SON Plans Pact To Train SME’s On Standard Products

SON Plans Pact With Kwara Govt, To Train SME’s On Standard Products

In a quest to promote Small Scale Industries and businesses, the Standard Organization of Nigeria, SON, is set to sign a memorandum of understanding with the Kwara State government to educate small scale industries on standard products.

READ ALSO: FIRS: States Mull Digital Tax Technology As Revenue Shortfalls Hit 40%

The Governor of Kwara State Governor, Mallam Abdulrahman Abdulrazaq said manufacturing is an important means of reducing unemployment in Nigeria, and his State is set to partner SON in this regard.

Receiving the Director-General of Standard Organization of Nigeria, Farouk Salim, the Governor said manufacturers should receive more support to make international standard products, thereby boosting exports and creating jobs.

Stressing further, the governor said the present administration would encourage small and medium scale businesses in the state and partner SON to uphold standards.

DG, SON, Salim, said he was in the state to launch the organisation’s new multi-million naira office complex and inspect some manufacturing companies in the state.

The DG however appealed to the state government to provide supportive infrastructure manufacturers and other businesses in the state.


Digital Webinar SMEs

BusinessDay with NetPlusDotCom Set to Host March Edition of Monthly Digital Webinar Series for SMEs

In honor of the International women’s month, all the speakers are leading women in their various industries – Akinola Ibukun, Head-Customer Finance, PiggyVest; Ommo Clark, CEO, iBez; Simi Afolabi-Jombo Product Specialist, PayStack and Temitope Williams, Founder, CEO Martwayne will be speaking at the March edition of BusinessDay and NetPlus’s free monthly SME Digital Transformation Webinar Series.

READ ALSO: ‘Batch C’ on an 8 months Auto-Revamp Training Program

Themed “Partnering with Technology to Supercharge Your Business,” this month’s digital webinar edition will hold on Thursday March 25, 2021 from 10:00am – 11:30am.

“The importance of technology can be seen in the drastic difference it has made in many lives around the world especially since the pandemic hit, Adopting tech in business in no longer a question of when in the future but a necessity for right now, today.

This month, we have a lineup of experts in tech who will give insight on how entrepreneurs can boost their businesses using technology,” says Wole Faroun, founder of NetPlusDotCom.

This monthly series is organized by BusinessDay Media, West Africa’s leading provider of business intelligence and information and NetPlusDotCom, a leading technology and digital payment company in Nigeria.

The aim is to create an avenue for SME’s in search for expert information on navigating the effects of the Coronavirus pandemic to learn the modalities of the new age of doing business. It also offers a connecting platform for participants to meet with organizations that can facilitate access to market, finance and digital skills.

To register for this event, please visit:



How SMEs can scale up under the AfCFTA

SMEs can to take advantage of the incentives provided under the new Finance Act to scale up under the AfCFTA.

READ ALSO: Access Bank unveils SwiftPay to boost Digital Payments for SMEs

Independent of the AfCFTA, the Federal Government of Nigeria has in recent times embarked on some far-reaching reforms aimed at enhancing ease of doing business both for the Small and Medium-sized Enterprises (“SMEs”) and across other strata of business in Nigeria. Some of these reforms can be seen in the areas of policies, laws, business formation and registration, post-incorporation filings and taxation. Two of the legislative instruments which are critical to these reforms deserve some mention here:

Companies and Allied Matters Act, 2020 (CAMA, 2020)

The signing of CAMA, 2020 into law by President Muhammad Buhari on 7th August 2020 came as a very cheering news to the SMEs community. Some of the provisions which impact directly on SMEs include but not limited to the following (i) a single member/shareholder for a private company (ii) minimum share capital in place of authorized share capital. This allows promoters of business to pay for only shares that are needed at the point of incorporation; (iii) exemption of SMEs, small companies or companies with single shareholders from the requirement of appointing Auditors to audit their financial records (iv) filing, share transfer and meetings can be done electronically by private companies (v) Statement of compliance which was hitherto signed by legal practitioners can now be signed by the business owner or his agent (vi) introduction of Limited Partnerships and Limited Liability Partnership thereby providing options for promoters who may want to incorporate partnership instead of limited liability companies (vii) Appointment of company secretary now optional for private companies (viii) AGMs and other company meetings can now be held virtually, amongst other reforms.

