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By Merit Ibe
Since the onset of COVID -19 pandemic in the country, businesses across the spectrum, especially micro small and medium enterprises (MSMEs) have faced a number of hitches coupled with the already weak economy, which has forced some small businesses out of business. While some reduced the quantity of goods being bought, manufactured, some others are turning to cheaper markets to source goods or raw materials.
The rising cost of energy, transportation, devaluation of the local currency, acquisition of land, poor infrastructure, multiplicity of taxes and levies from different tiers of government, security and inconsistent government policies have been the bane of small businesses.
Though the Central Bank of Nigeria, through its stimulus packages tried to intervene to cushion the effect of the pandemic on businesses, many MSMEs still complain of not having access to funds.
Government had introduced a number of impressive initiatives in form of economic policies, schemes and projects aimed at encouraging businesses and consolidating prior achievements.
Among such initiatives last year were specific stimulus packages such as N50 billion facility for SMEs and Households, N100 billion for Healthcare and Pharmaceuticals, N1trillion for manufacturing and agricultural sectors and more.
This is expected to boost the performance of different sectors so as to overcome the current challenge and for companies to sustain their operations instead of experiencing further decline and shut down.
Stakeholders commended the various CBN funding windows but decried the poor implementation which has hindered the attainment of the noble objectives of these funds, thereby forcing many small businesses to wind up.
Chairman, Lagos Chamber of Commerce and Industry (LCCI), SMEs Group, Daniel Dickson-Okezie, who disclosed that many businesses shut down in 2021, noted that it was as a result of COVID -19, forex and other challenges, admitting that SMEs were going through a lot of difficult times in the history of the country.
“Already, the economy was in bad shape before the pandemic hit the country, which led to a lockdown that devastated almost every sector.
The aggregate demand dropped. People needed the purchasing power to buy because income decreased as they were locked in for sometime..
To make the matter worse, rising cost has been a major challenge to SMEs. Cost of electricity, fuel, virtually cost of everything increased; market price increased. When inflation rate is high, forex not favourable, exchange rate is getting worse by the day, at the end of the day it’s difficult for SMEs to do business because they have lesser capacity to withstand shock and the challenges of in the business environment.
“These challenges affect all businesses not just small businesses, but the big ones or the multinationals have better capacity to withstand any decline or sudden challenge.
“The situation at the ports is not making things better. Importers impute all the cost of importation, clearing and movement, at the end of the day, MSMEs bear the final cost, because most small business owners are not importers.
“These challenges make it difficult to do business.
“For the case of funding, the bigger businesses have better opportunities. They find it easier to source funds for their businesses unlike the SMEs .
“As chairman of SMEs Group in the chamber, member of council and Advocacy Committee, member of other business organisations and the organised private sector, I stand to say that these loans and funds from the Federal Government have not been received by SMEs, as they complain each day of having not accessed the so called loans.
“In a summit by stakeholders supporting SMEs, which was chaired by the commissioner for cooperatives, the commissioner alluded to the fact that business owners were complaining that they were not getting the funds. The issue has been a major source of concern.
“We are still interfacing and advocating. Recently we met with the deputy governor of the CBN and the director of Development Finance, Adedeji . We agreed that the disbursement of SMEs funds henceforth should be done through the Business Membership Organisations (BMO) . We have agreed with CBN and with other government regulatory agencies that any disbursement of fund should be transparent and better still pass through the BMOs- the organised private sector. That is the position.
“Doing business in Nigeria, the business owner is at the negative receiving end. Infrastructure is decaying daily and security is a major threat to all businesses not just SMEs.
In a meeting of the chamber with service chiefs, chief of army staff and major stakeholders on “Security meets business,” we raised the issue of investors not likely to invest in the country which is unsafe as the security situation is deteriorating by the day.
“Some SMEs have shut down while some that are still struggling to survive, some are relocating from the North to other parts of the country and safer climes as moving goods has been challenging.
“Our roads are death traps, like the Okene- Lokoja road, if accidents don’t kill due to bad road, bandits will molest and kill travellers.
“We have really been battling multiple taxes which have been ravaging SMEs. We got up to a point that we were able to make sure that businesses that are not making up to #25million turn over are exempted from VAT in the finance act. The challenge we have now is the local government taxes. We are trying to handle multiple taxes at both the local and state levels.”
For her part, Chairman, National Association of Small Scale Industrialists (NASSI), Lagos Gertrude Akhimien, decried the security situation, saying it has forced many SMEs out of business.
“Insecurity is a major reason for the shut down of many SMEs. Many SMEs who are into production need raw materials which they have not been able to access due to the security situation especially in the Northern part of the country.
“Small business owners are afraid to risk their lives due to the senseless killings and kidnappings. So, the little raw materials that come in are expensive and at the end of the day, there is no profit. As I talk to you now, five bakeries just shut down. The bakery section just raised an alarm of the continuous rise of raw materials as such many have closed shop waiting till price stabilises . If price keeps increasing consumers cannot buy they rather make alternatives.
“These are not make believe stories. With the spate of killing and kidnapping the country is not safe for business. Many SMEs have shut down, even in the association.
“Members are lamenting seriously, Getting market for their goods is quite difficult, as purchasing power has gone down and people are prioritising their needs now. .
“For funds, SMEs are not getting the funds from the Federal Government, how can they remain in business. Nothing seems to be working.”
