Economic Confidential

Small and medium enterprises (SMEs) are critical to achieving government's objectives of transforming the economy as a build-up to meeting the Millennium Development Goals (MDGs).

In the light of this, any collaborative programmes involving the enhancement of SMEs are always given attention, especially in the Africa sub-region.

Because of its centrality to economic growth, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) in collaboration with the National Bureau of Statistics conducted a survey in 2010 on SMEs in the 36 states and the Federal Capital Territory.

The survey showed that there were more than 17 million SMEs in the country, which employed more than 32 million persons and contributing 47 per cent of the gross domestic product.

The report further informed the Ministry of Trade and Investment's commitment to obtaining credible and reliable data for planning and policy formulation on virile micro, medium and small enterprises in the country.

The stakeholders and the government will not, therefore, controvert the fact that if SMEs are strengthened, they are indeed, incontrovertible contributors to job creation, wealth creation and poverty alleviation.

The Federal Government's deliberate effort at making the country to be rated high among the 20 most industrialised nations by 2020 has also elicited external supports such as assistance from regional financial institutions.

For instance, in January 2013, the African Development Bank (AfDB) signed an agreement to provide two sovereign-guaranteed multi-tranche lines of credit (LoCs) to Nigerian Export-Import Bank (NEXIM) and Bank of Industry (BOI) to support export-oriented SMEs modernisation and expansion.

The first line is $500 million to BOI and $200 million to NEXIM which AfDB believes will allow local SMEs to be more competitive, scale up their operations and ultimately create more jobs in Nigeria. The LoCs will include a technical assistance package to strengthen institutional capacity at both BOI and NEXIM as well as at their SME clients.

Through this integrated financing package, the AfDB is supporting Nigeria's efforts towards a more diversified economy away from oil and gas.

The LoCs will supply multi-sector financing to address the challenge that SMEs face in accessing finance in the country.

Signing the agreement, Dr Ousmane Dore, AfDB's Resident Representative in Nigeria said the bank's combined programme would contribute to mobilise significant financial resources for Nigerian export-oriented SMEs.

He said the programme would also contribute to economic development, employment opportunities, foreign exchange and regional trade integration.

In his remark, Mr. Robert Orya, NEXIM Managing Director, commended AfDB's support through the programme.

``NEXIM seeks important economic development achievements, including approximately 55,000 new jobs for its SME clients, $1.6 billion in foreign exchange and an overall contribution of almost seven per cent to non-oil exports,'' he said.

He said this will include a 10 per cent share in Economic Community of West African States (ECOWAS) exports.

He said the facility would provide a great opportunity for NEXIM to make available concessional long-term funding in pursuance of its strategic objectives of enhancing value-added exports and bolstering the capacity of SMEs for job creation and foreign exchange earnings.

Speaking along the same direction, Ms. Evelyn Oputu, the BOI Managing Director, said that the the AfDB's operation would generate significant additional lending to the nation's export-oriented SMEs client.

According to her, the new credit line would come to the rescue at a time when it is sometimes difficult for commercial banks to finance this important sector of the Nigerian economy.

But economists have raised the concern that there are some challenges in the development of SMEs in the areas of access to finance, improving the business environment, promoting the value chain and regional economic integration within the ECOWAS sub-region.

In addressing the challenges, Dr Samuel Ortom, Minister of State for Trade and Investment, allayed the fears of the stakeholders.

Speaking in Abuja recently, Ortom said ``I want to assure the public that this government aims at moving the sub-sector forward as it is putting all machinery in motion to ensure that jobs are created for the teeming unemployed youths and women in the country.

He however, emphasised that availability of reliable and detailed SMEs database would accelerate the translation of the general policy framework into effective and sustainable intervention programmes.

All the same, economic analysts believe that developing a group of diverse and competitive SMEs is a central theme towards achieving sustainable economic growth for the country.