Nigeria Business & Finance Updates

‘Nexus between MSMEs advancement and contribution to national development’

Micro, Small and Medium Enterprises (MSMEs) have been generally acknowledged as the backbone to the success of developed nations, gaining popularity through the success rates in such developed economies that invested in the sector.

From unemployment reduction to its contribution to government revenue, the benefits of a well-developed MSME sector can never be over emphasized. Given their contributions, nations have set out plans to develop the MSMEs sector to achieve economic growth.

In high-income countries, MSMEs contribute well over 65 per cent of employment and about 48 per cent to the GDP, while in low-income countries, they contribute to about 30 per cent of employment and about 15 per cent of GDP.

There also exists a relationship between the informal sector, MSMEs and economic development. In low-income countries, the contribution from the informal sector is rather high, unlike high-income countries where the contribution from the informal sector is low.

This gives room for the development of the informal sector, to reduce the gap between the formal and informal sector and allow the poor to actively participate in the economy

For the Nation to be among the 20 most economically advanced nations in the world by the year 2020, serious attention must be paid to the development of the MSMEs sub-sector in Nigeria

The contributions of MSMEs to the economic growth of countries have been very significant. SMEs are viewed as an engine of growth that contributes enormously to the nation’s Gross Domestic Product (GDP) employment generation, industrial output poverty alleviation, export promotion, and self-independence

In Nigeria, despite the fact MSMEs has been identified as a tool for economic development and provision of employment, variety of challenges seems to have a negative impact that constraint MSMEs from playing the vital role of stimulating economic development/

Ranging from; Lack of financial capabilities, management issues, inadequate infrastructure, sociocultural issues, government policy and unstable political system.

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In view of the current situation regarding MSMEs in developed countries and the need to encourage growth of the sector in the developing countries like Nigeria, that the Convention on Business Integrity (CBi) in collaboration with ActionAid and Lagos Chamber of Commerce and Industry (LCCI) unveiled web-based solution to help MSMEs meet COSO 2013 standards.

The Chief Executive Officer, Convention on Business Integrity (CBi), Soji Apampa, explained that a web-based design was aimed at preparing MSMEs to meet the COSO 2013 standards on internal controls and to establish certifiable anti-bribery, anti-corruption standards (ABAC).

Apampa explained that notwithstanding the various challenges faced by businesses in Nigeria, MSMEs can distinguish themselves from other organisations by being compliant with international standards as a competitive edge and subscribing to the COSO 2013 framework.

He added that donor organizations, as well as development banks, have had cause to stop MSMEs from participating in their activities because of integrity issues in a process called Debarment.

“MSMEs in Nigeria are severely challenged by issues of undercapitalization, lack of records, difficulty to the access to bank credit, high cost of doing business, irregular power supply.

“Additionally, inability to separate personal finances from business, corruption, infrastructural inadequacies like bad roads, government lack of interest in the sector’ amongst a host of others summarily explain their challenges.

“Issues such as falsification of their year of incorporation, doctoring the value of reference contracts and tampering with the experience of key personnel.

“However, compliance with international standards and subscribing to the framework can help address these challenges and put your business in a vantage position to ensure competitiveness,” he said.

Presenting the business model of the platform, the Information Technology Manager, Integrity Organization Limited, Maduka Okafor, explained that the value proposition of the platform was to enable MSMEs to understand ethical and anticorruption standards.

Okafor explained that the platform served as a marketplace of service providers who provide regulatory interface services and also helping MSMEs internally assess themselves and show credible evidence of conformance with standards and regulations.

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Furthermore, he noted that the customer segments expected to make use of the platform are International Donor Agencies, Banks and Other Financial Institutions, Venture Capital Firms, Large Enterprise Companies and most importantly MSMEs.

He disclosed that the key partners supporting this initiative are Center for International Private Enterprise CIPE, Department for International Development (DFID), other international donor agencies, financial institutions, and service providers.

He also explained that the platform was secure and compliant with the General Data Protection Regulation (GDPR) standards on data protection and covered the requirements needed to comply with the COSO 2013 framework.

A panel session headed by Chairman, Nigerian Association of Small and Medium Enterprises (NASME), Solomon Aderoju, agreed that more incentives could be used as a motivation tool to drive the usage of the platform amongst other benefits.

“MSMEs remain the backbone of major developed economies and they are important contributors to employment, economic and export growth.

While, MSMEs contribute 48 per cent of national GDP, account for 96 per cent of the private sector and 84 per cent of national employment; they are still faced with challenges hampering their growth.

“It is thus important for MSMEs to work towards thriving in this economy by differentiating themselves from the crowd and building processes on systems not on individuals in order to ensure sustainability,” he said.

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