The Nation Newspaper

Tag: SMEs growth

  • Dubai reinforces status as hub for SMEs growth

    Dubai, United Arab Emirates (UAE), has launched a series of initiatives aimed at positioning itself as productive base where the cost of doing business is significantly reduced for Small and Medium Enterprises (SMEs) from Nigeria and other countries around the world.

    Apart from the forthcoming Expo 2020 Project, which will see Dubai hosting the first ever World Expo in the Middle East, Africa and South Asia (MENA), the Dubai SME, the agency of the Department of Economic Development mandated to develop the SME sector in the Emirate, has been supporting local entrepreneurs.

    The agency extended support to 4, 227 local entrepreneurs in 2018, an increase of 32 per cent from 2017, while the value of its incentives and facilities increased 63.4 per cent to AED101 million in 2018, from AED 61.8 million in 2017.

    Also, 5, 767 entrepreneurs benefit-ted from Dubai SME’s services, training and development programmes, a 163 per cent increase compared to 2017.

    In addition, 1, 175 national companies were launched in Dubai in 2018, thanks to the support of Dubai SME.

    “The UAE and its leadership are committed to supporting entrepreneurs and creating a supportive economic climate for small and medium enterprises,” CEO of Dubai SME Abdulbaset Al Janahi said.

    He also said financial support has been part of Dubai’s offerings for SMEs, as the Mohammed Bin Rashid Fund (MBRF), the financial arm of Dubai SME, supported 18 projects with a financial assistance of AED14 million in 2018, an increase of 147 per cent over 2017.

    Al Janahi added that as Dubai prepares to host Expo 2020, UAE-based trade finance banks are seeing new opportunities to support more small businesses.

    They recently rolled out a new banking package for local SMEs and startups involved in Expo 2020, which included preferential pricing and privileges on transactions, working capital, trade finance, foreign exchange and commercial loans.

    In the last few years, Dubai has emerged as SME hotspot for new specialised niche sectors. One of such sectors that has witnessed exciting SME growth stories is fintech.

    Dubai has become a major hub for fintech startups, thanks largely to government support and initiatives undertaken by the Dubai International Financial Centre (DIFC).

    DIFC’s unique experimental licences, market leading pricing and collaborative workspaces have been instrumental in spawning a vibrant fintech ecosystem that is unrivalled in the wider region.

    Al Janahi said Dubai is also setting up new dedicated SME clusters focused on entrepreneurial innovation. Dubai

    SME along with Meraas and the Department of Economic Development (DED) recently signed a partnership to launch Al Seef SME District, an innovation hub within Al Seef.

    The hub, which pays tribute to Dubai’s origin as commercial trading port, offers a dedicated space for new businesses from the design, fashion, F&B and information technology sectors.

     

     

     

  • Govt restates commitment to SMEs growth

    The Lagos State Government has reiterated its commitment to promote the growth of Small and Medium Scale Enterprises (SMEs) in the State.

    The Commissioner for Wealth Creation and Employment, Mrs Uzamat Akinbile-Yussuf disclosed this on Wednesday, during a lecture to mark the Global Entrepreneurship Week, held at Folarin Coker Hall, Alausa, Ikeja.

    Read also: Do credit guarantee schemes encourage banks to lend to SMEs?

    Speaking on the theme of the lecture, ‘’GEW inclusion: Minimising barriers by maximising inclusion,’’ Akinbile-Yussuf, who was represented by the Permanent Secretary in her ministry, Mrs Abidemi Raji, noted that entrepreneurship is the major driver of economy all over the world.

    She said: ‘’ Let me assure that the state government shall continue to provide enabling environment for businesses of Small and Medium Enterprises (SMEs) to flourish. Let me also assure all the stakeholders of the commitment of this present administration to work with all groups and interest to achieve the overall policy thrust of poverty alleviation and sustainable economic growth for the State.

  • How to boost SMEs’ growth, by Obi

    FORMER  Anambra State governor, Mr. Peter Obi has listed factors that can boost Small and Medium Enterprises’ (SMEs) growth.

    Obi spoke during the just-concluded Commonwealth Business Forum in London.

    He said: “First, it has been universally acknowledged that SMEs are the backbone of any nation with good economic growth. The available statistical evidence is indicative of the correlation between SMEs, developed nations and hopeful developing nations, especially in their productive capacity and in the area of job creation.