Finance Act, 2020

Complementing the reforms under the CAMA 2020 is the Finance Act. Enacted first in 2019, the Act was further expanded and re-enacted to among other things address the negative impacts of COVID 19 on small businesses and this led to the new Finance Act, 2020. The new Finance Act was signed into law on 31 December 2020 and took effect from 1st January 2021. It introduced over 80 amendments to 14 different laws such as the Personal Income Tax Act, Companies Income Tax Act, Capital Gains Tax Act, Value Added Tax Act, Customs & Excise Tariff Act, Tertiary Education Trust (TET) Fund Act, Fiscal Responsibility Act, Public Procurement Act, CAMA, Nigerian Export Processing Zone Act and Oil and Gas Export Processing Free Zone Act. SMEs are expected to take advantage of the incentives provided under the new Act. SMEs with a turnover of less than N25 Million are exempted from Companies Income Tax and TET tax amongst other incentives. SMEs engaged in primary agricultural production are qualified for pioneer status for an initial period of four years and an additional two years.

MSME Survival Fund

In a bid to ameliorate the impact of COVID-19 on small businesses, the Federal Government of Nigeria launched the N75 Billion Survival Fund for Micro, Small and Medium Enterprises (MSME). The Fund which was touted as part of the economic sustainability Plan of the Federal government is meant to support small businesses to meet basic operational needs and provide funding in order to boost the production capacity of MSMEs in Nigeria.


The aforementioned reforms and policy interventions provide the needed environment for small businesses in Nigeria and the coming of the AfCFTA could not have been at a better time. The critical question remains, how SMEs can leverage the opportunities provided under the AfCFTA to scale up their operations. SMEs are often considered the economic backbones particularly in developing countries as they account as major contributors to the GDP and in the area of job creation. Nigeria has a vibrant SME ecosystem. Out of the 95 Million SMEs in Africa, over 45 Million of them are in Nigeria. Thus, on the continent Nigeria plays a huge role, accounting for close to 50% of SMEs. In terms of economic impact, SMEs contribute 48% of national GDP in Nigeria, make up the 96% of businesses and contribute 84% of employment. Despite the contribution to the economy, SMEs in Nigeria in particular, have continued to grapple with the challenges of high cost of capital and lack of access to funding as well the inability to compete globally. Due to the largely informal nature of SMEs in Nigeria, obtaining data for the purpose of planning has also been difficult. On this, the role of Small & Media Enterprises Development Agency of Nigeria (SMEDAN) in amongst other things, formalization of SMEs in Nigeria should be encouraged.

One of the objectives of AfCFTA is providing free movement of goods and services on the continent and it is expected that the new trade bloc will afford SMEs the opportunities to scale up and lead to value chain aggregation across Africa. In addition to the limitations identified above, poor infrastructure, multiplicity of regulations and taxes and lack of skills in international trade equally militate against the growth of SMEs. To make matters worse, most SMEs often fail to appreciate the role of professional advisors such as lawyers in the formative stage of their business. The role of trusted professional advisors in navigating the regulatory bottlenecks should not be a trade-off for cost-saving measures as the value of these technical and professional services to SMEs cannot be over-emphasized.

To increase global competitiveness of the SMEs, harmonization of business rules and regulations across Africa is required. Governments in the member States should invest heavily not only in physical infrastructures but in digital technology as most SMEs particularly those in service sector rely on internet and digital platforms to drive their operations. For instance, the expected gains under the CAMA, 2020 have not been fully actualized as recent experience has shown that SMEs still face challenges accessing and using the Corporate Affairs Commission’s online platform because of slow and poor services. Related to this is the need for patient capital to encourage start-ups in order to drive innovations amongst the teaming youths.



TAX: Oman to cut income tax on SMEs

According to state television, Oman will reduce income tax for small and medium enterprises in 2020 and 2021, as well as give long-term residency permits to foreign investors.

