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.