It has been one month since President Bola Tinubu committed to invigorating the Micro, small, and Medium Enterprises (MSME) and industrial sectors in order to mitigate the effects of the elimination of gasoline subsidies and currency depreciation.
However, firms in Africa’s largest economy have yet to see any sign of the funding. They do not yet know the disbursement criteria, requirements, terms and circumstances, prospects, or entities that will distribute the monies.
Rising inflationary pressures have eroded the purchasing power of cash-strapped consumers in recent months, while businesses have faced greater operating costs. As a result, many small enterprises have had to close their doors.
“We only have the announcement right now, nothing else. There is no proof that the N75 billion for manufacturers and the N125 billion for MSMEs have been released to the implementing agencies, according to Gabriel Idahosa, vice president of the Lagos Chamber of Commerce and Industry (LCCI).
He claimed that the chamber had recommended swift deployment of the intervention funds when the president made the statement, but that has not happened.
“If the funds had been provided in June, the implementing agencies would have established the procedures for applying and the requirements by the end of July. And most enterprises ought to have been able to access that money by the start of August, he continued.
The only information the Association of Small Business Owners of Nigeria (ASBON) has regarding the fund, according to Femi Egbesola, national president of ASBON, is the president’s announcement.
“As of now, there is no directive regarding the terms and circumstances, prerequisites, applications, or screening process for obtaining funding. The initial group of money recipients has not yet been observed,” he stated.
“And even before the announcement, we weren’t consulted in order to learn about or get justifiable standards that would be fair to businesses. Simply put, I’m perplexed because this is not how things ought to be done.
On July 31, 2023, Tinubu said during a nationwide broadcast that his administration would invest N125 billion in the MSME sector as part of measures to mitigate the effects of the elimination of the gasoline subsidy.
Between now and March 2024, his government, according to him, will invest N50 billion in conditional grants to one million nanoenterprises.
He stated, “Our goal is to award N50,000 each to 1,300 owners of Nano businesses in each of the 774 local governments across the nation.
He claimed that by integrating beneficiaries into the established banking system, this scheme would further promote financial inclusion.
“In a similar vein, we will invest N75 billion in 100,000 MSMEs and start-ups. Each venture promoter will be eligible for between N500,000 and N1 million under this program, with a 36-month repayment period and an annual interest rate of 9%, he continued.
The president claims that between July 2023 and March 2024, N75 billion will be spent to enhance the industrial sector and increase its potential to grow and provide well-paying jobs.
“Our goal is to provide funding for 75 businesses that have the capacity to grow their economies sustainably, accelerate structural change, and increase productivity. Each of the 75 manufacturing companies will have access to N1 billion in financing at 9% interest with a maximum 60-month repayment period for long-term loans and a 12-month repayment period for working capital, the official said.
Read also;
- How vision boards can transform your business goals
- Lagos rail expansion set to boost small businesses, entrepreneurs
- Ekiti agro-business farmers gain boost with L-PRES cluster initiative
- Niger State agriculture generates over N600b in 2024
- SMEDAN unveils #StartWithSMEDAN to boost small businesses
Segun Kuti-George, national vice president of the Nigerian Association of Small Scale Industrialists, stated that while the government may be figuring out the details of implementation, at the very least business organizations should be aware of the location of the funds, the people who will be in charge of them, and those who will be responsible for distributing them.
“Much can occur in a single month. Numerous businesses may close if nothing is done. The story will be different if there is a lifeline, he added.
Petrol prices have tripled to N617 from N184 since May 29, when President Bola Tinubu announced the withdrawal of the fuel subsidy, while the value of the naira has fallen since the currency was floated.
As of Tuesday, the official exchange rate had climbed from N463.38 to N738.18 due to the floating of the currency. The difference between the legal and illegal markets widened to N187.
The National Bureau of Statistics reports that in July 2023, the inflation rate increased from 22.41 percent in June to an almost 18-year high of 24.08 percent.
According to Stanbic IBTC Bank’s most recent Purchasing Managers’ Index, business activity in the nation decreased to 51.7 in July from 53.2 the month prior, the lowest level in four months.
According to analysts at Stanbic IBTC Bank, “rising price pressures impacted demand, with growth of both new orders and business activity softening as the second half of the year got underway.”
According to data from the Nigerian Exchange Limited, foreign investment in Nigerian stocks dropped last month to the lowest level seen since Tinubu’s reforms, which prompted a significant rise in the stock market.
Foreign investors acquired a total of N9.45 billion worth of stocks, down from N22.72 billion in June.
According to Abdulrasid Yarima, president and chair of the governing council of the Nigerian Group of Small and Medium Enterprises (NASME), an increasing number of MSMEs are closing their doors, and members of his group are worried since they haven’t heard anything from the federal government.
“Like everyone else, we anticipated that the interventions would begin right away. Even so, she has not responded to our request for a consultation visit to meet with the new minister.
“We did the same to the vice president, who is the chairman of the MSME council, but since June, he has yet to respond,” he continued.
Wale Edun, the minister of finance and coordinating minister of the economy, and Doris Anite-Uzoka, his counterpart in the ministry of industry, trade, and investment, will spearhead these programs as they pertain to the manufacturing sector, small and medium-sized businesses, he said.
In order to ensure that everyone in Nigeria benefits from the program and that no one is left out, he claimed that the two ministers were figuring out the specifics of how to put these ideas into practice.
About 10% of the 40 million MSMEs in the nation have closed their doors since the elimination of subsidies, according to NASME. According to ASBON’s projection, more than 20% of their 27,000 members have been impacted by the deteriorating economic situation.
“When you make such announcements, you create anxiety and expectations among businesses because, over the last three years, most of them have lost a lot as a result of the COVID-19 pandemic, elections, the naira crunch, the removal of the petrol subsidy, and the naira devaluation,” an official at MAN stated.
He counseled investors to wait patiently and to temporarily decrease their expectations. “The government and ministers should also start developing the criteria for who will receive the funds, conditions, and percentage because if it is not well managed, it may be taken over by the political class,” the government said.
As the hub of any nation’s economic growth, the MSME sector is crucial to market economies. They encourage new employment by developing new goods and services, which eventually accelerate economic growth.
According to the United Nations Industrial Development Organization, the industry generates 50% of the GDP and has created over 48% of all employment opportunities in the continent’s most populated country.
However, small business owners in Nigeria have been battling a variety of problems, such as a bad power supply, increased borrowing costs, skyrocketing inflation, limiting economic policies, fluctuating foreign exchange rates, and a multitude of taxes.
According to the Small and Medium Scale Enterprises Development Agency of Nigeria in Nigeria, 80 percent of SMEs fail before their fifth anniversary as a result of challenging economic conditions, a lack of capital, and subpar business practices, which have stifled the growth and transformation of micro-businesses.
Source: Businessday
Discover more from SMALL BUSINESS INSIGHTS
Subscribe to get the latest posts to your email.
