For a long time, economic experts around the world have been reiterating the need for countries to harness the potentials locked in the SMEs sector towards boosting the GDP. GTBank‘s recent partnership with the Development Bank of Nigeria further underscores just how important this is.
Here at Nairametrics, we understand the importance of the SMEs sector to the Nigerian economy. That is why this article will be illustrating how adequate and well-monitored investment in SMEs can facilitate sustainable economic development, whilst ultimately uplifting millions out of abject poverty.
Findings have shown that small and medium scale enterprises are the bedrock on which any economy can survive/thrive. As a matter of fact, most developed nations are successful today because of the foundations laid by their SMEs. It is, therefore, important for under-developed and developing countries such as Nigeria to learn from this.
Today (May 29th), newly-elected government officials are going to be inaugurated across Nigeria. One of their main functions, as policymakers, should be to design and implement special fiscal and support measures that should help SMEs to thrive. Note that this assistance should be targeted at not only sustaining domestic SMEs activities but also at encouraging small Nigerian businesses to position themselves for international exploits.
Why this is important: Let’s face it; it’s been close to 60 years since Nigeria gained independence from Britain, and up till now it still remains classified as a “developing nation”. The development process is taking too long, especially when you consider the fact that we have virtually all the natural resources, human resources, and numerous other opportunities that could fast-track our development. What we need at this point are the right Government policies, well designed and implemented for the sake of our development.
What is Achievable: There is no denying what can be achieved if the right support is given to Nigerian Small and Medium Enterprises. The potential in the SMEs space is apparent. And with the right Government support, a lot can be achieved. Indeed, investing in SMEs is a holistic approach to proffering solution to Nigeria’s economic woes.
The Reality: While the Government can truly not provide employment for all, SMEs can achieve just that. Already, the sector is trying by employing thousands of Nigerians and helping to curb unemployment. Imagine what would happen if small businesses are given the opportunity to grow and they end up becoming major businesses in ten to fifteen years.
How SMEs can boost the economy: In a journal published by the Edinburgh Group (EG), the influence of SMEs has been highlighted to play a significant role in the structural well-being of their host communities and nations.
We have seen countries such as the USA, France, Germany, and China where SMEs surge is contributing to the increment of available jobs, technically reducing unemployment, and preparing grounds for a robust economy. When there are more hands in production, the GDP gets pushed up.
As part of the EG’s mission to ensure that the international accountancy profession meets the needs of its diverse stakeholders, it published a financial and data analysis journal to address the theme: Growing the Global Economy through SMEs. In the publication, among other strategies endorsed include:
- Factorization of measures to support SMEs finance
- Allocation of significant budget to working capital support
- Facilitation of easy access to bank lending -France and South Korea as case studies
- Re-visitation and review of tax policy
- Reduction of social security charges
- Investment in infrastructure
Recommendations for policymakers
In addition to strategies check-marked by the authors of the journal, below are recommendations for policymakers to consider:
- Identify any additional information and support mechanisms that can be targeted toward SMEs to encourage their involvement in fast-growing economies.
- Look for opportunities to reduce unnecessary red tape and regulations concerning international trade and investment.
- Create clear signposting to help SMEs identify and access the full range of financial support available for international activity.
- Assess whether additional targeted tax breaks could encourage SMEs internationalisation, particularly in the aftermath of the global financial crisis when recovery is proving slow in many economies.
AfDB board denies asking Adesina to step down, as Obasanjo says the bank risks being hijacked
“The Bureau of the board of governors informs the public that it has not taken any decision. Everyone must allow the Bureau to do its work and allow due process to reign.”
The Bureau of the Board of Governors of the African Development Bank (AfDB) has denied media reports making the rounds that AfDB’s president, Akinwumi Adesina, has been asked to step down pending the completion of the probe and determination of allegations against him.
The bank’s top governing board members said that they have not asked Adesina to step down from his position as president, even as the board continues to review the fallout of complaints by some whistleblower. The statement from the Chairman of the bank’s board of governors, Niale Kaba, said:
“The Bureau of the board of governors informs the public that it has not taken any decision. Everyone must allow the Bureau to do its work and allow due process to reign. All governors will be carried along in resolving the issue.’’
Kaba also stressed that there was no governance crisis at AfDB as was being speculated in certain quarters. He confirmed that the Bureau of the Board of Governors of AfDB met on Tuesday, May 26, after the request by the U.S Secretary calling for an independent probe. The essence of the meeting was to take a closer look at the allegations by the whistleblowers against Akinwumi Adesina, said allegations which had already been investigated by the ethics committee of the bank.
Kaba further disclosed that even though no decision has been taken yet, the bureau assures that it is treating the case with the utmost seriousness that it deserves.
