High Mortality Rate of SMEs in Nigeria Worries Osinbajo
By Adedapo Adesanya
Vice President Yemi Osinbajo has assured that the demon, multiple taxation, would be tackled by the Presidential Enabling Business Environment Council (PEBEC) so as to allow the business environment in Nigeria to thrive.
Mr Osinbajo gave this assurance on Monday in Abuja at the First Abuja Small and Medium Enterprises (SMEs) Conference and Exhibition 2021 organised by the Abuja Chamber of Commerce and Industry (ACCI).
The event was aimed at providing solution strategies for resolving tax, regulatory, packaging and logistic challenges facing Nigerian SMEs, causing the sector to have a high mortality rate.
Mr Osinbajo, represented by Mrs Mariam Katagum, Minister of State for Industry, Trade and Investment, said the government was focused on improving the Ease of Doing Business and encouraging tax and fiscal responsibility.
He noted that the problem of taxation on the growth of SMEs in the country was exacerbated by a lack of reliable data for statistical analysis.
According to him, the mortality rate of SMEs in Nigeria is very high, and among the factors responsible for this are tax-related issues.
He said it was because of this that the government, through the Finance Act 2019 and 2020, amended various tax and fiscal legislation to align the Nigerian business environment with global standards.
“One of such amendments is the categorisation of companies into small, medium, and large companies, based on annual gross turnover as seen in the Finance Act 2019. The Act also has, as one of its strategic objectives, support to small businesses, in line with the Ease of Doing Business reforms.
“However, some of the specific challenges related to taxation are multiple taxations at the national and sub-national levels, non-clarity on the procedure and amount to pay and non-friendly tax administrators,” he said.
For SMEs to sustain their role of contributing to the mainstream economy, Mr Osinbajo said they must implement effective strategies in their business operations, inclusive of logistics.
He said the function of logistics is important to SMEs because it is the quintessence of the organisation’s relationship with suppliers and customers.
He noted some challenges related to logistics as high transportation costs, lack of quality delivery service and infrastructure, adding that the challenges related to packaging are non-availability of quality materials, high cost of materials and lack of an inbuilt culture of packaging.
To resolve some of these challenges, he said specific actions must be put in place to overcome them. He noted that the Muhammadu Buhari-led administration was taking measures like sensitisation and awareness creation, general capacity building and streamlining of taxes across the national and sub-national levels.
He listed others as the implementation of relevant sections of the Finance Acts, specific technical training on packaging and logistics, sharing of knowledge and peer review with SMEs in other jurisdictions.
He also called for strict observance of international standards, adding that regulatory authorities must develop friendly criteria for SMEs.
Mr Osinbajo noted that the conference is apt, in view of the African Continental Free Trade Area (AfCFTA), because several African countries have the scale to compete with Nigerian businesses in terms of productive capacity, packaging, exports and logistics.
