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3 reasons SMEs fail according to Fidelity Bank MD

Onome Ohwovoriole by Onome Ohwovoriole
December 6, 2017
in Business News, Company News
Nnamdi Okonkwo, MD/CEO, Fidelity Bank Plc

Nnamdi Okonkwo, MD/CEO, Fidelity Bank Plc

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Fidelity Bank Managing Director, Nnamdi Okonkwo at a training workshop for Small and Medium Scale Enterprises (SMEs) highlighted three reasons why they fail namely infrastructural constraints, access to markets and poor corporate governance.

Infrastructural constraints

Infrastructure is a major issue in the Nigerian business environment., and SME’s are left hard hit because they can not afford the finance or scale to come up with solutions. An absence of power means small businesses have to run generators. This serves as an added cost as a back up generator is often needed. In a country where petroleum products are imported, a sudden spike or scarcity in products mean a shut down in operations.

Access to markets

Access to markets is critical for SMEs, especially those in the agri sector. Poor roads means food crops go bad before getting to the market and the exorbitant transport cost is added to the final purchase price. These additional costs makes goods produced in Nigeria more expensive than those imported.

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Poor Corporate Governance

Accounts of SMEs tend to be mingled with those of the owner. The lack of due process and building a business around the owner means the businesses often fold up after the retirement or death of the owner. SME owners are often unwilling to give up control of the business, having devoted a great chunk of time and resources to it.

Why is Fidelity Bank supporting SMEs

Supporting SMEs would enable the bank assist the government in its goal of reducing unemployment in the country. A large proportion of businesses run in the country are SMEs. By supporting SMEs, the bank cultivates relationships which will be enduring when the businesses become large scale. These include workers having salary accounts with the bank and

Fidelity bank shares are closed at N2.25 in todays trading session on the Nigerian Stock Exchange. Year to date, the shares are up 155%.


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Tags: Fidelity BankNnamdi Okonkwo
Onome Ohwovoriole

Onome Ohwovoriole

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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