READ ALSO: NSE completes demutualisation

The proposals, which were reported on state television, are part of Oman’s Vision 2040, which aims to diversify the economy away from oil, which accounts for the majority of the country’s revenue.

Oman’s economy is one of the poorest in the Gulf, having been hit hard by the coronavirus pandemic and low oil prices. Last month, the International Monetary Fund predicted that the economy will contract by 6.4 percent in 2020, with a moderate rebound to 1.8 percent growth this year.

Income tax will also be lowered for businesses that will start operating this year in sectors aimed at economic diversification.

Until the end of 2022, Oman will also reduce rent in the Duqm Special Economic Zone and industrial areas.

It said granting longer residencies for foreign investors would be done “in accordance with specific controls and conditions that will be announced later after their study is completed by the Council of Ministers, in addition to incentives related to the market.”

The cabinet also approved a long-term urban growth strategy that “is considered a key enabler for achieving Oman Vision 2040,” state TV said citing Oman’s ruler, Sultan Haitham bin Tariq al-Said.


Insurance Plan SME

Insurance Plan for SMEs in Nigeria

Small and medium-sized enterprises (SMEs) tend to cycle outside the insurance loop for reasons ranging from ignorance to cost.

READ ALSO: Nigeria to reward every diaspora dollar inflow with N5

Corporate calculations at the lower part of the enterprise ladder appear to be different from calculations nearer the top, resulting in smaller enterprises preferring to take bigger uncovered risk.

Insurance for small firms is like dashing into the rain without an umbrella the consequence could be uncomfortable, but the choice is more the result of the lack of knowledge than the lack of money.

 Analysts in growing numbers are beginning to realise that small businesses do not insure their assets not because they do not want to, but because they cannot afford to, or so they think.

The problem with small enterprise insurance appears to be a perception of cost rather than an understanding of loss.

Smaller-sized entrepreneurs tend to cost their goods or services without considering cost of insurance, thereby undervaluing the cost of their goods or services.

The consequence is that in a time of crisis they end up sorry rather than safe.

Data from the Nigeria Bureau of Statistics (NBS) show that local SMEs contributed about 48% of the national GDP in the last five years.

With a total number of about 17.4 million, they account for about 50% of industrial jobs and nearly 90% of the manufacturing sector, by number of enterprises.

The NBS report suggests that SMEs support industrialization and employment.  

More advanced economies have equally used SMEs to grow industries and promote development.

What is an SME? Running The Numbers

SMEs may look trivial, but they are the bedrock of several stable global economies.

Base research data indicates that the total cost of starting a micro enterprise (including working capital but excluding cost of land) is N5m but not exceeding N50m, with a labour size of 10 workers.

The total cost of starting a small enterprise (including working capital but excluding cost of land) is between N5m and N100m, but not exceeding N200 million, with a labour size of between 11 and 50 workers, while the total cost of starting a medium-sized enterprise (including working capital but excluding cost of land) is between N100m and N500m, with a labour size of between 51 and 200 workers.

Funding SMEs; The Search for Longevity and Stability

SMEs are usually faced with financial dark holes which have persistently led to their failure.

Despite a few federal and state-sponsored funding schemes for smaller businesses, several SMEs have hit the deck as they quickly run out of cash or find themselves buried under a heap of commercial debt.

Funding has been a key operational problem for SMEs as poor management capacity, weak record keeping, lack of operational transparency and no collateral conspire to keep SMEs out of the formal banking sector credit market.

Aside the lack of funds, other challenges that face SMEs include the lack of skilled manpower, multiplicity of taxes, high cost of doing business, and the low threshold for absorbing economic shocks.

…The Other Problems

Additionally, SMEs are confronted with risk-related issues ranging from, changing taste and preferences of consumers, economic vulnerability, infrastructural constraints such as poor power supply, inadequate supply of potable water, poor access roads, high cost of equipment, high rate of domestic inflation, management risk, marketing risk, reputation risk, natural disasters such as earthquakes, fire outbreak, and floods (especially in the farm belts), social unrest, and arson (like during the EndSARS protests).  

