Nigerian opposition candidate Atiku Abubakar, in his policy document that contains what he describes as his vision for a prosperous Nigeria, says he will increase Micro, Small and Medium Enterprises (MSME) funding window to N500 billion, from N200 billion.
He plans to promote awareness of the National Collateral Registry of Nigeria and further simplify the collateral registration process in the country where a myriad of challenges are making it practically difficult for businesses to thrive.
Atiku says he will remove infrastructure bottlenecks crimping the growth of companies as Nigeria needs to spend a minimum of $30bn (about N9.47tn) annual investments to bridge the infrastructure gap that exists in the economy.
“MSMEs and SMPS (Small and Medium Practitioners) will be given special fiscal advantages including tax breaks and rebates to accelerate business formalisation,” said Atiku.
Atiku will pursue policies that will help harmonise state and federal laws to avoid over taking business while simultaneously pursuing aggressive credits to critical sector of the economy.
MSMEs make up between 90 and 95 percent of Nigerian businesses. The sector is pivotal to the economy as it contributes 48.87 percent to GDP, according to a recent report by Small and Medium Enterprises Development Agency of Nigeria.
Nigeria has 37 million numbers of MSMEs employing 58 million persons, but most businesses close shop in the first five years of operation after capitulating to harsh and unpredictable macroeconomic environment.
The major challenge facing MSME operators is lack of finance. Most Nigerians are poor and they do not have money to set up business while collaterals demanded by banks before giving loans discourage many people from starting a business.
Poverty rates have exceeded population growth, a worrisome situation that calls for urgent actions by whoever is voted president come February.
Over 16 million people out of a population of 180 million are without any form of job, 9 million than in 2014.
Over 2 million new entrants join the labour market each year meaning the unemployed share of the labour force more than triple in less than a decade: from 5.10 percent I 2010 to 18.80 percent in 2017.
A report by Brookings Institution, a nonprofit public policy organisation in USA, reveals that Nigeria has already overtaken India as the country with the largest number of extremely poor in early 2018.
Federal Government has been formulating policies to help promote small business in Nigeria.
The Small and Medium Enterprise Equity Investment Scheme (SMEEIS) was established in 2001 by the Bankers’ committee. The scheme requires all banks in Nigeria to set aside 10 percent of their profit After Tax (PAT) for equity investment and promotion of small and medium enterprises.
The Central Bank of Nigeria (CBN) launched the N220 billion Micro, Small and Medium Scale Enterprises Development Fund (MSMEDF) in 2013- with a view to paving the way for small business access to capital- but many MSMEs say they have not accessed it, though banks say they are disbursing.
Although Atiku’s policy statement for small businesses are laudable, some experts are of the view that the policy is overly optimistic as the country is grappling with lower revenue brought on by a precipitous drop in crude oil price.
The Federal Government has embarked on borrowing spree in order to plunge a budget deficit and fund infrastructure.
The key question is, will Atiku borrow to meet his campaign promises if voted president?
Already, the country’s total public debt is at N22.30 trillion ($73.20 billion) using an exchange rate of $306/N. This compares with N21.7trn as at December 2016 and N17.3tn as at December 2015.
Federal Government’s debt serving cost has been eating deep into revenue, at the detriment of a fragile economy.
In 2011, debt servicing was taking 20 percent of Federal Government revenue. By 2017, it had risen to 61.59 percent.
Nigeria’s FG funds up to 60 percent of its annual budget from the proceeds of oil sales.
If the federal government’s share of oil revenue at N1.12 trillion is compared with the associated cost of servicing debt of N1.64 trillion, clearly, the oil revenue will not be enough to pay interest on Nigeria’s expanding debt, which leaves analysts wondering where Atiku will source N500 billion for small businesses.