Empowering SMEs to Deal with Socioeconomic Challenges

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Nigeria is plagued with various socio-economic challenges, with most of them taking their roots from poverty and the statistics of nearly all development indices mostly stacked against Africa’s second largest economy.

For example, the World Bank reports that a little over 800 Nigerian women out of 100,000, die during child bearing, with most of them dying due to poverty and the lack of access to adequate medical care.

This figure, according to the United Kingdom’s Department for International Development (DfID), positions Nigeria as the second nation of the world with the highest female maternal mortality rate. As for neonatal mortality, which is the death rate of newborns in Nigeria, the number is a staggering 528 per day.

The same trend persists with other indices like unemployment and underemployment with a figure of about 70 per cent; life expectancy with an average male and female figure of less than 50 years; illiteracy rate of about 70 per cent, and the gory statistics is almost endless.

Government has deployed various methods in the past trying to deal with several of these challenges with most of these interventions underpinned by the principle ‘simple handout’.

Local governments ask all pregnant women to come to particular locations to get free medical care; anti-poverty agencies of government hand out N5,000 monthly to registered unemployed persons, so on and so forth, with most of these government efforts ending up by simply enriching the corrupt administrators of these ad hoc poverty alleviation initiatives.

Various Responses

Analysts believe that hand outs and ad hoc approach to dealing with poverty are at best panic responses and usually yield no real value.

Director General of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, believes that only schemes that attempt to empower the poor and down trodden in society can be sustainable and effective against poverty and all its ancillary problems.

BoI Intervention

This therefore brings to prominence the effort of the Bank of Industry (BoI) in organising an annual innovative programme targeted at enhancing the access of small and medium enterprises to financial opportunities.

SMEs are known around the world to be the most avid employers of people in all economies and the people who often have access to the opportunities created by SMEs are the poor and economically-disadvantaged.

So, when BoI gathered other organisations including the Western Union, the United States Agency for International Development (USAID) and the US Department of State as well as about 15 banks in Nigeria to make commitment towards exploring ways to expand financial opportunities for the next generation of African SMEs, experts said the nation’s development bank took the most functional step towards dealing with her socio-economic problems.

At the BoI event, which took place in Lagos recently, more than 100 business leaders from Africa’s Small and Medium Sized Enterprises (SMEs) presented their innovative business plans to leading Nigerian and Pan-African banks at the 2nd annual SME Live Banking Panel.

Managing Director of BoI, Evelyn Oputu, pointed out at the beginning of the programme that the goal of the organisers of the event was to ensure that 80 per cent of participating SMEs got funding from banks for their business ideas before the end of the meeting.

Oputu highlighted the importance of the initiative, stating that, “BoI has been working with SMEs for more than a decade and has continually underscored their key role in not only driving growth, but also job creation. This 2nd annual event is unique, bringing together great banking partners who have recognised the role of SMEs in development and are willing to help address issues they face in accessing financing.”

The BoI boss stressed that SMEs held the keys to the eventual economic emergence of Nigeria and all of Africa, noting that the reason why the programme was focused on Nigerian was due to the understanding that if Nigeria can get its SME development on the right path then all other parts of Africa would be on the path to getting it right.

She called for collaboration among SMEs across Africa and hailed the fact that in the previous edition of the programme large numbers of SMEs from Nigeria and other parts of Africa made presentations of their business ideas 10 per cent of participating SMEs getting bank financing commitments.

Crucial Funding

Oputu however stated that in the current event, the organisers hoped that up to 80 per cent of SMEs attending the programme would have their business plans approved for funding by the financial institutions present at the event.

“We want SMEs to understand what the banks are looking for in their proposals and business plans. It is not enough to have a bright idea, that idea needs to be structured, in order to be able to change the society and to return investment. We are here to help SMEs achieve their business goals.

“We are interested in the spillover effect of the success of SMEs to other segments of the society. It is the responsibility of SMEs not to drop the ball but to achieve their purpose and we at the Bank of Industry are determined to help SMEs succeed,” she said.

“When our customers’ businesses grow, national and regional economies benefit,” said Aida Diarra, Regional Vice President, (North Central and West Africa) for Western Union. “Western Union strives to equip individuals with the tools and resources that they need so they can achieve growth. The sacrifices that many of our customers make to startup a business can be lost without the tools to maximise their investments through remittances, Diaspora investors or institutional partners.”

SMEs representing key sectors such as information and communications technology (ICT), agri-business, manufacturing and renewable energy were among those being reviewed by approximately eight to twelve Nigerian and pan-African banks. Training workshops to help further develop SME capabilities are part of the initiative.

“Developing new approaches and opportunities that generate sustainable financial empowerment requires coordination and alignment across all sectors,” said Ambassador Robin Renee Sanders. “A partnership between the Bank of Industry and the African Diaspora Marketplace (ADM) links the private sector, government leaders and global community to collectively make a significant and positive impact to help SMEs.”

Boost for Women

Recognising the impact of women entrepreneurs, the initiative will emphasise financial opportunities and mentorship for women business owners, including participants from the US State Department’s African Women’s Entrepreneurship Programme. Studies by USAID have revealed that “$1 in female hands is worth $10 (and in some cases $20) in male hands.”

The United States Department of State is a supporting partner of the African Diaspora Marketplace and the programme is being implemented by the Small Enterprise Assistance Funds.