As an entrepreneur the best way to manage risk associated with a business (asides risks associated with managerial or operational competence) is by getting an insurance cover.

It is important to note that risks might be the reason why a venture capitalist would not invest in a business.

Nevertheless, before getting an insurance cover it would be reasonable to profile the business’s risk to determine the appropriate insurance policy to buy.

Admittedly, some of the risks of businesses are unforeseeable (‘black swans’) while others are known but the timing is unpredictable (‘grey swans’).

In identifying risks, it is important to understand that SMEs are businesses in the private sector, and they cut across all industries so, the nature of risk varies according to the industry.

The responsibility falls on the business owner to identify the risk associated with the industry and purchase insurance that reflect those industry-specific risks.

Some risks are uninsurable, in this situation the entrepreneur would do well to still approach an insurance professional to help in assessing the impact of an unforeseeable loss on the type of business the entrepreneur is engaged in and review the best risk-protection strategy.

In such situations, small businesses could self-insure by saving money for possible future losses.

A variety of insurance schemes or plans are critical to risk protection of SME businesses the kinds of risk protection arrangements include: Liability Insurance, Business Property Insurance, Workers Compensation Insurance, Health Insurance, Life Insurance and so on.

All About the Plans

SMEs require standard fare insurance protection schemes some of which include the following:

Fire and Risk Insurance Plan

Fire and Risk Insurance is a vital insurance plan for SME in Nigeria.

It covers your business against, earthquakes, fire outbreak, tsunami, flood, social unrest, intentionally inflicted damages that may occur in the line of your business.

An example was what happened during the end SARS protest that affected business premises and markets.

This insurance plan will protect your business against loss or damage because of rain, flood, and storm. 

Under this plan, your insurer will pay back all your losses, giving you the capital, you need to resuscitate your SME. 


Lagos State Government

Key To SME Growth In Lagos State

Small and Medium-sized Enterprises (SME) are generally regarded as the engine of economic growth in any developing economy. Similarly, a large concentration of SMEs including Micro and Nano businesses are easily noticeable in Lagos State, the economic hub of Nigeria. The State enjoys a high presence of SMEs, Micro and Nano businesses more than any State in Nigeria. Why is that? The simple metric to this is that Lagos State has a population size of about 15 million, according to United Nations (UN) projections and it appears like a country within a country considering the strength of economic activity and populace. 

READ ALSO: P&G Nigeria Partners FG, BoI to Start SME Academy

In fact, without a doubt, Lagos State has a population estimate that is higher than some West African countries namely Guinea (13,132,795), Benin (12,123,200), and Togo (8,278,724), Sierra Leone (7,976,983). Even the population of the State is higher than that of some developed countries such as Finland (5,540,720), Belgium (11,589,623), Sweden (10,099,265), Denmark (5,792,202), and Ireland (4,937,786). Supportably, the population is even higher than the combined population of Liberia (5,057,681), Mauritania (4,649,658), Gambia (2,416,668), Guinea-Bissau (1,968,001) as at 27th February 2021. However, the painful reality is that over 60% of the residents of Lagos State are poor and live in various high density and informal settlements scattered across the State. These residents lack proper sanitation, power, and other basic services, and most of them eke a living from small businesses which includes Nano and Micro businesses most importantly. A visible reference usually includes the operators of kiosks, commercial tricycles, motorcycles and many other informal business operations in the State. 

The estimated figure of micro-businesses in Lagos State is 3,224,324 and to add to this, over 11, 663 SME operates in the State, according to a recent statement from the Lagos Ministry for Commerce, Industry, and Cooperatives. In my opinion, these data are underreported and do not reflect the large informal economy that exists. From reliable data the informal economy employs about 5.5 million people in Lagos State if not more. So, a reliable data base is necessary for adequate planning in the State. 

The small business economic activities in Lagos State can contribute largely to the growth of non-oil sector, employment generation, and the creation of sustainable entrepreneurship. These can largely be driven by businesses in the formal and informal sector in the State. Arguably small business represents over 90 percent of private businesses in the State and contribute to more than 50 percent of employment in the State. Yet the State government has not duly recognised the significance of this sector in the economic development of the State. For instance, the popular computer village in Ikeja, Ladipo spare part market in Oshodi and Balogun market in Lagos Island all consist of clusters of mostly micro-businesses with huge economic engagements but the government of Lagos state is yet to facilitate their formality and capacity building with the required policy and incentive considerations. 

