News reports say the Minister of Industry, Trade, and Investment, Niyi Adebayo on Tuesday inaugurated a 10-man steering committee to drive the implementation of the various support schemes for small businesses especially Micro, Small and Medium Enterprises (MSMEs) in the country. The Minister of State for Industry, Trade & Investment, Mariam Katagum is the Chairman of the committee while the Chairman, First Bank of Nigeria Plc,
Ibukun Awosika is the Vice-Chairman.
In a bid to support the growth of MSMEs, the federal government has established a number of schemes geared towards providing finance at low-interest rates. These include a special intervention fund managed by the Bank of Industry (BOI) to provide subsidized loans to MSMEs at a rate of 9% per annum. Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) is another intervention funding scheme anchored by the CBN
specifically for enhancing agricultural businesses of MSMEs. The latest of this move is the MSMEs Guaranteed Offtake Simulation Scheme which is aimed at providing bridge financing in supporting the payroll costs of MSMEs that are currently grappling with severe cash flow problems due to the disruptions induced by the global pandemic.
The vulnerable Nigerian MSME sector has been one of the sectors that have been badly hit by the current economic weakness brought about by the COVID-19 pandemic. Several businesses have been affected by supply chain disruptions and low demand for their products and services due to the weakened consumer purchasing power, leading to substantial loss in revenue. In a survey carried out by FATE Foundation in conjunction with BudgiT, of the 1943 MSMEs surveyed, 94.3% reported being negatively impacted by the pandemic particularly in the areas of Cashflow (72.1%), Sales (67.7%) and Revenue (59.2%).
Despite the negative impacts of the pandemic, 47.1% of respondents were positive that their businesses will survive the pandemic with 22.8% being unsure while 30% indicated that their businesses will not survive the pandemic. Most of the businesses reported needing support with Cashflow (72.1%) and Sales (67.7%) and will like the Government to provide support in the area of funding (89.4%) and access to markets (33.8%).
Globally, MSMEs are considered the critical engines of economic growth due to their potential to create jobs, boost economic output, generate income, and reduce poverty. In Nigeria, MSMEs have always struggled to play these essential roles given tough challenges in the business environment. Prior to the onset of the pandemic, many MSMEs were still reeling under the impact of the recent recession and were still struggling to get back on their feet. With the onset of the pandemic, the situation appears to have worsened for many. Given the importance of these MSMEs to the country’s economic recovery post-pandemic, an effective support scheme should be a top priority. That said, it is essential that efforts should be deepened in improving accessibility and timely disbursement of such funds.
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