LAGOS – Small businesses in the country face many challenges and other issues, a major one being access to funding.
Mr. Segun Kuti-George, a past chairman of the Lagos State chapter of the Nigeria Association of Small Scale Industrialists (NASSI), spoke on the on the issues in this interview, he also looked at other issues that concern small businesses.
According to him, funding is a very big challenge for small businesses and that is because they are considered high-risk by financial institutions.
“So, providers of funds do not want to touch them. The high-risk areas are where they can get huge returns, but they have concentrated their funding in the hands of larger industries to the extent that over 70 per cent of Nigeria’s funding loans are in the hands of less than 30 per cent.”
He argued that the costs of the funds are high, adding that interest rates at 24, 25 to 30 per cent cannot help production. “If you are doing trading, maybe, but for someone to produce, you cannot use funding of 20 to 30 per cent.”
He posited that the main reason that leads to the underdevelopment of the growth of MSMEs in the country is inability to access funds.
However, he said that the association has engaged in advocacy with the government and its funding agencies. He added that some of the programmes of the government in recent years are a product of advocacy. Of the association
However, he stated that when the policies and programmes are executed, small businesses do not benefit because the conditions that they cannot meet are imposed.
Speaking of regulation, Kuti-George said that if sector is under-regulated, that would have been very favourable to operators. But rather, “we are being over-regulated, and I have said this in different fora.
Regulation is good because we cannot leave the entire space unregulated. We will have trouble in our hands; we will have substandard goods, death and sicknesses in our hands. But we should not also over-regulate. What I have had to tell some of these agencies is that patriotism also has to play a role in the way we regulate.”
On whether members of his association have accessed interventions from the government, he said: “For those interventions that are non-monetary in nature, every MSME is going to benefit especially those things that relate to the removal of VAT, lowering taxes, and tangible turnover and the likes. That is a welcome development and we commend the government.
“As for other interventions that have to do with loans and grants, the grants are quite very low and inconsequential. I don’t see what N50,000can do for small or medium enterprise owner who fills his or her car with N50,000 fuel. It may make a little sense for nano business owners or household business operator,” he said.
He added, “Our position has been those interventions don’t actually get to actual targets, the way out is for the government has to liaise with the business membership organizations (BMOs). My association in Lagos, for example, has a cooperative and the members are very vibrant, cooperative and 95 percent compliant, and has over 95 percent recovery rate and people get loans from the cooperative within 48 hours and the security is a guaranteed by another member of the corporative who also has a certain balance.
“ If the government wants to give money to the BMOs and they are serious about it, let them channel it through the BMOs. You call them and ask them how to go about it. You give money to people who have never been in any business, never produced anything to administer loans to people who are actually in the eye of the matter.
“If they are serious about it, then work through the business Membership Organizations. If you give the money to a cooperative, for example, they know their members; they know who is doing what.
“ They won’t give N10 million to somebody who needs N3 million because they know what the person is doing. Let the BMOs administer these things and from time to time and the government can get report from them at the end of the year or two try to find out what is happening there.
Read the full article here