The novel Coronavirus (COVID19) and the harsh economic climate currently with us, has made many of these businesses struggle and some have shut down due to these challenges which includes the perennial issues. That is, from infrastructure deficits (power, road, technology, and so on) to inconsistent government policies, security problems, multiple taxations, regulatory burdens, stiff competition from large companies, entrepreneurial attitude of operators, huge financial and funding problems, lack of meaningful structure, longevity and succession plan among others. SME operators and entrepreneurs strive with different strategies and tactics to absolve many of these challenges and shocks to make any meaningful balance with little or no external support. However, the government needs to realise and recognise that small businesses are crucial to job creation, economic diversification, innovation, poverty reduction, wealth creation, and income redistribution in their policy-making activities. If this sector is well harnessed in Lagos State it can be a huge catalyst in transforming the State economically. 

The vivid truth is that a well-functioning SME sector would add more value to the economic fortunes of the State, sustain livelihoods, reduce poverty by creating more job opportunities in the economy than any other sector. Therefore, proper monitoring and evaluation of this sector are crucial for the economic development of Lagos State. When businesses survive, there will be a reduction in market failures and the more businesses are without survival threats the government can equally benefit from their growth and development. It can increase tax receipts and accelerate the growth of industrialisation in the State. Therefore, the Lagos State government should focus more on policies and programmes to widen the SMEs’ involvement in the formal sector particularly the Micro and Nano businesses. The State government through the appropriate Ministry can implement policies that will enhance ease of doing business in the State to attract operators from the huge unregulated informal sector to the formal sector. The informal sector in Nigeria refers to economic activities in all sectors of the economy that are operated outside the purview of government regulation. Therefore, policies to attract business formality should be considered and formulated, and also the capacity and sustainability of these SMEs, Micro and Nano businesses should be enhanced. Because if all these are set in place it will encourage the development of the formal posture of the SME sector in the State. 

That said, key stakeholders such as the Small and Medium Enterprise Development Agency (SMEDAN), Nigerian Association of Small & Medium Enterprises. (NASME), Association of Small Business Owners of Nigeria (ASBON), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Association of Micro Entrepreneurs of Nigeria (AMEN), The Lagos Chamber of Commerce and Industry (LCCI), Manufacturer Association of Nigeria (MAN), The financial technology (FINTECH) associations, and groups in the Organised Private Sector (OPS) advocate for ways government can create innovative measures to improve business formality, enable secured environment, improve on rule of law, encourage public-private initiatives, invest in infrastructure, and consider policies as the needed. Corruption has also remained a very serious problem that needs to be genuinely addressed because it can threaten any development policies and programmes of the State. 

The support of these teeming Small, Micro, SME and Nano businesses is also imperative and strategies to sustain their business operations should be key in the decision-making process of the government of Lagos State. The national bureau of statistics suggested many of the Nigerian youth are unemployed, majority of them can be meaningfully absorbed into this sector through self-employment, startups, and financial technology (FINTECH), if the SME sector is made viable with adequate enabling environment. 


SME Academy

P&G Nigeria Partners FG, BoI to Start SME Academy

Leading manufacturers of trusted quality brands in Nigeria, Procter & Gamble (P&G) Nigeria, in partnership with the Federal Ministry of Trade and Investment (FMITI) and the Bank of Industry (BoI), has initiated an SME Academy program to find sustainable solutions to unlock the efficiency and performance of small and medium scale businesses in the country.

A statement from the company said the training, which took place on October 3, 2019, in Ibadan Oyo State, is a follow-up to the agreement made with the federal government earlier in the year.

READ ALSO: SME Sensitization Tour’ at Osisatech Enugu

The goal of the SME Academy is to find sustainable solutions to unlock the efficiency and performance of these enterprises through advisory and skills development, as these are key constraints to the growth of SMEs in Nigeria.

