Thursday, 6 October 2016



SMALL AND MEDIUM SCALE ENTERPRISE DEVELOPMENT IN NIGERIA.


·        Introduction

I am sure this is not the first time you are hearing the word” SME”. You hear it everywhere; on the radio, in the news and even in the papers. So what exactly crosses your mind whenyou hear the word; “SME”.
Simply put an SME is an acronym for Small Medium Scale Enterprise. Small Medium Scale Enterprises refer to businesses that employ a small number of workers and do not have a high volume of sales. Such enterprises are usually privately owned and operated as sole proprietorships, corporations or partnerships.
·        Classification of SMEs
SMEs can be classified according to their size and the turnover they make annually. In Nigeria for instance, SMEs are defined by the Central Bank as entities with asset base ranging from 5 million naira to 500 million naira (excluding land and buildings) and with employees between 11 and 200.
Another important classification of SME is according to their annual turnover.
The table below explains shows the classification of SMEs according to the Small and Medium Enterprise Development Agency of Nigeria(SMEDAN) in the year 2010;
Size
No. of Employees
Turnover
Micro
1-10
< 4.9 Million
Small
10-40
5 Million - 49 Million
Medium
50-199
50.1 Million – 499

·        Roles and Significance of SMEs
In Europe for instance, Small and medium-sized enterprises (SMEs) are often referred to as the backbone of the European economy. This is because they provide a potential source of jobs and economic growth. In the European Union, Micro, small and medium-sized enterprises are socially and economically important, they represent 99 % of an estimated 19.3 million enterprises in the EU and provide around 65 million jobs representing two-thirds of all employ
In Nigeria, studies have shown that the manufacturing sector is predominantly dominated by SMEs. SMEs represent about 95% of the manufacturing sector, and 70 percent of industrial jobs in terms of number of enterprises and an overall 96% of Nigerian businesses. In Nigeria, small businesses are generally found in small shop, hairstylists, trade men, photographers, digital studios. This awesome position shows that the role of SMEs cannot be overemphasized in the growth and development of the Nigerian economy. According to SMEDAN, (2010), SMEs both in the formal and informal sectors employ over 60% of the labour force in Nigeria. More so, 70% to 80% of daily necessities in the country are not high-technology product, but basic materials produced with little or no automation e.g. Garri, Clothing, Shoes.
Despite all these contribution of SMEs, SMEs are still faced with a myriad of problems which has in one way or the other hampered their growth and indirectly the growth of Nigeria. Problems limiting the success of SMEs in Nigeria include
Lack of easy access to funds
• Deficient Public Infrastructure
• Bureaucratic Bottlenecks & Inefficiency in the administration of Incentives
• Discrimination by banks due to credit risk
• Uneven competition and preference for imported products
• Poor Succession Planning
·        Inadequate Educational & Technical background.
·        Multiplicity of regulatory agencies & taxes, increasing high cost of doing business.
·        Dependence on imported raw materials – foreign exchange risks
·        Poor Entrepreneurial Skills such as organizational skills, Marketing, Personnel Management, accounting ICT and Leadership.
Despite the hurdle faced by SMEs in Nigeria, It would be interesting to know that there are various strategies of survival for SMEs even in our recession-hitting economy. It is good news that many SMEs are growing and developing and that according to the Statistics(NBS) SMEs still employ over 60% of the labour force in Nigeria. And how is this possible? It is possible because they go through certified business consultants who are experienced and can forecast and help overcome lying dangers that may want to undermine the growth of such SME in future. At EZ37 Solutions, we have our competent Business Advisory Consultant for SMEs. In addition, we are a certified BDSP-Business Developer Service Provider with the Bank of Industry. Hence you need not to look further. We are here to help you. Contact us today!

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