Adesina, who maintains his innocence of those allegations, had stated that a fair, transparent, and just process will vindicate him.
In a related development, former Nigerian President Olusegun Obasanjo had thrown his weight behind Adesina and kicked against the demand by the United States of America for a fresh, independent probe of the AfDB President who had earlier been cleared by the ethics committee of the bank.
In his letter to 12 former African Presidents, Obasanjo said that Africa must stand up and not allow its institutions to be unduly controlled by non-African countries.
Obasanjo said that the bank has witnessed tremendous growth under Adesina’s leadership and has doubled its capital base since he took over.
How N400 billion ecological funding can save Nigeria’s coastline
The waves of current from the ocean have become more violent, eroding the nation’s coastline which poses a serious threat.
With the higher rainfalls predicted for the year 2020, states in Nigeria may have to worry about something more serious than a flood – the erosion of the coastlines.
According to Mr Kabiru Abdullahi, Lagos State Commissioner for Water Front Infrastructure Development, the waves of currents from the ocean have become more violent, eroding the nation’s coastline and compounding environmental degradation, and flooding.
This development is already posing serious threats to several parts of Lagos state, which is known to be a coastal city.
According to NAN, the state government had already constructed 18 groins to wade off the violent currents from the oceans, but Abdullahi admitted that given the current situation, there is a need to construct at least 60 more groins.
These groins, he explained, would act as breakers, trapping sand from moving down the beaches.
What can N400 billion do to save the situation
Coastline erosion is a seasonal problem which will always occur when there is a rise in sea level, as is expected during the rainy season. If the government does not armour the shorelines with seawalls, jetties and groins, there could be more property and land losses.
According to the commissioner, N400 billion would be just enough to construct groins to cover another 60 kilometres in addition to the 7.2 kilometres done so far.
“On the Eko Atlantic City Project, so far, 18 groins have been constructed at 400 metres intervals covering a distance of about. We still have about 60 kilometres to go which is estimated to cost about N400 Billion,” he said.
The Ecological fund is an intervention fund set up by the Federal Government to address the various environmental challenges in communities across the country, but interestingly, the Lagos state government has not accessed any ecological fund on this project so far.
Lagos state budget for 2020 was put at N1.17 trillion with environment getting N66.586 billion of the sum. With this sum, there is no way the ministry of environment can take on the task of funding a N400 billion project on coastline and shoreline protection, and this is only one of the numerous environmental challenges the state has to deal with. The state budget has even been reviewed downwards in view of the COVID-19 induced economic challenges.
Illegal dredging activities and land reclamation for urban development are also creating serious environmental issues for Lagos and left on its own, and without intervention funding from the federal government, the coastline situation could be left to deteriorate even further with the onset of the rain
As the commissioner suggested, the federal government might want to consider allocating some of the “recently released tranche of Abacha loot of about $313 million” for this purpose, as it no doubt qualifies as a critical infrastructure for the country.
New OPEC+ output cut proposal may stall if Russia …
OPEC is weighing the possibility of continuing with the current level of OPEC+ production cuts till the end of the year in order to support the oil market.
Some members of the Organization of Petroleum Exporting Country (OPEC) and Saudi Arabia are considering extending the historic production cuts of almost 10 million barrels per day beyond June.
They are weighing the possibility of continuing with the current level of OPEC+ production cuts till the end of the year in order to support the oil market; however, they are yet to get the support of Russia.
Russia could be a stumbling block to sustaining the output cut deal beyond June, though OPEC+ and top oil-producing countries had pledged in April to restrict production to 9.7 million barrels per day in May and June, and then 7.7 million barrels from July to December.
According to reports, Saudi Arabia is pushing for the deeper 9.7 million barrel per day output cut to be extended beyond June up to the end of 2020, in order to rebalance the oil market, which is still bedevilled by a lot of uncertainty and volatility.
(READ MORE: Now that Oil is back)
Russia on its part, which is a key ally to OPEC has been non-committal on this plan. The Russian government on Tuesday approved a plan to increase oil production as soon as the OPEC+ deal ends. This they hope to achieve by having new oil wells drilled this year and in 2021 for 2022 production.
According to a report from oilprice.com, Saudi Arabia believes the oil market still needs support and wants to continue with the current output cut until the end of the year. Russia wants the same, but the major challenge is with the oil companies who had failed to reach any agreement at their meeting on Tuesday.
About half of the Russian oil firms support the extension of the current output cut while the other half are against the extension but rather calling for the continuation of output cut that was earlier agreed by OPEC+. As a result, Russia is typically non-committal and would wait to see how much oil demand will recover.