Managing Director of P&G Nigeria, Mr Adil Farhat, said, “The development of SMEs through capability building is a demonstration of Procter & Gamble’s commitment to transforming Nigeria’s Entrepreneurship ecosystem.

READ ALSO: NBS, SMEDAN, to Confirm Number of MSMEs in Nigeria

“When we decided to impact SMEs in Nigeria with support from the Federal Ministry of Industry, Trade and Investment, we were interested in developing an empowering model that would accommodate as many entities as possible.

“Our partnership with the Bank of Industry is strategic, as they have the capacity and expertise that would accelerate this vision into sustainable realities; which aligns with our goals for this program”.

Speaking on the objectives of the program, the Regional Manager (West) of the Bank of Industry (BOI), Mr Kagara Ahmed said: “It is important for SMEs to focus on knowledge acquisition to optimize their people, physical resources, processes, and products/services in order to guarantee sustainable business profits.

“BOI is committed to the development of SMEs in Nigeria because we believe that a vibrant SME sector is critical to the transformation of Nigerian industrial sector. The focus of today’s SME Academy is to effectively enhance the management systems of SMEs to ensure that their operational processes from initiation to completion is of quality and sustainable standards.”

Among its other objectives for the initiative, Procter & Gamble aims to provide practical guidance designed specifically for highly innovative SMEs with sustainable ambitions that are determined to turn strong, innovation towards total economic activity.

The SME sector has become increasingly important to economies around the world, with a World Bank Study estimating their presence to be between 365-445 million in emerging markets. It is also the leading source of employment in Nigeria, amassing over 80% of the region’s workforce.



Millions of MSMEs pushed to the brink amid lockdown

A large chunk of Nigeria’s 41.5 million MSMEs could go under due to the coronavirus-induced lockdown aimed at halting the spread of the deadly virus.

Joshua Adekunle happily survived on packets of sweets before the coronavirus-induced lockdown. His entire life was anchored on the daily sales he made under Obalende Bridge in Lagos. All his wares were worth N5,500 and he made daily sales of N500 to N1,000. As little as these were, they took care of him.

READ ALSO: NBS, SMEDAN, to Confirm Number of MSMEs in Nigeria

But since the announcement of total lockdown in Lagos two weeks ago by President Muhammadu Buhari, Adekunle’s life has seemed hopeless. He has sold all his wares at an auction and spent the money on food.
“My biggest concern now is to eat some food,” Adekunle, who sleeps in a dingily-lit one room at Ajah with four other micro business owners, said.

READ ALSO: Business owners recount tales one year after COVID

“I don’t know what to do after the lockdown because there will be no money to start life again,” he said.
A large chunk of Nigeria’s 41.5 million Micro, Small and Medium Enterprises (MSMEs) could go under due to the coronavirus-induced lockdown aimed at halting the spread of the deadly virus.

The measure to control the virus is in line with global best practices, but it will lead to shocks, shutdowns and unprecedented job losses in Nigeria as the Federal Government continues to drag on plans to provide palliatives to help the businesses, analysts say.

Millions of workers will not return to their jobs after the pandemic, with unemployment peaking at 23 percent before the pandemic. The World Bank said in a 2015 report that 40-50 million additional jobs were needed between then and 2030 to reduce poverty and boost inclusive growth. MSMEs contribute 50 percent to Nigeria’s GDP and account for 86.3 percent of jobs (59.6 million jobs in 2017), according to a report by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).

Ike Ibeabuchi, chief executive of a small-scale manufacturing outfit in Enugu and Abuja, said he has no money to pay his workers because there is no production, distribution and, consequently, revenue.

“The year is lost for some of us who are in small and medium businesses,” Ibeabuchi, who produces chemicals, said. “Even after the pandemic and lockdowns, the consumers will be so poor that they can’t buy, and firms won’t be able to raise prices, even though the situation warrants that.”

In 2016, oil price fell to below $40 per barrel, leading to low foreign exchange inflows into the Nigerian economy that relies on oil proceeds for 75 percent of its revenue and over 90 percent of FX.

