Dwindling oil revenue has since forced a rethink in strategy in favour of Small and Medium Enterprises (SMEs). The Lagos State government is blazing the trail through deliberate policies and special programmes aimed at galvanising SMEs and engendering the development of the non-oil sector. Assistant Editor OKWY IROEGBU-CHIKEZIE reports that this is in the hope of boosting industrialisation.
The capacity of Small and Medium Enterprises (SMEs) to serve as the engine of economic growth and development is not lost on the Lagos State government. With the growing emphasis on diversifying the economy, following the crisis in the international oil market where the price of Nigeria’s crude oil has been falling, Governor Akinwunmi Ambode’s administration has turned to SMEs for succour.
Specifically, the state is encouraging SMEs through deliberate polices, special programmes and projects, in collaboration with relevant agencies, in the hope of generating employment, creating wealth, and boosting industrialisation. The administration is looking inwards and initiating policies and programmes targeted at engendering the development of the non-oil sectors where SMEs are dominant players.
For instance, at a mini-trade fair of locally-produced goods, organised by the Lagos State government, last week, to commemorate the ‘African Industrialisation Day,’ Ambode said the policy thrust of his administration embraces the private sector as a key stakeholder and prime mover of the economy.
“In the light of this, the provision of promotional tools that encourage the establishment and growth of businesses remains one of the major priorities of this administration. The Lagos State Traffic Management Authority (LASTMA) is repositioned towards ensuring the free flow of traffic across the state, while all agencies of government have been mandated to provide prompt services to the members of the public,” Ambode said.
He assured that his administration would continue to formulate and implement policies and programmes that would consolidate the state’s position as the industrial and commercial hub of Nigeria, with the objective of creating employment, eradicating poverty and promoting sustainable economic development.
Ambode, who was represented by the Commissioner for Commerce, Industry and Cooperatives, Prince Rotimi Adebolade Ogunleye, said Lagos was the most industrialised state in the country, accounting for about 80 per cent of the value added growth in the manufacturing sector.
Apart from generating about 65 per cent of value added tax (VAT), with over 2000 industries, which constitute 65 per cent of the country’s total number of industries, he said Lagos was home to over 200 well capitalised and efficiently managed banking and financial institutions.
This is in addition to accounting for nearly 60 per cent of the country’s Gross Domestic Product (GDP) and 65 per cent of national invest-ment with over 200 firms listed on the Nigeria Stock Exchange and 90 per cent of maritime foreign trade.
Despite these intimidating credentials, Ambode said the administration was not unmindful of the challenges encountered by SMEs and other businesses in the state. He said government would continue to engage members of the Organised Private Sector (OPS) through various fora to addressing the challenges.
Noting, for instance, that concerted efforts are being made to resolve various community-related issues between host communities and investors, he said the state government has created a number of incentives, including creating a one-stop shop of competitive infrastructure.
He pointed out, for instance, that a number of investors have begun business operations in the Lekki Free Trade Zone. Notable among them is the Dangote Group, which, he said, is establishing a world-class refinery and fertiliser plant.
Permanent Secretary, Ministry of Commerce, Industry and Cooperatives, Mr. Olalekan Abisoye Akodu, praised the state government for being responsive to the needs and challenges of members of the OPS, especially SME operators.
He assured that the government was prepared to continue to offer windows of opportunity through policies, programmes and regular forum for interaction. He said this was in a bid to create a conducive investment environment for businesses to thrive.
President, Doublem Enterprise Development Centre, Alhaji Muhammed Mustafa, said the growth of the economy could only be stimulated by deliberate policies targeted at SMEs. He canvassed a collaboration between government and industrialists on incentives.
According to him, this is one of the ways the ‘Asian Tigers’ achieved success; in addition to closing their borders to imported products and unhealthy competition against their local entrepreneurs.
He said Nigeria should borrow a leaf from India, for instance, which, in 1972, came up with a policy that mandated banks to give business loans at four per cent for between four and 10 years moratorium,.
Mustafa decried a situation where multinationals produce water, chin–chin, noodles and bread that should have been the exclusive reserve of local entrepreneurs. He regretted that this could only happen in Nigeria.
He wondered how local companies can compete with multinationals if they are not given a leeway through deliberate policies of government. He also wondered how indigenous entrepreneurs and SMEs can ever grow and serve as the engine of employment generation and wealth creation when the government is not in any way encouraging them.
Decrying the high cost of funds, poor infrastructure provision, over regulation and unfair competition, Mustafa said: “Government is not sensitive to the needs of SMEs; state governments should have their plans for SMEs and not necessarily wait for the Federal Government.”
He pointed out that small businesses are, indeed, the safest for banks to deal with because they can easily be reached unlike the multinationals where ownership is separated from management. “Government at all strata should be interested in giving them loans because if they succeed, they will pay taxes and they also have the capacity to employ more people, create wealth and eliminate poverty,” he added.
An entrepreneur and Managing Director of Goshen Multi Nigeria Limited Mr. Segun Kuti-George, however, tasked government on the establishment of petrochemical industries.
Kuti-George whose company manufactures kitchen tops, bath tubs, bowls, shower trays, and bank counters, among others, said his products have 75 per cent local material content, pleading with thegovernment to set up petrochemical industries.
He regretted that Nigeria remained the only oil producing country in the world without petrochemical industries that manufacture resin, which is a major by-product of the petroleum industry.
For the Managing Director, Vetinal Continental Products Ltd., Mrs. Victoria Okonkwo, there is the need for government to support SMEs, which, according to her, are the only viable vehicle to curb unemployment.
She expressed regrets that, despite the potential of SMEs to create wealth and generate employment, the much- touted N220 billion MSME Fund has not been disbursed because of stringent rules by banks.
She said small companies, such as hers, could not meet stiff conditionalities, such as certificate of occupancy (C-of-O) for properties, which they usually don’t have. She said the machines and equipment of SMEs can be pledged for loans.
Okonkwo also decried the huge cost operators incur due to poor infrastructure, especially electricity supply, which adds to their cost of production and is passed to the consumer.
