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The federal government has said the weak nature of the Small and Medium Scale Enterprises (SMEs) sector is currently hampering the inflow of foreign direct investment.
The Executive Secretary, Nigerian Investment Promotion Commission (NIPC), Mr. Mustafa Bello, disclosed this in Abuja during the recent ninth national conference on investment.
The conference with theme, ‘Building linkages for competitive and responsible entrepreneurship in Nigeria,’ was attended by relevant investment promotion agencies and development institutions from both the public and private sector of the economy.
It was convened to mobilise broad-based support and provide a road map towards creating an enabling investment environment for investment in Nigeria.
Bello, while quoting statistics from the International Finance Corporation (IFC), lamented that although SMEs constitute 96 per cent of Nigerian businesses in general and 90 per cent of the manufacturing sector, it only contributes about one per cent to Nigeria's Gross Domestic Product (GDP).
The one per cent contribution to GDP, he added, is low when compared to the 40 per cent contributed by SMEs in Asian countries and 50 per cent in the United States and Europe.
He said: “There is no gainsaying that the engine of industrial development in any economy is the small and medium enterprises sector. According to the IFC, SMEs constitute 96 per cent of Nigerian businesses in general and 90 per cent of manufacturing/industrial sector in particular as against 53 per cent and 65 per cent of businesses in US and Europe respectively.
“Unfortunately, they contribute approximately one per cent GDP in Nigeria compared to 40 per cent in Asian countries and 50 per cent in the US and Europe. It is also important to note that with a weak SME sector, the ability of the country to attract FDI is seriously hampered”, he added.
With such low contribution to Nigeria's GDP, the NIPC boss said the sector's contribution to wealth and employment in the country would be far below its potential.
He disclosed that the commission has selected the areas that have been identified as hindering the growth of SMEs in Nigeria, adding a framework that would make Nigeria the preferred next destination would soon be formulated.
Also speaking at the event, the Minister of State, Industry, Trade and Investment, Dr. Samuel Ortom, said the federal government had taken several measures to make the Nigerian investment environment more competitive. He listed some of the measures as increased investment infrastructure in roads, railways and airports.