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2019 Budget: What’s In It For Small Business Owners?

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In presenting the 2019 Budget to the Joint Session of the National Assembly on Wednesday, December 19, 2018, President Muhammadu Buhari said:

‘’To further support Small and Medium Scale Enterprises, which are the focus of our industrialisation drive, we have set aside the sum of N15 billion for the recapitalisation of the Bank for Agriculture and the Bank of Industry.

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‘’In addition, the sum of N10 billion is provided as a grant to the Bank of Industry for the purpose of subsidising the interest rates charged on loans to Small and Medium-Scale Enterprises. This is intended to make it possible for them to access single digit interest rate loans from the Bank of Industry.’’

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Continuing, the President said:

‘’A key objective going forward is to further encourage and enable ‘prosperous small businesses’. Our micro, small and medium enterprises will accordingly benefit from improved access to funding, supporting infrastructure and off-take arrangements by Government and larger enterprises. They will leverage the Government Enterprise and Empowerment Programme, and the Anchor Borrowers Programme.’’

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The President added:

‘’In addition to the development of Special Economic Zones which will underpin our efforts to move away from a mono-economy, we intend to exploit the comparative advantages of the Six geo-political zones and our 36 states by establishing Six Industrial Parks and 109 Special Production and Processing Centres across all 109 senatorial zones including shared facilities. These clusters will have power, water, and broadband facilities with embedded regulatory services. The clusters will generate vibrant economic activity, stimulate small businesses and create jobs across the length and breadth of Nigeria.’’

Given these projections, what can Small Business Owners look forward to in the 2019 Budget? Does the President’s Budget instil confidence and certainty for small businesses? Are there areas of concern to Small business Owners that the 2019 Budget did not address?

The implementation of the provisions, and achievement of the objectives, of the 2019 Budget, as it concerns Small and Medium Enterprises, will definitely enhance their chances of success.

The Bank of Agriculture currently has a negative capitalisation, having depleted its loanable funds. Consequently, its share of the N15 billion grant earmarked for it (and the Bank of Industry) will bring the now-comatose development finance institution back to business.

Besides its share of the N15 billion recapitalisation fund, the Bank of Industry will also receive N10 billion towards subsidising its interest rates on loans to Small and Medium Enterprises. At a time the Bank of Industry claims to be advancing credit to its clients at single-digit rates, and these clients allege that the interest rates on the credits they receive are in double-digits, this subsidy has the potential of making the bank’s loans more affordable to its borrowers at the recommended single-digit rates.

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There is also the promise of the 2019 Budget to enable ‘’prosperous small businesses’’ to ‘’leverage the Government Enterprise and Empowerment Programme, and the Anchor Borrowers Programme.’’ The 2019 Budget or the Federal Government does not define ‘’prosperous small businesses.’’

Perhaps subsequent pronouncements on the Budget and related matters may clarify that. Suffice to say that this provision may be Government’s response to the persistent and growing complaints of Small Business Owners and target beneficiaries of the aforementioned programmes, to wit: The Programmes inhabit the fertile imaginations of their creators or live in the realm of good intentions and, when they exist, their success stories are overly exaggerated.

This is in spite of claims like the one made by the President during the Budget presentation when he said: ‘’The Government Enterprise and Empowerment Programme has seen to the disbursement of 1,378,804 loans to small businesses and farmers in all states including the FCT. These are interest free loans that will be paid back.’’

Government equally plans to create Six Industrial Parks (one for each geo-political zone) and 109 Special Production and Processing Centres (one for each senatorial zone), all with such shared infrastructural facilities as power, water and broadband internet. These clusters aim to generate economic activity, stimulate small businesses and create jobs.

These are laudable projects but there is doubt about their faithful and timeous implementation during the plan period, because the Budget is for an election year that is pregnant with uncertainties.

Be that as it may, a major concern of Small Business Owners not addressed by the 2019 Budget is the ease of doing business. According to the World Bank annual survey, Nigeria dropped from 145 in 2017 to 146 in 2018 in a ranking of 180 economies. Vice President Yemi Osinbajo, head of the Presidential Enabling Business Environment Council (PEBEC) that seeks “to remove bureaucratic constraints to doing business in Nigeria, and make the country a progressively easier place to start and grow a business”, underlined the challenge when he said:

‘’When a potential business owner wants to register a company, collect tax clearance certificate or obtain NAFDAC registration or SON certification, expatriate quotas, any other papers, approvals or certification from government and we do not willingly and efficiently help him or her, we are killing the jobs and prosperity that he would have created.”

That’s right. Government must pay greater attention to improving the ease of doing business which, in turn, will help achieve the objective of the 2019 Budget and enhance the environment for Small and Medium Enterprises to survive and thrive.

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