    “Our understanding of the challenges, which SMEs face within the Commonwealth requires our grasping fully the challenges SMEs face within individual Commonwealth countries. Although the total GDP of 54 Commonwealth nations is $10 trillion, four of these countries (the United Kingdom with about $2.6 trillion, India with about $2.4 trillion, Canada with about $1.5 trillion, and Australia with about $1.2 trillion) account for over 75 per cent, while the rest of the 50 countries account for the balance of 25 per cent and only about ten (the U.K, Australia, Brunei, Canada, Cyprus, India, Malta, Pakistan, Singapore, and New Zealand) could be said to be outside the orbit of the so-called Third World economies.”

    He said the policies and support of Commonwealth countries to SMEs must be designed to accommodate the vagaries and different challenges within the various nations. The SMEs in various Commonwealth countries are consistently faced with management and development conflicts within their territories, Obi added.

    According to him, in Africa, for instance, these challenges compound the realities of those Commonwealth countries where everyday governance and developmental challenges are underpinned by stability deficits, organisational deficits, as well as scientific and technological deficits.

    He said it is not about reinventing the wheel, Commonwealth nations should understudy the impressive economic record achieved by China. China, which has the fastest sustainable economic expansion than any other major economic power in modern history, has grown its economy within a quarter of a century from a GDP of less than $1 trillion to a GDP of about $12 trillion.

    “China, with half of the 2.4 billion population of Commonwealth countries, achieved these impressive records with industrialisation and export as its back-bone.  SMEs contribute 70 per cent of China’s export earnings and 60 per cent of its 800 million jobs.

    “It then follows that with the right policies and support to SMEs across the various Commonwealth countries, the total GDP of these countries could see a growth of up to 18 trillion dollars by 2030, the deadline for achieving the Sustainable Development Goals (SDGs). “Such achievement would help the Commonwealth countries to create about 200 million jobs, which would be a third of the World Bank target of 600 million jobs within the said period, considering that the population of the Commonwealth countries is presently a third of the world population,” Obi said.

  • BoI, NAFDAC to drive SMEs growth

    BoI, NAFDAC to drive SMEs growth

    The Bank of Industry (BoI) and National Agency for Food and Drug Administration and Control (NAFDAC) have partnered to drive Small and Medium Enterprise (SME) operations in the country.
    The acting Managing Director, BoI, Mr. Waheed Olagunju, explained that the partnership would see both organisations develop the SME sector deploying the use of standardisation.
    The acting BOI boss, during the signing of memorandum of understanding (MoU) with NAFDAC?, ?added that “For this country’s economic recovery to be fast-tracked, both agencies must work hand in hand to support particularly Small and Medium Enterprises (SMEs). Those who produce food must receive NAFDAC certification and endorsement before they can access credit and the importance of this is that if you do not have NAFDAC numbers, you cannot sell your products in the open market and a situation where you cannot sell, your business model will become defective while your business plan will not materialise and unless we are able to establish that you can sell your products when they are produced, we will not lend to you, because it is only when you sell that the cash flow projections on which loan repayment is predicated is when the cash flow projected can be realised. For us it is very important for our customers to be accredited by NAFDAC.”
    Olagunju, explained that in 2017, the development finance institution will see much of its developmental funds targeted at ailing firms and brown field projects, maintaining that these projects have a faster turnaround time by way of job creation and other positive multiplier effects.
    “In 2016, we granted loans to more than 800 companies. In 2017, we plan to do more than a thousand because that is one of the fastest ways of ensuring quick recovery of the Nigerian economy and we are concentrating on brown fields, because new projects take about 18 to 24 months to implement before they start feeling the impact of such companies by way of job creation and other multiplier effects, but we are focusing on ailing firms because their turnaround times are usually shorter and as such, they can begin to employ quicker than green field projects,” he said.
    Responding, the acting Director General, NAFDAC, Mrs. Yetunde Oni, said the signing of the MoU for is a culmination of exchanges between the two organisations on ways to further entrench the policy thrust of the federal government on development of the non-oil sector of the economy.
    She pointed out that the collaboration with BoI is win-win for all parties, saying that it is business support plus [BS+].

  • ‘Finance central to SMEs growth’

    ‘Finance central to SMEs growth’

    Capital is the  most important factor  for the sustainable growth of small and medium scale enterprises (SMEs), the Head, SME Banking, Stanbic IBTC Bank, Mr. Obinna Ukachukwu, has said.

    In an interview, he said without capital, it would be difficult for any business to attract finance or investment.

    According to him, if the promoter of a business does not know the value of the business, it is very unlikely that any investor or financier will be comfortable committing money because the equity or debt investor is bringing in money in exchange for value.

    “If you don’t know the value of your business then you do not expect a debt investor to put in his money,” Ukachukwu said.

