Conditional Grant Scheme Raises Hope For SMEs

Small and Medium Enterpises (SMEs) play critical role in Nigeria’s economic development. The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has shown its commitment to SMEs’ growth through improved funding. The agency unveiled the Conditional Grant Scheme (CGS) in Lagos to move micro enterprises from the informal to the formal sector, and make more funds available for their operation. The CGS is expected to enhance the competitiveness of the operators towards meeting national, regional and global standards, writes COLLINS NWEZE.

Small and Medium Enterprises (SMEs) hope for better funding was rekindled in Lagos last week. It happened at the inauguration of the Conditional Grant Scheme (CGS) championed by Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) with the support of Federal Government.

The CGS was created to promote micro enterprises across the country through capacity building and delivery of post-intervention support services such as access to finance (conditional grants), markets, workspace, technology, among others.

Findings showed that Nigerian SMEs have largely performed below expectation as a result of poor access to finance, inadequate managerial skills, poor accounting practice, poor infrastructure, policy somersault, multiple taxes, environmental factors, and marketing problems, among others.

SMEDAN, with the backing of Federal Government, unveiled the CGS to reverse the trend.

The scheme was created to improve the internally generated revenue of the three tiers of government across the country thereby reducing over-dependence on oil revenue.

It will also improve the human, technological and financial capacity of operators of micro enterprises. The scheme is expected to lift the sub-sector, making it more efficient and financially viable.

Speaking at the launch of the scheme in Lagos, Director-General, SMEDAN, Dikko Radda, said the micro enterprises sub-sector is a critical sub-sector in the Nigerian enterprise development space.

He said the sector collectively account for majority of the enterprises in the country and also account for the highest number of jobs created in the economy. The findings in the National MSMEs survey of 2010 and 2013 revealed that micro enterprises represent 99.87 percent (17,261,753) and 99.80 percent (36,994,578) of total enterprises respectively.

“In terms of employment, the total number of persons employed by micro enterprises in 2010 was 15,641,460 (representing 90.41 percent of total number of employed persons). In 2013, the total number of persons employed by micro enterprises was 57,836,391 (representing 96.88 percent of total number of persons employed).

“However, it is important to note that over 90 percent of the micro enterprises are informal and populated by people at the bottom of the pyramid, hence, the need for the Agency to conceptualize a flagship programme referred to as Conditional Grant Scheme for micro enterprises in Nigeria,” he said.

According to Radda, the justification for a special entrepreneurship/vocational development intervention for the entrepreneurs at the bottom of the pyramid cannot be overemphasised based on the need to graduate informal enterprises to the formal sector, industrialise the nation, develop the rural economy, stem youth restiveness and unemployment and create the platform for sustainable economic growth and development in Nigeria.

“This present initiative (Conditional Grant Scheme) looks towards promoting the activities of micro enterprises across the country in the areas of capacity building and the delivery of post-intervention support services such as access to finance (conditional grants), markets, workspace, technology, among others”.

The pilot phase of the project was conducted in 2017 at Katsina State, where 34 Local Government Areas (LGAs) were involved, Gombe (11 LGAs), Ebonyi (13 LGAs), Oyo (33 LGAs), Akwa Ibom (31 LGAs) and Benue (23 LGAs). This makes a total of 145 LGAs.

Considering the socio-economic impacts on the enterprises of the beneficiaries, the agency decided to extend the programme to other states of the Federation subject to availability of project funds. Presently, the programme is scheduled to run in three states which are Lagos, Bauchi and Sokoto.

According to Radda, the scheme will help move the micro enterprises from the informal to the formal sector, creation of jobs, wealth and poverty alleviation in the society, enhancing the competitiveness of these enterprises towards meeting national, regional and global standards and improving the internally generated revenue of the three tiers of government across the country thereby reducing over-dependence on oil revenue.

He said: “Moreover, the Agency will be working in partnership with other stakeholders in achieving the objectives of the programme. They are banks, Federal Inland Revenue Service (FIRS), Business Development Service Providers (BDSPs), State and Local Government, Insurance Companies and Corporate Affairs Commission (CAC).

Also, the eligibility of the prospective beneficiaries of the scheme is based on business registration or willingness to register their enterprises, the need for additional investment, lack of access to formal financial services, proof of address in the LGA/personal identification and above all the enterprises must have progressive economic potentials.”

Radda said the scheme has provision for award of excellence to high performing enterprises in all the LGAs of the selected states to reward hard work/success and to encourage high performance from other enterprises. The conditions for the award will include the turnover of the enterprise.

Furthermore, in SMEDAN’s determination to address the challenges confronting the MSMEs in Nigeria in a holistic manner, the agency is implementing One Local government One Product (OLOP) in one hundred and nine (109) senatorial districts in the country. This effort is based on the successful implementation of the pilot phase of the OLOP programme. The intervention activities under OLOP among others include access to workspace, equipment support, access to working capital, capacity building and so on,” he stated.

SMEDAN Director-General, Radda said the first step to the scheme is to identify beneficiaries and partners, sensitization and needs assessment, entrepreneurship training registration of enterprises and opening of bank accounts.

These will be followed with the delivery of grants, provision of micro insurance, provision of tax holiday and follow-up, and impact assessment.

SMEDAN  unveiled the SME Rating Agency (SMERAN) expected to de-risk the MSMEs and ensure that they have a seamless access to affordable finance with respect to credit and credibility. It is a collaboration with the Bank of Industry (BOI) and Nigeria Export-Import Bank (NEXIM).

SME operators speak

Speaking at the vent, Managing Director, Blast Enterprise Limited, Stephen Abiodun, said the scheme is a launching-pad for MSMEs into the world of financing.  He said the CGS is expected alleviate the funding challenges facing SMEs.  “This will provide more funding for us and ensure that they are effectively positioned to contribute to job creation, wealth creation and poverty alleviation in the country,” he said.

Lawson Taofik, another SME operator, said CGS is a viable plan by SMEDAN to lift SMEs. “I am happy SMEDAN inaugurated this project, and will add value to SMEs development not only Lagos, but across the country,” he said.

The Lagos State Government, said the scheme will boost SMEs potentials in the state. It said Lagos is the commercial hub of Nigeria and SMEs in the city needed funding and other support being provided by SMEDAN.

Chairman, SMEDAN Governing Board, Femi Pedro, noted that the MSMEs sector is fraught with numerous challenges, assuring that the board will work closely with the management of SMEDAN to address the identified challenges.

He said the CGS launch is timely and a good step to solving SMEs funding and logistics problems in the country. He said that SMEDAN is committed to the growth of SMEs in Nigeria.

Speaking further, Radda recognised the need to boost SMEs operations by putting in place strong measures that confront these challenges facing the sector.

From the implementation of the One Local Government One Product (OLOP) Program, National Enterprise Development Program (NEDEP), establishment of the SME Rating Agency of Nigeria, credit information portal, ICT development to implementation of the Nationwide MSMEs Clinic to mention but a few.

SMEDAN is helping the Federal Government to realize its vision of improving the economy and lives of the citizenry through skilled entrepreneurship and access to finance.

The One Local Government, One Product (OLOP) program remains an important input into the development agenda of the present administration. The program was meant to identify and facilitate the specialization of a unique product or service peculiar to each of the 774 local government areas in the country.

SOURCE : The Nation