The United Bank for Africa was at it again in the journey to building Africa’s economy through the development of the micro, small and medium enterprises (MSMEs). The bank organised an online workshop on July 29, 2020, focusing on booking and accounting, and tax management for small businesses.
I was connected to the programme because building sustainable businesses is what I do with my team for a living. For over two years, I have used this column, Positive Growth with Babs to share tips on how businesses could develop from the idea and initiative of one person to a global brand that outlives the owner. I have shared tips on leadership, culture, teamwork, employee engagement and experience, capacity building, customer management and institutionalisation of organisations to promote the sustainability of businesses. The reasons are not far-fetched. Africa needs more of the MSMEs to develop economically, utilise the capacity of her population and maximise the potential of her vast resources. The high rate of unemployment in Nigeria is attributable to the low volume of productive and successful MSMEs.
Most of the developed economies have strong MSMEs as the foundation of their employment rates and high standard of living. In the United Kingdom, the number of private sector businesses as of 2019 according to the UK government was put at 5.9 million. Of which 5.82 million businesses were small (0 to 49 employees), 35,600 enterprises were medium-sized (50 to 249 employees), 7,700 companies were large (250 or more employees). In India, the total number of MSMEs was more than 63 million, with over 31 percent GDP contribution in 2019. India also has a government ministry for MSMEs, with a cabinet minister who focuses on MSMEs in the country due to their colossal employment generation and contribution to the standard of living.
According to the NBS, the total number of SMEs in Nigeria is estimated at over 41 million. The number of SMEs in Nigeria is grossly inadequate for her population of 250 million people given the high component of the youth and agile segment which must be productively engaged and keep away from criminal activities.
In the past years, my team has intentionally focused on helping the MSMEs to build sustainable business culture and processes to transform ideas behind the enterprise into generational outputs. In my experience as a leadership and business consultant, I have seen businesses that are in their third or fourth generations, especially in the FMCG distributorship line. These businesses, without structure and failure-proof processes, have trained and fed many people as dependable sources of livelihood. I have equally seen successfully built companies with over four decades of existence crumbled because of ignorance and inadequate succession plans. I had seen an heir apparent who mistook turnover of her mother’s business to be the profit of the company and ordered four new sets of cars as his first business decision when he took over the company. He crunched the figures against the business built before his birth.
The value of UBA’s MSME Workshop is generational. The bank aside from providing financial services has contributed to the sustainability of the businesses of the attendees. I attended the workshop out of keen interest and can attest that the duo of Chioma Ifeanyi-Eze and Emeka Amadi did excellently in their presentations. Chioma, who is the founder of the Accounting Hub, taught the participants on book keeping and accounting basics for small businesses. She highlighted the importance of recording all expenses and income using the accrual basis and the need to use relevant accounting software for ease of processing and accuracy of the reporting.
Amadi, the taxman and the group head of UBA tax management team, focuses on the importance of record-keeping and knowledge of relevant tax laws. He explained the need for the business to file their annual tax returns and be responsible to the society. I have no iota of doubt that the attendees’ businesses will not remain the same if they put into practice what was shared with them. It is good that UBA is taking the lead in developing the capacity of the MSMEs. It is easier for banks to get the attention of the small business owners than the business consultants who struggle to convince their clients of the need to have structure around their businesses.
Given my experience, getting the MSMEs owners to embrace enduring policies, processes, procedures, and building a business culture that guarantees sustainability is not easy. There is a different psychology and methodology to change the “I own it and know it all” of an average MSME’s owner who might see business consultants as people with theories and without the practical knowledge required to help his or her businesses. I met a lot of resistance in my journey as a business coach when I started.
Today, my team is supporting businesses with presence outside Nigeria and in five countries across Africa. We were in the United Kingdom last year to support the expansion plan of one of our clients, and I have visited countries in Africa for a client who sees value in building capacity for his business through our coaching and process improvement services. What we do and focus on is to make the company independent of the owners and focus the owners strategically for diversification of revenue streams. The more a business can operate without undue interference from the founders, the better it is for it to be sustainable and stand the test of time.
I recently shared my thoughts with a protégé who is delving into consulting for the MSMEs. Getting an average small business owner to pay for consulting service is difficult but not impossible with time. At the enlistment stage, I have always asked my prospective clients how they will feel at age 70 seeing their businesses thriving and pay the salary of the employees. I use their answers to let them know the importance of building enduring structure and processes to sustain their business ideas. I am also fond of asking my new clients a question asked by one Harvard professor to identify their intention for their businesses. I will ask them if they will continue to do their main business or not when given all the money they need to live till the end of their existence. Those who still choose to do their existing business activities even without the need for money are the people that are doing the businesses as their life calling. I take delight in working with them. It is my life’s call to support businesses and individuals to be at their best and generate visible results within 90days.
In the book, the value chain banking, I wrote on how bankers should classify their MSMEs customers into four quadrants to support them to build sustainable businesses. I equally advise bankers on what the customers are looking for before they start relying on their bankers as business partners for progress. MSMEs owners want bankers they can trust and respect. The trust and respect quadrants are critical in the relationship mapping and building for business bankers. If the banks do more than granting credit facilities by focusing on developing the business capacities of this segment, the success rate of MSMEs will be high resulting in increasing levels of employment, high standard of living and business survival. Loans granted to the MSMEs will be well managed with a lower risk of diversion and loss due to inherent mismanagement or poor decisions by the MSME owners.
The United Bank for Africa’s micro, small, and medium enterprises workshop is a vital capacity building programme and support for businesses to grow and be well managed. It is what is needed as guides to sustainable practices that guarantee the employment of people and the uplifting of people’s dignity through work. This is worthy of emulation by all the banks. The MSMEs owners will listen to the banks beyond being the finance providers; they will see banks and their staff as experts and will be happy to have complementary capacity building workshops as part of the perquisite of banking with their banks.
Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.