Between 2016 and 2017, about 272 MSMEs were forced to shut down, with 180,000 jobs lost, according to a 2017 survey jointly done by NOI Polls, the Manufacturers Association of Nigeria (MAN) and Centre for the Studies of Economies of Africa.

The current situation will be worse, say analysts, with everything from production to supply on lockdown, and recession knocking.

Chukwubuike Nnoli, chief executive of Zubnol Limited, producer of pillows and mattresses in Anambra, has asked his workers to go home. Raw materials he ordered have not arrived and his customers are in their rooms.

Temiloluwa Smyth, CEO of Smyth Couture, a fashion designer, said since the pandemic, people have stopped making outfits as there are no events or occasions to wear them to.

The national survey of MSMEs conducted by NBS and SMEDAN in 2017 said the number of MSMEs has risen from 37 million to 41.5 million MSMEs. The growth is due to the rising number of survivalists who opened micro businesses in the face of economic slump in order to survive. Small businesses face multiple taxation, high energy cost, poor access to credit and infrastructure, but the current situation has combined with these age-old problems to worsen their plight.

“The number of medium-sized enterprises decreased significantly from 4,670 in 2013 to 1,793 in 2017, indicating a 61 percent drop,” the NBS and SMEDAN report, which covered between 2013 and 2017, said. This means that 2,877 firms shut down within four years.

Degun Agboade, president, Nigerian Association of Small and Medium Enterprises (NASME), said the COVID-19 pandemic and lockdown have been devastating for MSMEs in the country, especially for micro businesses who survive on daily incomes.

“The impact has been colossal on us. Everything is totally paralysed and many of us will not be able to recover when all this is over. The impact will be longer than we expect and the government is not doing enough to support us at this time,” he said.


SME Loans

Loans: Why its difficult for SMEs to get from  banks.

“Onyeagwu gave all these insights while speaking in an interview with Arise TV on why Nigerian banks charge high-interest loans”

The Group Managing Director of Zenith Bank, Mr. Ebenezer Onyeagwu  has discussed the impressive positive returns recorded this year by the bank. He also shared some insights on the relationship between commercial banks in Nigeria and Small/Medium Enterprise business owners.

READ ALSO: Investing during a recession.

Onyeagwu gave all these insights while speaking in an interview with Arise TV on why Nigerian banks charge high-interest loans, making it difficult for small business owners to get single-digit loans for their business, the Zenith Bank GMD explained that the operational costs and regulatory costs involved in running a bank usually sets the pace for every other thing.

He listed examples of operational costs involved in running a single bank branch and how all that adds to the bottom line at the end of the day.

He also highlighted regulatory costs which are not particularly known by people outside the banking sector as one of the costs of doing business banks face.

These two factors mainly contribute to the high-interest rates banks charge on loans.

“Our cost profile depicts the operating environment. Within the year we saw an upward review in fuel price, which accounted for the increase in our fuel cost. Again, when you are looking at cost of doing business, you also need to look in total, how businesses are being conducted. If I set up a branch today, I would need to provide my infrastructure, I need to provide power, water and in some cases, we even construct the road to provide access to the branch location. So, as a result of the poor state of infrastructure, you see that businesses would now have to contend with providing these resources to get their operations running. So, if we have more available and cheaper utility services and infrastructure to support businesses, of course, the cost would go down.

Then, looking at cost of doing business in banking, it goes beyond those operational costs. We also have things like regulatory cost. A bank like Zenith, given our size, the burden of regulatory cost on us is heavy. By regulatory cost here, I am referring to the Nigeria Deposit Insurance Corporation premium and the Asset Management Corporation of Nigeria fee. So, because of our size, if you look at the numbers, you will see that these regulatory costs account for a whopping 28 percent of our overhead. So, all of them come together to add to the cost of doing business for us as a banking institution in the country,” Onyeagwu said.

On why it is difficult to get single-digit loans from Nigerian banks, Onyeagwu highlighted 3 key reasons why single-digit loans are very difficult to obtain in Nigeria. He listed the following:

  • Fiscal deficit
  • Government Borrowing
  • Money supply and demand

The Zenith GMD stated that it is nearly impossible to issue an interest rate by fiat. He stated that the interest rate will always be determined by market forces.

