MSMEs as potent tool towards tackling rising unemployment
These are challenging times for businesses, especially the Micro, Small, Medium, and Enterprises (MSMEs).
Notwithstanding, the fact that MSMEs play a critical role in job creation and are the live wire of the Nigerian economy, they need to be encouraged to do more.
Experts are of the view that with their contributions to the economy, especially their capacity to create jobs, they must be included in many initiatives.
They also submitted that the government needed to put in place appropriate support infrastructure to facilitate the growth of MSMEs, across all sectors.
Speaking at a yearly workshop organised by Labour Reporters Association of Nigeria (LAWAN) in Abeokuta, Ogun State, Chief Executive Officer of Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said when compared to large enterprises, MSMEs tend to use less capital per worker, have the capacity to use capital more productively and create more jobs per unit of capital.
He said MSMEs promote entrepreneurial development and accelerate the use of local law materials, thus deepening backward integration.
Yusuf, who spoke on the theme, ‘Role of SMEs in Tackling Rising Unemployment in Nigeria,’ maintained that MSMEs are instrumental to the mobilisation and utilisation of small savings for investment.
Some of the funds, according to him, tend to exist outside the banking system and boost job creation.
Yusuf cited the National Bureau of Statistics (NBS), which stated that as of 2017, out of 41.5 million MSMEs, 99.8 per cent of the MSMEs are micro-enterprises, 0.17 per cent are small enterprises, while 0.004 per cent are medium enterprises.
However, in the latest 2021 GDP data of the NBS, manufacturing contribution to GDP was nine per cent 2021, with almost 50 per cent of the contribution by the food and beverage sub-sector.
The result, he said, was partly a reflection of the impact of backward integration on the subsector’s performance.
He expressed concerns about the unemployment rate of 33.3 per cent in 2018 according to the NBS; underemployment at 22.8 per cent; youth unemployment 42.5 per cent and youth underemployment at 21 per cent in a given population of over 200 million, in which over 60 per cent are youths.
Yusuf, who was the former Director-General of the Lagos Chamber of Commerce and Industry (LCCI), said, with these scary figures, there was a correlation between unemployment and poverty; unemployment and crime rate and between unemployment and insecurity.
Alerting that some of the adverse social consequences of unemployment were already manifesting in various communities, he affirmed that MSMEs are potent tools for tackling unemployment.
To further curb the growing unemployment rate in the country, the CPPE chief, said there was a need to stem the tide of de-industrialisation in the economy, which he said had been aggravating the rate of employment in the country.
He raised the alarm that many factory premises around the country had been taken over by activities other than manufacturing, such as event centres, supermarkets, worship centres and warehouses for imported finished goods.
“Many of our industrial estates have become a shadow of what they used to be. Evidence of all of these can be found in industrial estates located in Ilupeju, Ogba, Ikeja, Sango-Ota and Agbara, adding that in the eastern or northern part of the country the story is not different,” he said.
He said it was imperative to take urgent steps to stem the tide of de-industrialisation if the country must curb the growing unemployment and increasing import dependence of the economy.
Listing some of the factors responsible for de-industrialisation, he said: “The influx of cheap and substandard products, which creates unfair competition with our domestically produced goods; the crisis in our foreign exchange market, which has elevated the volatility in the exchange rate, which worsened scarcity of foreign exchange; epileptic power situation; high cost of energy, especially diesel and gas; the phenomenon of multiple taxations imposed by the three tiers of government.”
He said other challenges included “multiple taxations and excessive drive for revenue by agencies of government, which imposes a huge toll on our manufacturing industry, especially those who are in the MSME category.
“There is weak domestic patronage of what is produced locally. There are inadequate basic industries to support our manufacturing enterprises. Such industries include the iron and steel industry and the petrochemical industry. There are issues around policy inconsistency, weak infrastructural base – power, transportation, Apapa traffic issues, railway system and the ports, among others.”
While charting the way forward to address some of the challenges, Yusuf urged labour to be more tolerant and embrace economic reforms and the ideals of a market economy.
The move, he said, would accelerate investment growth, job creation, economic growth and poverty reduction.
According to him, rigid ideological positions against reforms and a private sector-led economy had caused considerable setbacks for the Nigerian economy. It has impeded the creation of a strong and sustainable economy.
He said if Nigeria must create jobs and reduce poverty, it should rapidly expand the scope of private sector investment in the economy.
“I am therefore appealing to the labour unions to embrace the philosophy of a private sector-led growth to enable the economy to grow and prosper. This is without prejudice to the protection of interest of workers across all sectors of the economy. This is not an ideological proposition. It is about what will benefit our economy and accelerate the pace of job creation, economic inclusion and prosperity for all,” he said.
Similarly, to stem the tide of unemployment in the country, Head, Corporate Communications and Media Relations, United Bank for Africa (UBA) Plc, Nasir Rahmon, said for the SMEs to withstand the test of creating more jobs, the Federal Government and other financial institutions must provide both policies, technical and financial supports to them.
He talked about how his organisation has supported SMEs enormously over the years, stressing that if the country was serious about creating jobs and growing the economy, the government must find a way to support the SMEs, while the banks must support lending.
He praised the bank’s chief executive, whom he said recognises the role of supporting SMEs across the shores of Nigeria.
“We are told that we are where we are because these supports were lacking. So in support of the SMEs, my bank UBA has committed enormous resources towards supporting the SMEs, not only in Nigeria but across Africa, because we are a global bank. This support catalyses developments in creating more jobs while helping to fight poverty in the African region,” he said.
Quoting his CEO, Rahmon said, “This is therefore why UBA is totally- aligned and fully-committed to supporting the SMEs through development of several products tailored towards assisting them to procure the much-needed capital and technical know-how required to successfully run their businesses. In this clime, it is extremely very difficult for businesses to survive based on the prevailing interest rates and this is the reason why the bank set up the SMEs account,” he stated.
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