturing/SMEs sector to include infrastructure deficit, multiplicity of taxes, policy contradictions, exorbitant cost of clearing and transporting raw materials from ports to the factories, poor access to Lagos ports, weak port infrastructure to increasing incidences of smuggling, counterfeiting and high unsold inventory of locally manufactured goods. These constraints have led to the sector facing challenges of attaining its full potential.

Operators’ woes
Chairman, Small and Medium Enterprises (SMEs) Group of the Lagos Chamber of Commerce and Industry and value-chain operator in the agribusiness sector, Abiodun Oladapo, in a chat with New Telegraph in Lagos, on the fate of SMEs in the current business clime, explained that many of its members were still groaning over dearth of infrastructure.
He pointed out that lack of basic infrastructure had resulted to inadequacy in the capacity utilisation of many SMEs, which is currently still at low ebb.
The LCCI SMEG chairman explained that manufacturers/SMEs were facing challenges in their businesses and this could be linked to the abysmal performance of the country’s manufacturing sector.
Oladapo revealed that challenges in the form of high inventory of unsold products, inadequate electricity supply, frequent increases in electricity tariff in the face of poor services from distribution companies and abnormally high-interest rates were still manifesting in the country.
In his own reaction, the Director-General, LCCI, Muda Yusuf, disclosed that at the LCCI council meeting this month, he called for a concessionary tax rate for small and medium-sized enterprises in order to promote the objectives of job creation and inclusive growth as enshrined in the economic recovery and growth plan.
According to him, it is very difficult for small businesses operating in the country to survive this current business clime because of the fragility in the economy.
Yusuf stressed that small businesses were more vulnerable to go under with the current challenges in the economy, hence the high mortality rate.
These groups of businesses, the LCCI DG said, deserve every support that the government can give.
Recently, at the World Bank Group and the African Centre for Economic Transformation, in Accra, Ghana, the President/Chief Executive of the Dangote Group, Alhaji Aliko Dangote, told the world that unavailability and erratic supply of power across the continent has been identified as the biggest impediment to Africa’s growth.
“No power, no growth. We need to make sure we tackle the issue of power,” Dangote said.

The billionaire said small businesses on the continent could not survive without stable power when the income or revenue generated was used in purchasing diesel to power and service generators.
According to him, “these generators are meant to be backup or standby. But now the generators are providing consistent power and the grid is now standby.
“That does not make sense. For example, the entire state of Kano, with a population of 21 million people, has a power supply of less than 35 megawatts from the grid. These are the issues we need to tackle.”

Last line
It is regrettable that the volatility in the economy is not being addressed properly by the government, so Nigerians should expect more high mortality in SMEs businesses in the long run except drastic actions are taken.

 

This article was published by the New Telegraph

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