TOWARDS A ROBUST FRAMEWORK FOR DEVELOPING MSMEs IN NIGERIA

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TOWARDS A ROBUST FRAMEWORK FOR DEVELOPING MSMEs
IN NIGERIA

• BY
• M.A. ADELAJA (MRS)
• DIRECTOR-GENERAL
• SMEDAN
• BEING THE KEYNOTE ADDRESS AT THE STAKEHOLDERS
  CONSULTATIVE FORUM ON SMEs
• THE NIGERIAN ECONOMIC SUMMIT GROUP
• THURSDAY, 14TH SEPTEMBER, 2006.

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Outline of Presentation

• Importance of MSMEs
• Performance of Nigerian and Global MSMEs
• MSME Importance in Figures
• Why the Gap in the Performance of African SMEs
  vis-à-vis their Peers in Europe and Asia?
• Strategies for Closing the Gap and Improving SME
  Performance
• What SMEDAN is Doing
• Conclusion

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Importance of MSMEs

• MSMEs a central force in the economic growth
  and development of many nations
• Have reputation for employment generation,
  economic empowerment and, by implication poverty
  alleviation
• Ubiquitous, therefore accelerating more evenly
  spread development in nations
• Quickly adapt to changing circumstances, with
  their potential to innovate giving them a
  critical edge in the market place
• Some statistics to underline MSME importance...

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The place of SMEs globally and specifically in
Africa
?
?
?
? Industrial sector figures only
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Why the Gap in the Performance of African MSMEs
vis-à-vis their Peers in Europe and Asia?

• Two major reasons
• First is the difference in the motive for going
  into business (most African SMEs are necessity
  entrepreneurs, lured by unemployment and poverty
  into business as a means of survival unlike
  their counterparts in Europe and Asia, who are
  opportunity entrepreneurs in business in
  pursuit of market opportunities)
• Second are a combination of internal and external
  constraints which Nigerian MSMEs face

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Factors Behind the Gaps contd
Weak Infrastructure
EXTERNAL GAPS
Weak Access To Finance
Zero book record
Lacks corporate governance
Low Education
GAPS
INTERNAL
Informal Operation
Acts and thinks locally
Financial Miss-management
Operating Environmental Challenges
Unfair Competition
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Strategies for Closing the Gap and Improving SME
Performance
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What SMEDAN is Doing
SMEDAN
Business Information
Business Development Services
Enterprise networking/ Cluster Formation
Advocacy Improved Operating environment
MSME Policy
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Conclusion

• Empowering the small business promoter. Four
  major elements required
• transform existing necessity entrepreneurs to
  opportunity entrepreneurs
• deal with the weaknesses inherent in the MSMEs
  with BDS and
• deal with the challenges imposed by the operating
  environment with emphasis on infrastructure
  (especially power and workspace), the
  legal/regulatory environment and access to
  finance
• Seeing MSME development as a value chain matter
  from project conception to the product/market
  place
• Failure in these areas would make the ECOWAS CET
  (Common External Tariff) a threat to our MSMEs
• Such failure would also aggravate the poverty
  cycle
• As the premier institution for MSME development
  in Nigeria, SMEDAN believes in partnership with
  public and private sector institutions to
  champion the cause for MSME development in
  Nigeria
• Other institutions should appreciate the
  statutory role of the Agency and align/harmonise
  their functions accordingly

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Conclusion (Contd)
Poverty life cycle
poverty
Conflict
Unemployment
Diseases
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Conclusion (Contd)

• Without getting involved in direct production,
  the government has a catalytic role to play in
  boosting the productivity of the MSME sector, if
  the percentage of those living below 1 per day
  must be halved by 2015
• But government intervention must be within a
  market-friendly framework (e.g. subsidizing
  purchase of BDS from private service providers
  rather providing it directly)
• The Nigerian government may also require the
  support of the international community and
  multilateral agencies to strengthen the MSMEs
• But a lot depends on us ourselves, within the
  framework of NEEDS I NEEDS II (just around the
  corner)

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THANKS FOR YOUR ATTENTION