Considerations for the Promotion of MSMEs that Stimulate and Accelerate Economic Development
Nations rely and count on the strength of its productive population, their enterprising spirit and endeavours to foster innovations that translate to the development, growth and industrialization of the nation’s economy.
It is the daily enterprise endeavours and activities of citizens operating in both the informal and formal sector that determines the dimension and pace of the development, growth and transformation of the economy of the nation.
Hence, citizens of any nation are at the centre and core of nation building and national development efforts. In Nigeria, young people are the center of driving innovations and contributing to the development of the nation’s economy.
Beyond abundant natural resources, human resource is the real raw materials and critical asset that drives development. Nigeria is richly endowed with a predominantly youthful population. With an approximately 75% of the over 200 million population under the age of 35 years representing the vibrant and productive segment of the nation, Nigeria can be said to be uniquely endowed.
Dr. Akinwumi A. Adesina, President of the African Development Bank in his recent speech at the midterm ministerial performance review retreat, emphasized the need for more decisive actions to turn this demographic asset into an economic dividend.
The traditional and strategic role of Government with the support of Donor Agencies in the promotion of MSME development requires the designed, development and deployment of policies, strategies and interventions that does not only stimulate economic activities but creates the enabling environment and facilitates the ease of doing business for aspiring, startups and existing entrepreneurs.
There are however reported, as well as documented cases of policy failures, and how they fall short of achieving the strategic policy objectives to promote MSME development and growth.
Donor supported interventions towards complimenting publicsector funded MSME Palliatives and handouts serves best for social advocacies, and to facilitate poverty reduction interventions that aim to encourage emerging entrepreneurs to learn and acquire functional vocational and technical skills with a mix of supply driven Entrepreneurship Training, supporting them to drive self-employment essential in the Informal sector value chain development programming.
Though Government and Donor Agencies also facilitate middle level intervention programmes that are designed to support the stimulation of MSME development, yet such interventions are limited because of their budget-oriented andtime-bound framework, targeting only for a limited number of beneficiaries.
Currently, Micro, Small and Medium Enterprises (MSMEs) is said to contribute nearly 50 per cent of Nigeria Gross Domestic Product (GDP) and 80 per cent of the country’s total employment. Invariably, a robust and impact oriented interventions to stimulate scalable startups innovations can scale the contribution of MSMEs to the development of the nation’s economy.
There is obviously more to the promotion of the development and growth of MSMEs with the capacity to stimulate and accelerate national economic development, generate wealth and create jobs than mere palliative and handout interventions. Public policies and intervention programmes should be designed to promote the development and growth of scalable innovative, productive and competitive enterprises.
Beyond rhetoric, the promotion of the development of MSMEs with the capacity to contribute to the development of the economy of the nation requires deliberate determination and commitment, unambiguously expressed in practical and impact orientated strategies and interventions. It also involves the building of functional ecosystems and fostering of multi-sector synergy, partnership and collaboration among public and private sector stakeholders.
Public policies and strategic interventions designed to support the development of scalable MSMEs should aim to develop functional, dynamic and robust private sector led enterprisesembedded with Key Performance Indicators (KPIs),and measurable outcomes in practical terms over a period of time that may be subject to periodic reviews.
For instance, public policy and MSME interventions programmes should be designed to achieve specific set targets with timelines and expected outcomes such as the strategic sectors of focus to simulate enterprise growth, the total number of MSMEs to be supported to grow and expand with a clearly articulated practical strategies, the estimated number of jobs to be created, as well as the projected earnings and potential returns on investment (RoI).
The potentials of Startup innovations in Nigeria holds a lot of promise in driving accelerated and sustainable economic transformation and growth and the need to prioritize focus on Nigeria startup space cannot be overemphasized.
Startups in Nigeria are leveraging technological innovations to drive investors engagements to developed disruptive solutions and new production and service systems in the finance, logistics, agribusiness, hospitality, automobile and investment sectors of the nation’s economy.
A recent report compiled by fDi Intelligence, a specialist division of the Financial Times, in collaboration with research company,Briter Bridges, aims to “map the continent’s nascent tech ecosystems and explore their potential moving forward” suggest that Nigeria hasthe highest volume of start-ups over 750 but fall short of critical matrix. South Africa came second, but its startups raised $241 million raised in 2020, compared to Nigeria’s $64.1 million. The report also expressed concerns about a number of barriers and inhibitions preventing the substantial growth of startups in Nigeria.
Considering the potentials of startup innovations to the growth of the nation’s economy, the Government can conduct a critical review of the startup space with the view of identifying growth inhibitors and leverage lesson learned from the recent significant growth of Nigerian startups innovations led my young people to innovate impact oriented and sustainable policy frameworks and strategies so as to open up viable space and matching spot to scale the growth of startup innovations by supporting the establishment of innovative accelerator programmes (IAP).
Overall, Government needs to prioritize the promotion of innovative finance through financial engineering to facilitate ease of access to finance for innovative startups as it is crucial in the implement of a successful IAP. To achieve this strategic objective, Government at all level can partner with relevant private sector stakeholders to initiate innovative financial engineering programmes to facilitate ease of access to diverse innovative finance and funding options for MSMEs in Nigeria.
It is my considered opinion that a strategic paradigm shift in the nation’s approach to the promotion and development in Nigeria will not only stimulate a rapid evolution of a new economy, it will also seamlessly address the increasing unemployment rate currently peaking at 33.3% as well as position MSMEs to contribute to increasing the volume tax for the benefit of the Nation.
Dr. Peter Ayim is an Enterprise Development Expert and Principal Consultant at MSME Business Development Services Limited. He can be reached via [email protected]
