BY SIMON REEF MUSA
The capacity by various countries to create job opportunities and grow their economies is directly proportional to their competence in developing the private sector, especially the Micro, Small and Medium Enterprises (MSMEs). It is on this basis that nations of the world have declared unwavering commitment in broadening the frontiers of growth for MSMEs now considered as the engine for national development.
The classification of MSMEs into categories varies from one country to the other. Some of the factors generally considered in classifying MSMEs include employment, paid up capital, turn over and sometimes location and size of the business outfit. In Nigeria, for the purpose of a coherent national policy, the classifications of MSMEs by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) is done using two criteria: employment and assets (excluding land and buildings).
As the agency responsible for coordinating the development of MSMEs in Nigeria for maximum impact, SMEDAN is mandated to, among others, create awareness and carry out sensitization programmes for positive attitudinal changes for effective business decisions; provide business development services like training, counselling and mentoring; create an effective platform where MSMEs can engage themselves in a global environment and promote linkages and access to funding and other forms of collaborations, among others.
According to SMEDAN, the micro business category is employs less than 10 persons and is endowed with an asset base of not more than N5 million. For the small enterprise type, the employment capacity is pegged as from 10 -49 persons, with a capital base from N5 million – N50 million. For the medium category, the outfit is expected to employ from 50-199 persons, with a capital outlay of about N50 million to N500 million.
In a 2011 study on Nigeria’s informal sector, the report estimated that there were about 6. 49 million non-agricultural micro enterprises in the country, with a total employment of 8.97 million. This group was dominated by wholesale and retail trade which accounted for 49% of employment and manufacturing accounted for 30%. Other sectors included repairs of vehicles (3.2%); transport (2.9%); hotels and restaurants (2.6%); building and construction (1.8%); textile, clothing and leather goods (3.8%), among others. The small business outfit represents yet another category, with owners of this category that are premised majorly on sole proprietorship, comprising businessmen and women with large reservoir of manpower and technical skills. The medium category is often seen as the “missing middle” of Nigeria’s private enterprises, with professionals dominating this category.
There is no doubt that a country that can fully harness and develop the potentials of its MSMEs can rise up to become an industrialised nation and tackle the twin monster of underdevelopment and poverty. However, for that to happen, there is need to organise and evolve solid foundation for proper monitoring and development of MSMEs for job creation. The need for database as tool for effective planning cannot be overemphasised. It is against this backdrop that SMEDAN recently embarked on the nationwide registration of MSMEs in order to obtain a comprehensive database for all the estimated 41 MSMEs operating in the country.
To achieve this objective of reliable database for all MSMEs, SMEDAN recently commenced the MSMEs Mass Registration Programme (MMRP) aimed at “incentivized mass registration of MSMEs on a dedicated portal with Unique SMEDAN Identification Number (USIN). It is a more inclusive and sustainable solution to some of the fundamental issues they are daily faced with.”
The MMRP, according to SMEDAN, “is also to facilitate the sourcing, developing, warehousing and managing of a comprehensive and verifiable database of MSMEs with a view to providing wholesome solution to a formalized MSME subsector of the economy. It is designed to provide tailored and critical hand-holding services to the informal operators to ensure their growth, sustainability and diversification.”
For Nigeria that is devoid of a database necessary for formulating policies to broaden and develop operations of MSMEs, the current attempt at the mass registration of entrepreneurial outfits is a step in the right direction. Apart from deploying enumerators to the field to carry out data capture of all entrepreneurial outfits, every MSME that has benefitted or is a potential beneficiary is expected to be registered.
Some of the objectives of the MMRP include providing reliable information for planning and decision-making in the sub-sector; evolving a veritable instrument for driving further research on emergent issues within the Nigerian MSME sub-sector; creating a unique identity in form of a SMEDAN registration number peculiar to each MSME, ensuring subsidized access to specialized advisory and Business Development Support (BDS) services and “building investor confidence as they will see that they are dealing with government recognized business entities and will be willing to commence a business relationship, among others.”
Taking into consideration the rise in unemployment figures, the Chairman of SMEDAN, Otunba Femi Pedro, sees huge potentials in reducing unemployment among citizens and eradicating poverty through development of MSMEs. Apart from the obvious advantages of providing database of grassroots’ entrepreneurs for proper planning and coordination, the prospects for industrializing the nation and developing the rural economy for sustainable economic growth for the country can be attained.
The Director General of SMEDAN, Dr. Dikko Radda, sees the current registration exercise as aimed at availing the MSMEs the opportunities for growth and enhanced access to financial and technical backing and rallying support from lending institutions in tackling poverty and unemployment in the country. Identifying the current mass registration exercise of MSMEs as something that is geared towards benefitting MSMEs through capacity building and post-intervention support services for micro enterprises, the SMEDAN boss is of the view that the current registration exercise of business outfits would “enable the registered MSMEs in the database to subsequently access finance, market, business insurance, technology among others.”
While the MMRP is targeting the integration of over 41 million micro, small and medium scale enterprises across the country, the databank is also expected to be accessible to donor agencies and multilateral organizations, including providing statistics to guide various government agencies on policies and measures for appropriate actions.
There is no doubt that achieving this feat of registering about 41 million MSMEs could require whopping sums of money that could prove a scaring exercise. Considering the advantages of this exercise to both local and international collaborators, the Federal, State and international donor agencies should collaborate to providing funding for the programme. In the present situation where information on Nigeria’s MSMEs is only based on estimates, the need for a comprehensive databank is very crucial in laying strong foundation for the development of MSMEs in Nigeria.
With SMEDAN issuing a Digital MSME Certificate, as well as SMEDAN Unique Identification Number (SUIN) for all registered enterprises in the country, the agency could facilitate the necessary synergies for business relationship for a vibrant entrepreneurial growth. More than anything, in a digital world where information matters, the registration of Nigeria’s MSMEs could become an effective tool in turning around the fortunes of the nation by ensuring a solid foundation for MSMEs in growing the economy and tackling poverty for a nation that is now recognised as the global capital of poverty. Ending poverty and underdevelopment could become feasible when reliable data on enterprises are provided in order to guide government and collaborating agencies develop MSMEs and combat the twin scourge of poverty and underdevelopment.