Need To Enhance Businesses To Lift Citizens From Poverty

The World Bank’s Economic Report (July 2014) states that Nigeria is one of the top five countries that has the largest number of poor people in the world.

The top five countries, in terms of numbers of poor, are India (with 33 percent of the world’s poor), China (13 percent), Nigeria (7 percent), Bangladesh (6 percent) and the Democratic Republic of Congo (5 percent), which together are home to nearly 760 million of the world’s poor.

The number of poor Nigerians is put at 58 million or 33.1 per cent of the population.  This represents an improvement from the previous study conducted in 2009/2010 which put the poverty level at 61% of Nigeria’s population.

According to the Bank of Industry, BOI, Micro, Small and Medium Scale Enterprises, MSMEs, constitute the essential ingredients to lubricate and develop the Nigerian economy to lift citizens out of poverty.

Divisional Head, Large Enterprises of BOI, Mr. Joseph Babatunde said that there is need to enhance the business activities of MSMEs.

According to Babatunde, there should be provision of financial and tax incentives to encourage SMEs to join the formal sector. Governments need to provide tax incentives for SMEs and subsidies similar to those available to large corporations as well as give more priority to intervention funds for start-ups/ or SMEs, he said.

Babatunde added that governments should promote public-private partnerships to attract venture capital funds and higher levels of investment, and put in place measures to create investor-friendly environments.

He said, “SMEs contribute a large share of manufactured exports in most industrialised East Asian economies like China and India, ranging from 31-56%, than less developed African economies of less than 1% in Tanzania and Malawi, and 4% in Nigeria for instance. There is therefore the need to focus on policies that will promote the SMEs export potential to boost economic growth and development.

“Building supply chain capacity: Apart from government, large corporations can also support the development of a strong and reliable SME sector. A lot of large corporations source for their supplies from developing countries.

Large corporations can help SMEs become more viable business partners for raw materials sourcing, by providing capacity building support in terms of training in business planning, logistics, marketing, distribution, and quality control. They can assist through technology transfers, direct investment in infrastructure, and the sharing of knowledge.

These would make SMEs more competitive, as well as facilitate their access to credit. All of this can benefit the large corporations by creating more effective and inclusive supply chains.

“Strengthening local distribution networks: SMEs have local knowledge, understand domestic consumer demands, and have access to remote regions. By contracting local SMEs to sell and distribute their products in these markets, large corporations can help strengthen the sales capacity and income of local SMEs. At the same time, they can strengthen their own distribution networks and open up new markets for their products.

“Providing access to financial services: SMEs require greater access to financial services and investment capital. Large corporations have little difficulty securing sizeable bank loans and private investments. SMEs often struggle to obtain credit and loans, so much so that personal savings forms the major source of funding for most of them throughout much of the developing world.

Many financial institutions in these developing societies are reluctant to fund SMEs because of perceived risks and high transaction costs. Thus loans to SMEs, when they are able to obtain them, tend to carry higher interest rates and shorter pay-back times.

However things are changing. Albeit slowly. Many large banks are now partnering with development agencies and NGOs to serve the SME market.

“Setting up incubation centers and knowledge hubs: To provide transitional market places for SMEs and training platforms for the provision of technical know-how for SMEs respectively.

“Infrastructural development: SMEs are considered an important tool for poverty alleviation, human resource development and employment generation. In order to enhance the productivity and exports of the SME sector, there should be a strategic shift in the Framework for Economic Growth of the Government to infrastructural development and establishing common facility centres,” he said.

Babatunde noted that the contribution of SMEs to the economy of Nigeria cannot be over-emphasised. Therefore, tremendous support is required to ensure their growth and sustainability for the desired sovereign goals to be achieved in terms of developmental impact and poverty alleviation. (Vanguard)
Share on Google Plus

About Naijadopest

    Blogger Comment
    Facebook Comment


Post a Comment

Disclaimer: Do not use this forum as a channel to promote hatred, tribalism or any other kind of personal grievances. The administration can delete or edit a post that violates these guidelines. Keep the posts relevant to the topic in an attempt to keep the forum organised and maintain the focus on each topic. Thank you for your understanding.