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The micro, small and medium enterprises (MSMEs) are confronted with many challenges. Such challenges include lack of long-term and single-digit funding, poor infrastructure, multiple taxation and high energy costs, among many others. The problems have been exacerbated by COVID-19, which has wiped out millions of small businesses already.
In a phone conversation, Seun Oshoniyi, head, membership relations, Lagos Chamber of Commerce and Industry (LCCI), said the problems of MSMEs dwelt more on lack of information, poor people-network, and lack of expert advice. She said their problem was not necessarily funding, as many believed.
“While many entrepreneurs claim that funding is a problem, you will be shocked to see that when they are pitched to investors or have access to grants, many of them are absolutely clueless on what they should use the money for,” she said.
She explained that many people just enjoyed being referred to as CEOs without making necessary investigations regarding proper handling of a business, adding that most entrepreneurs lacked access to the right information that would help them grow their businesses. She further said that some of them undermined the importance of technology, digital marketing and social media.
She pointed out that many MSMEs lacked proper structure and framework with which they could successfully carry out their business, adding that they also shied away from professional services to save costs and end up getting into trouble.
“Entrepreneurs need competent accountants to file their books; seasoned lawyers to help them make major decisions and documentations; a board of advisors, and personnel managers to help source employees,” she said.
“If they do not have these handy professionals, there is a limit to what grants and loans can do,” Oshoniyi said.
Tony Anele, group head, consumer and retail banking, UBA, said at a business forum in 2019 that many businesses failed due to lack of structure and not necessarily finance, as it was often thought . This, he believed, would be reduced when the entrepreneurs sought professional advisory services.
Data from the National Bureau of Statistics (NBS) show that the number of MSMEs in Nigeria rose from 37 million in 2013 to 41.5million in 2017. Micro enterprises were 41.47 million, constituting 99.8 percent of the total enterprises, while small and medium businesses were estimated at 73,081, which is 0.2 percent of the total.
Despite their relevance to the economy, the report shows that the number of medium scale enterprises dropped by 61 percent, from 4,670 in 2013 to 1,793 in 2017, while the total MSMEs grew marginally by 12.1 percent.
A survey conducted by BusinessDay among some entrepreneurs shows that many of them (90 percent ) highlighted funding as a major problem they are battling with. However, business experts have said funding is not majorly a business problem but indicates inefficiency on the part of the entrepreneur.
