Why government interventions in MSMEs may miss goals
Although the Federal Government has announced plans to roll out a N2.3 trillion stimulus package and survival fund for Micro Small and Medium Enterprises (MSMEs) to stay afloat amid the economic challenges imposed by COVID-19, some stakeholders, Wednesday, insisted that underlying factors may cripple the projected objectives.
As part of the initiative, the MSMEs would receive payroll support for three months, and guaranteed off-take scheme among others. But the Founding Partner and Chief Executive Officer of Gabriel Domale Limited, a management consulting firm, Dr. Leesi Gabriel Gborogbosi, noted that if underlying factors affecting businesses in Nigeria are not factored, the interventions like many others may remain elusive.
Gborogbosi said while financial support is critical, addressing some fundamental challenges, including the governance structure as well as MSMEs’ capacity will go a long way to make the sector contribute meaningfully to the nation’s ailing economy.He also noted that knowing the right businesses to invest in at the time of a pandemic was necessary, adding that there was a need for strategic solutions, especially solutions that create import substitution products.
“Government is providing support financially, but does money alone solve problems? You need capacity to work. It means that the government needs to look more carefully at the MSMEs with the right potential. There is a need for capacity development.” the Port-Harcourt based expert stated.He also called for a holistic approach that would ensure necessary consultants worked with the SMSMEs to address leadership, governance structures, and other barriers limiting the potential of small businesses.
Gborogbosi said: “The MSMEs are critical to the economy and that is why we need to get things with them. Most of the time, the government introduces policies and thinks it is good for the people but what they don’t realise is that some of their expectations are not in line with the people’s expectations.
The solution is that the people must be engaged before policy. There is a need to get the views of the MSMEs to understand their problems. This is the situation in most developed countries.”
Speaking on some of the interventions, Adesuwa Okunbo Rhodes, who is the Founding Partner and Managing Director at Aruwa Capital Management, also canvassed a mix of funding options for the MSMEs.
While applauding the strides by the Central Bank of Nigeria (CBN) in a challenging macro-economic environment and low oil price regime, she urged the government to do more, and provide the necessary fiscal stimulus to the economy.
Rhodes noted that some of the interventions would not scratch the surface of what is needed to make the small businesses uplift the economy.“Debt alone is also not the answer. There has to be a mix of funding available to SMEs from grants to equity, funding has to be truly patient and long term so that a generation of innovative SMEs aren’t lost, and unemployment isn’t exacerbated due to the pandemic,” she stated.
