How MSMEs can foster economic development in Nigeria – Ex-NACCIMA DG

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) commitment to nurturing entrepreneurship has undoubtedly played a significant role in shaping the landscape of small businesses in Nigeria, Ayoola Olukanni, former director-general of the National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), has said.

Mr Olukanni disclosed this on Friday while speaking at the ongoing 2023 Management and Staff Retreat of the SMEDAN of Nigeria held in Ilorin, Kwara State.

Speaking at the event, Mr Olukanni said the wheels of the Nigerian economy are kept running by the dynamism of Micro, Small, and Medium Enterprises (MSMEs).

“With over 40 million MSMEs employing over 80 per cent of the population and contributing about 50 per cent of the country’s Gross Domestic Product (GDP), they serve as the backbone of our economic structure.

“And their ability to adapt quickly to market changes, drive local innovation, and foster entrepreneurship makes them a critical force in shaping our nation’s economic future,” he said.

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Commenting on the evolution of SMEDAN and its role in fostering MSMEs development in Nigeria, he said the agency was tasked with the mission of encouraging the growth and development of the MSMEs sector of the Nigerian economy.

“These enterprises serve as drivers of job creation, innovation, and economic diversification. They represent the hopes and aspirations of countless Nigerians striving to build businesses, contribute to their communities, and provide for their families,” he said.

“Through its initiatives, the agency has acted as a catalyst for growth, offering essential services such as access to finance, capacity-building programs, technical support, and market access.

“SMEDAN’s commitment to nurturing entrepreneurship has undoubtedly played a significant role in shaping the landscape of small businesses in Nigeria.”

He explained that one of the cornerstones of SMEDAN’s efforts is the formulation and implementation of policies that facilitate the growth and development of MSMEs.

According to him, the 2020 National Policy on MSMEs stands as a testament to the agency’s dedication to creating an enabling environment for these enterprises to flourish. This policy, he said, is more than just a document; it represents a roadmap for empowerment.

“By aligning with local and international benchmarks, the policy seeks to redefine the MSME sector’s landscape. It places special emphasis on micro-enterprises, recognizing their potential to drive growth and employment,” he noted.

Furthermore, he said, the policy’s commitment to facilitating the profitable expansion of existing MSMEs along their value chains reflects a strategic approach to transitioning from micro to small and medium-sized enterprises, adding that an area of particular importance highlighted by the policy is the empowerment of women and youth.

“Acknowledging that these groups collectively own about 67 per cent of the MSMEs, the policy aims to provide an enabling environment for their engagement in entrepreneurial activities. This commitment to inclusivity aligns with the broader vision of fostering sustainable economic development,” he said.

Mr Olukanni said the fourth industrial revolution, characterized by the convergence of digital, biological, and physical technologies, is reshaping industries, challenging norms, and providing unprecedented opportunities.

“Our world is becoming increasingly interconnected, thanks to advancements in information technology and communication. From artificial intelligence to blockchain, the landscape of business is being transformed, and MSMEs are at the forefront of this transformation,” he said.

He added that these enterprises are harnessing technology to reach new markets, streamline operations, and provide innovative solutions.

“It is within this context that SMEDAN’s role gains even greater significance. The agency’s ability to understand, adapt to, and harness these technological changes can determine its effectiveness in fostering MSME growth.

“This includes not only enabling access to technology but also fostering a culture of digital innovation and entrepreneurship,” he noted.

Challenges

Speaking on sectoral issues, he said the Nigerian textile sector, once a vibrant and thriving industry, has faced numerous challenges in recent years, with the influx of cheap imported textiles and the decline of local production which dealt a blow to the sector.

However, he said, the revival of the textile industry requires a multi-pronged approach to investment in modern technologies, support for local designers, and promotion of indigenous fabrics.

“SMEDAN’s role in facilitating access to funding, market linkages, and capacity-building programs can play a pivotal role in revitalizing this sector,” he explained.

He said agriculture is the backbone of Nigeria’s economy, and the agribusiness sector has immense potential to drive growth but challenges such as low productivity, poor infrastructure, and lack of access to finance have hindered its progress.

According to him, SMEDAN’s emphasis on agribusiness as a viable entrepreneurial avenue can provide a transformative path forward.

“By promoting modern farming techniques, encouraging the Agripreneur Initiatives pioneered by the IITA, and facilitating value-chain development, the agency can contribute significantly to food security and economic prosperity.

“The Nigerian economy emerged as the largest in Africa and 26th in the world in 2014 with a GDP of $ 509.9 billion. As of 2018, the sector was estimated to be $3.8 billion. Projection is that the sector will grow to generate $15 billion by 2025.

“We must therefore pay due attention to this sector. With an eye on its potential to make significant contributions to GDP, creating employment for Nigerian Youth the Sector deserves attention,” he said.

Mr Olukanni said SMEDAN’s capacity in collaboration with stakeholders across the spectrum, the Bank of Industry for Financing, the Nigerian film industry Actors Guild, the Ministry of Culture and Private Sectors, and Chambers of Commerce should be expanded.

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“SMEDAN’s engagement in this sector is not just an option; it is a necessity. By nurturing creative entrepreneurs, fostering market access, and facilitating cross-industry collaborations, the agency can accelerate the sector’s growth and elevate Nigeria’s creative economy to new heights.

“The exponential growth of fintech startups, the rise of mobile money solutions, and the increasing adoption of digital financial services have reshaped the financial landscape.

“SMEDAN’s commitment to digital transformation aligns perfectly with these trends. By providing digital training, facilitating broadband access, and encouraging the development of innovative Fintech solutions, the agency can empower MSMEs to thrive in the digital age,” he added.

Institutional Support

The former NACCIMA boss said enhancing institutional capacity requires a comprehensive approach to capacity-building.

“This encompasses not only technical skills but also fostering a culture of continuous learning, adaptability, and innovation. SMEDAN’s commitment to training must extend beyond traditional methods, incorporating digital skills, entrepreneurship development, and financial literacy,” he said.

“Collaborative partnerships with government agencies, private sector players, academia, and international organizations can leverage expertise, resources, and networks to create a multiplier effect.

“These partnerships can foster knowledge exchange, promote cross-sectoral initiatives, and amplify SMEDAN’s impact.”

Access to finance remains a critical factor for MSMEs growth, he said, adding that SMEDAN can explore innovative financing models, including venture capital, impact investment, and crowd-funding platforms.

“By connecting MSMEs with funding sources tailored to their needs, the agency can address the financing gap and drive sustainable growth. SMEDAN can ensure that entrepreneurs thrive in the digital economy.

“Empowering women and youth is not just a social imperative; it is an economic imperative. SMEDAN’s focus on these demographics recognizes their immense potential as drivers of growth.

“By tailoring programs, mentorship, and access to resources to their needs, Special Funding Support for Women-owned Businesses, the agency can unlock a demographic dividend that fuels economic progress,” he said.