    He explained that the value of a business can be determined if the proper structures, such as proper book keeping, annual reports, tax returns, auditor’s report, and record of banking transactions, which form the history of the business, have been put in place.

    He, therefore, encouraged business owners and entrepreneurs to engage the services of professionals to ensure the right structures are in place.

    “When you have generated capital, you have determined your business’ worth, you then need someone to attest to that in form of documentations, whether it is your banker, your auditor or your tax man. Having these in place will make it easier for you to attract debt or equity financing,” Ukachukwu said.

  • How banks can stimulate SMEs’ growth, by Standard Bank chief

    With Nigeria’s small and medium enterprises (SMEs) sector buffeted by a myriad of challenges, banks have the capacity to reverse the trend and put the sector on the path of sustainable growth, Head, Personal and Business Banking West Africa, Standard Bank, Lincoln Mali, has said.

    He said SMEs in Nigeria face diverse challenges such as management, finance and business environment. In the area of management are issues such as skills shortage, management expertise, financial management, business support and access to markets, while in the area of finance, the SMEs are confronted with cost of capital, lack of collateral, information requirements, regulation impact and culture clash.

    Mali noted that SMEs have underperformed, despite that they constitute over 90 per cent of Nigerian businesses, and their contribution to the nation’s Gross Domestic Product (GDP) is below 10 per cent.

    Also, MSMEs are estimated to contribute 10 per  cent of the employment level in Nigeria, a level well below that of several other countries, including United Kingdom (UK) at 54 per  cent; United States (US) at 50.3 per cent; Bangladesh 80 per  cent; India 80 per cent; Belgium 66.6 percent; South Africa 60 per cent; Malaysia 57.7 per cent, and China 58.8 percent.

    Enhancing financial inclusion according to Mali, is a major driver for moving SMEs from survivalist mode to formal entrepreneurship, and this is where banks have a pivotal role to play. Among other areas that banks can make the difference, according to him, include facilitating basic business trainings and various capacity development programmes; up-skilling relationship managers to become professional business advisors; providing various lending solutions and linkages between corporates and the SMEs in their value chain and strong partnership with MFIs to drive inclusive growth.

    Others include having a real financial inclusion focus with the capacity to understand the market and properly de-risk it; providing some infrastructure to identified SME clusters as CSR (internet access, warehouses, trade portals); advocating for standardised measures of taxation and levying of SMEs in local markets; and leveraging on international affiliations to sponsor knowledge sharing between local SMEs and their foreign counterparts.

    Though the commercial banks have the capacity, but they lack penetration, as they are largely concentrated in Lagos, Abuja and a few commercial hubs. This makes it imperative for banks to create workable partnerships and innovations for deeper penetration, leveraging existing capital to empower businesses and in turn drive economic growth.

    “There will always be opportunities for those with the proper business skills to build a real future for themselves and the economy. At Standard Bank, we are extremely proud to help facilitate this process by helping to structure the financial packages that will help advance the success of SMEs in Nigeria and elsewhere in Africa,” Mali stated.

     

  • ‘Lack of technical, financial mgt hamper SMEs growth’

    Lack of technical and financial management capacity has been identified as two of the greatest impediments to the growth of Small and Medium Enterprises (SMEs) in the country.

    The sector is also constrained by the prevailing economic environment as well as the pessimistic attitude of operators.

    Managing Consultant, Resort Consult Limited, a financial consultancy firm, specialising Mr. Femi Ekundayo, who spoke in Lagos, also lamented that SME operators also lack good management structure and accounting system to make them attractive to financial institutions for any form of assistance.

    With the economic crisis caused by declining oil prices and subsequent devaluation of the naira, SMEs that depend on high import with its associated foreign exchange risk are unable to compete in the global market place. The lending rate of between 20 and 30 per cent is also considered unfriendly for SMEs as most of them find it challenging to sustain their businesses at that level.

    “It takes a lot of persuasions to make them know that there is light at the end of the tunnel for them,” he said, adding that a lot of interventions have been made in the sector that has brightened the prospects for SME operators.

    Mr Ekundayo whose company was one of the 122 successful Business Development Service Providers (BDSPs) that signed a service agreement with (BoI) recently, to provide professional services to SMEs, said most SMEs lack the technical capacity to package their feasibility studies and businesses very well.

    He also noted that despite being acknowledged globally as the engine of economic growth because of its potential to create jobs, boost production, generate income and reduce poverty, the SME sector is weighted down by harsh economic environment. For instance, most SMEs are weighed down by high operating cost due to lack of basic infrastructure particularly power.