As the economic situation in Nigeria bites harder, worsened by the impact of coronavirus-induced lockdown across different parts of the world, relief may soon be coming the way of micro, small and medium enterprises in Nigeria.
The MSME sub-sector is without doubt one of the worst hit since the pandemic broke out effectively in the first quarter of the year.
The MSME sector has been identified as the backbone of major developed economies, as well as important contributors to employment, economic and export growth.
In July, a PwC report said that in Nigeria, MSMEs contribute 48% of national GDP, account for 96% of businesses and 84% of employment.
Similarly, in South Africa, SMEs account for 91% of businesses, 60% of employment and contribute 52% of total GDP.
Since the pandemic broke out, prolonged lockdown has forced many MSMEs to close shops, just as it has wiped off the funding capital of over a million others. For those whose operations are tied to logistics, the restrictions placed around vehicular movements across the country has had its toll on their businesses.
In a bid to address these concerns, the Nigerian government Thursday flagged off two schemes to financially support about 1.7 million micro, small and medium enterprises across the country with N75bn.
According to the Minister of State for Industry, Trade and Investment, Mariam Katagum, the schemes would impact positively on businesses.
Katagum made this known at a briefing on the flag-off of the National MSME Survival Fund and the Guaranteed Off-take Stimulus Schemes under the Nigeria Economic Sustainability Plan.
The Economic Sustainability Plan was approved by the Federal Executive Council in June, following its initiation by the Economic Sustainability Committee that was established by President Muhammadu Buhari earlier in the year.
The committee is chaired by the Vice President, Yemi Osinbajo, and it comprises several ministers and the Group Managing Director of the Nigerian National Petroleum Corporation as well as the Governor of the Central Bank of Nigeria.
Katagum noted that in keeping to its promise to support businesses overcome the challenges posed by the COVID-19 pandemic, the Nigerian government was set to commence nationwide implementation of the two MSME initiatives.
The N60bn MSME Survival Fund and the Payroll Support schemes would be rolled out first, while the N15bn Guaranteed Off-take Scheme would then follow.
“Both schemes are at the core of the N2.3tn stimulus package, also known as the Nigeria Economic Sustainability Plan being implemented to help cushion the impact of the COVID-19 pandemic,” Katagum said.
“This is with a view to boosting the economy by saving existing jobs and creating new job opportunities.”
She explained that a 10-man committee was inaugurated in August with membership from the private and public sectors including the Vice Chairperson, Mrs Ibukun Awosika, chairman of First Bank.
Although the development signals a breath of fresh air for MSME operators gasping for air amid uncertainties, there are concerns over the utilisation of such funds.
In the past, the disbursement mechanisms put in place for similar fund have been trailed by allegations of nepotism and political considerations.
There are also concerns on how such opportunities would be directed to genuine beneficiaries in the absence of relevant data.
Speaking at a forum in October 2015, Folahunmi Aina, special assistant to Yemi Kale, statistician-general of the National Bureau of Statistics (NBS), said many MSME operators do not have adequate data about the business they do, stressing that no bank will be willing to invest in any business it is not sure of its numbers.
However, other analysts have raised concerns over the poor collection of relevant data on existing MSMEs across the country, even by regulatory officials of government.
As the government prepares to support small businesses disrupted by covid-19, these and other issues would determine the success or otherwise of the funding initiative.