Despite the huge potential of the SME sector to create employment opportunities for our teeming youthful population and economic development, the sector remains largely bedeviled by several issues with government policies as one of the drawbacks.
The Federal Government of Nigeria has had a history of feeble national economic planning policies for businesses and self-employed individuals. The effectiveness or inadequacies associated with these policies usually impact particularly SMEs and all other entrepreneurial activities negatively and depressingly. Further to this, the sampled opinion of SME operators revealed that government policies affect their activities, directly and indirectly, but extremely it impacts on their business operations. The government taxes, tariffs, foreign exchange regime, market regulations or pronouncements, fiscal and monetary policies have rippling effects on SME activities and entrepreneurial landscape including international trades.
Policy can be defined as a plan of action agreed and chosen by a group of people, organisation, government or political party. It can simply be categorised as either internal or external policies. It is internal when it is designed for business to use by the management and owners of a business entity often called business policies. The government policies, therefore, are external policies which are not within the direct control of business owners within the economy such as tax or duties, trade regulations, restrictions and prohibitions, policies towards change in social behavior, subsidy policy, and policies implemented to discourage the importation of goods or cargo, established rules and regulations to guide or promote certain actions.
There is, however, no gainsaying the fact that no country can attain any form of development without putting in place sound policies and programmes. The very crucial areas that government policy affect business in Nigeria are economic and legal. Having said that, governments always strive to create rules and frameworks in which SMEs can compete favorably. However, from time to time these rules and frameworks undergo reviews but such is not the case in Nigeria forcing businesses to change the way they operate. Businesses are left with limited choice to respond to the changing rules and policies of government. Most time in ways that are detrimental to their survival, due to macroeconomic and economic challenges.Businesses in Nigeria are keenly affected by government policy and regulations at all times.
When government create policies or regulate, it should generally gear towards achieving positive end; better or improved state of things and a more robust businesses operations, a capacity for optimal productivity, increased revenues and higher performance through cost minimisation, expansion, improved technology as well as quality human capital as obtainable in other climes. Most times these policies are usually precautionary measures but it is the reversal in Nigeria and Africa at large, where policies are made in reaction to a phenomenon or promote an action plan. Since governments are run by politicians, not necessarily businessmen this could be the discernable reason for this policy formulation strategy in Nigeria. Usually these policies can be from federal, state and local governments or from any of the combinations. Notably in recent times in Nigeria are Bank Verification Number (BVN) policy, National Identification Number (NIN) rule, the Finance Bill essentially the VAT increase on transactions, the ease of doing business policy, Treasury Single Account (TSA) for government revenue collections. Agriculture Promotion Policy, Nigerian Visa on arrival policy, National Economic Empowerment and Development Strategy (NEEDS), Privatization and Commercialization Policy, National Poverty Eradication Programme (NAPEP).
Vital to business among these is the land border closures with Benin, Togo, Niger, Cameroon and Chad on 20 August 2019, citing an effort to stem the smuggling (Cars, gasoline, food items) and insecurity. The government also made a pronouncement that restricting import and export of goods through these land borders should boost domestic food production and national productivity levels in all sectors. However, the border closure has impacted otherwise to Nigerian SMEs particularly consumers, retail SME operators, importers, and exporters. The domestic production output is low and cannot match the expected consumption levels and this has contributed to the rise in inflation numbers.
The closure was sudden and it took many by surprise, thus affecting business operations of mostly SMEs in the country even though this form of enterprise accounts for 84 per cent of jobs and accounts for about 48.5 per cent of the gross domestic product, GDP, of the country. So, the government needs policy to boost the capacity of these SMEs, and also develop and promote their activities instead of policy shocks and lack of stakeholder engagements.
Likewise, in Lagos State the commercial and economic nerve of the country, with an estimated population of above 20 Million. The government on Saturday, February 1, 2020 suddenly restrict all forms of commercial motorcycles (okada) and tricycles (Keke) which included startups hailing ride platforms like Max, ORide, and Gokada from major highways in the state owing to disorderliness, perceived criminality, law-breaking, and insecurity. Though the State presented records from 2016 to 2019, showing approximately 10,000 road accidents involving motorcycles and tricycles, where 600 deaths were recorded. Stakeholders’ engagement and adequate strict regulations would have been options to adopt since we still have them operational on our streets and hinterlands. Because their existence is truly a cultural reality and they support job creation at micro-business level.
The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) defines micro businesses as employing 1 to 9 persons, while small businesses employ 10 to 49 persons. They are all contributing to boosting the Gross Domestic Product (GDP) of the nation, generating employment and creating sustainable entrepreneurship. Lagos is the hub of SMEs in Nigeria and caution should be applied when policies that affect this sector are formulated.
Nonetheless, many dysfunctional economic policies of government have impacted negatively on SMEs particularly the micro businesses, the government has not shown satisfactory sensitivity to the plight of these numerous operators that form 90 per cent of business entities in the country. But the vivid truth is that a well-functioning SME sector could add more value to the Gross Domestic Product (GDP) of the country, increase the standard of living and create more job opportunities in the economy more than any sector. Instead, SME operators and entrepreneurs are left to strive with strategies and tactics to absolve any government policies or regulations shock to make any meaningful balance. The government needs to realise that small businesses are crucial to job creation, economic diversification, innovation, and income redistribution. Therefore, proper monitoring and evaluation of any developed policies and programmes are imperative.
That said, key stakeholders such as the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), The Lagos Chamber of Commerce and Industry (LCCI), Manufacturer Association of Nigeria (MAN), Nigerian Association of Small & Medium Enterprises. (NASME), and groups in the Organized Private Sector (OPS) incessantly advocate for the government to create an adequate enabling environment, improve on rule of law, encourage public-private initiatives, invest in infrastructure, improve access to finance, strengthen national security and consider policies as the needed market catalyst. Corruption has also remained a very serious problem that needs to be genuinely addressed because it can likewise threaten any development policies and programmes of the nation. These actions highlighted will go in no small measure to lessen business failures, increase foreign direct investment, and international rating of the SMEs.
In addition to the aforesaid, it is recommended that government interventions and policy formulations should be targeted to promote income redistribution, innovations, research, and development, reduce inequality, encourage private investment and injection of funds that can boost the economy to derisk these SMEs and make them viable. By this, the SMEs will be able to attract needed local and foreign investors, this will make their businesses competitive globally and also achieve adequate market exposure.
Besides, corroboration with experts and consultants in the provision of external advice to these SMEs on a range of topics such as strategy, a methodology for data gathering go support planning, organisational management, operations, wealth creation, business continuity, financial literacy, technology and role of innovation to increase SME output is equally significant. Concisely, going forward policies and programmes of government should be rooted in deep rule of law, accountability, transparency, and fiscal discipline.