He said, “First of all, if you are looking at the interest rate, you have to look at it in terms of the theoretical framework and issues around money supply, demand for money, issues around government borrowing, and the fiscal deficits. So, when you put all that together, you will see that you cannot have a situation where you decree interest rate by fiat. Interest rates would always be set by the dynamics and realities in the market. In this case, if you are looking at the interest rate in Nigeria, you have to index it to the risk-free rate. The one-year risk-free rate in Nigeria is like 10 percent. So, it will be difficult to have a single-digit rate in Nigeria.” 


Onyeagwu highlighted the various ways the Central Bank of Nigeria has intervened in a bid it provides single-digit loans to entrepreneurs in certain sectors. Sectors like cinema, movie, ICT, and fashion designing have been enjoying single-digit loans courtesy of various CBN initiatives.

He said, “We have intervention funds such as the Creative Industry Financing Initiative, where banks in the country provide long-term single-digit funding for entrepreneurs who are in cinema, movie, ICT, and fashion designing. We also have what is called the Agri-Business/Small and Medium Enterprise Investment Scheme. It is also a pool of funds available for businesses in that space. You can as well access these loans. Apart from these, the CBN also has different intervention schemes such as the Anchor Borrowers Scheme, the Commercial Agricultural Credit Scheme, and others, and all these loans are single-digit and they provide long-term financing. The big problem we have is that when you see an SME approaching you for the loan, the SME may not have a track record; he walks up to you and tells you that he needs a single-digit loan and needs N20 million.

“But I can’t give you N20 million without looking where you are coming from. So, we cannot decree the interest rate by fiat. But the regulators have done good work by providing funding schemes and whoever is eligible would get such single-digit long-term loans once they meet the criteria. So, the funding is there, but the SMEs when they approach the banks don’t often meet the eligibility criteria.” 


First-bank SME

Firstbank Unveils First SME Account…

First Bank of Nigeria Limited, Nigeria’s premier and leading financial inclusion services provider, has announced its SME specific accounts designed to reinforce the Bank’s role in putting SME’s at an advantage whilst contributing to national growth and development.

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The SME accounts – which are in two variants – First-bank SME Classic and First-bank SME Deluxe – are offered to SMEs, irrespective of industry, and tailored to have SMEs exposed to a wide range of services and opportunities that are essential for their continued growth and role in contributing to national development.

The advantages and features of these accounts include; access to Temporary OverDrafts (TODs)and other facilities subject to meeting Risk Adjustment Capital (RAC) of each product; immediate enrollment on all digital platform; free access to FirstBank SME events; free access to extensive business promotional and networking opportunities on the SMEConnect portal; access to a wide range of discounted and promotional offers.

Amongst the many opportunities available to holders of FirstSME account is the SMEConnect initiative of FirstBankwhich is a platform through which SMEs access the Bank’s unique propositions that will equip them with the essential tools needed for the growth of their business.

The SMEConnect portal is also designed to help SMEs identify various gaps that hinder their business growth. With FirstBank’s over 126 years of impacting the economy, the Bank’s SME innovative Business Diagnostics Tool will also help proffer tailored solutions, whilst creating avenues for business improvement, profitability and sustainability.

Following extensive research by the Bank, 7 strategic pillars have been considered essential for the sustainability and growth of SMEs. The 7 pillars – connect to infrastructure, connect to talent, capacity building, connect to policy and regulation, connect to resources, connect to market as well as connect to finance.

According to Chief Executive Officer of FirstBank, Dr. Adesola Adeduntan, “FirstBank is delighted to unlock several opportunities for SMEs to thrive. Our FirstSME account is one of the numerous opportunities designed to empower SMEs to continually drive impact as the backbone and contributors to employment and economic growth.

Being woven into the fabric of the society for close to 127 years means that we remain at the forefront of providing the desired financial products and services to fit the needs unique to the SMEs as well as facilitating the requisite tools and resources to efficiently and effectively drive business sustainability and expansion strategies essential to taking SMEs to the next level’’