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SMEs: Enhancing Access to Funding in a Pandemic

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By Timi Olubiyi, Ph.D

Globally, Small and Medium Enterprises (SMEs) are critical to the development of any economy as they possess great potentials for reducing poverty through employment creation and income generation.

This sector also improves innovation, local technology, output diversification, development of indigenous entrepreneurship and forward integration with large-scale industries.

Further to this, in Nigeria, many people work for these SMEs for subsistence. Therefore, the importance of SMEs is well recognized and documented in Nigeria. Regardless of the significant contribution to the economy, SMEs’ survival rate is significantly lower than that of large corporations.

Unfortunately, SMEs in Nigeria have underperformed over the years. However, these SMEs in Nigeria constitute more than 90% of the businesses around, their contribution to the nation’s GDP is below 10% according to recent data.

Empirical evidence shows that finance contributes about 25% to the success of SMEs, and one of the key issues attributed to non-performance is lack of access to funds. Having access to fund gives SMEs the chance to develop their businesses and acquire better technologies for production, therefore, ensuring competitiveness.

However, funding has remained one of the key SME internal issues that confront most enterprises in Nigeria today. SMEs in Nigeria face this gap, and this restricts their economic prosperity.

Consequently, the lack of external funding available for small and medium enterprises (SMEs) is the focus of this article.

Recall, Small and Medium Development Agency of Nigeria (SMEDAN) is the Nigerian government’s institution to develop the SME sector. The agency provides insight into the definition of small businesses based on the number of employees.

The agency defined small and medium enterprises (SME) as a business employing 1 to 200 persons. Therefore, in the context of this article, this definition is relied upon.

Further to this, the SME sector in Nigeria is bedevilled with many challenges. Among these, shortage of finance occupies a very central position, even though the economic and funding importance of the small and medium enterprise (SME) sector is well recognized in academic and policy literature and also evident globally.

Access to funds and financing for these SMEs remains severely constrained, thereby restricting their business growth. For several reasons, large firms may have a comparative advantage over SMEs because of their business structure, credibility in the market and easy access to funding. The limited access to funding by SMEs usually impedes on their productivity and growth.

Evidently, SMEs face credit discrimination from banks because of the opacity of their business information, lack of structure and it is also quite common that these SMEs do not have in place necessary audited financial statements.

For these reasons and more, it is usually difficult for SMEs to show credit quality to banks and other financial institutions. So, SMEs are seen to constantly experience financial constraints, and they experience more stringent credit terms than the large companies, which are seen to be less risky in Nigeria.

Access to finance can give SMEs the chance to develop their businesses seamlessly and acquire better technologies for production, thereby ensuring their competitiveness. However, funding has remained one of the key SME internal issues that keep confronting most enterprises in Nigeria today.

To substantiate this perennial issue, an opinion poll was conducted SMEs in Lagos State- (computer village Ikeja, Alaba international market and some market associations (Auto Spare Parts and Machinery Dealers-ASPAMDA and Balogun Business Association) the findings also revealed one of the main constraints faced by SMEs to be lack of access to finance.

Typically, most of the respondents cited funding and access to finance is the most important constraint. About 79% of small firms cited a lack of finance and access to financing as the main constraint to their business growth. That means only 21% of them have access to required funding for the development of their businesses, and this crucial enabling factor is difficult for SMEs to access.

Consequently, the access to the necessary financing or credit required to expand and continues to perform the business operation, growth, innovation and employment will be affected greatly.

Banks and credit institutions perceive SMEs in Nigeria as risky structures: not very resilient, fragile in terms of activity, solvency and management. Context observation also revealed that many banks do not have specialized products targeted at SMEs, particularly startups and micro-businesses in Nigeria. The absence is due to the banks’ reluctance to lend funds to start-up firms, as it is found that these younger firms’ survival rates are lower than the established large firms.

The opinion poll conducted also indicated that constraints are larger for SMEs in relation to larger firms due to inadequate assets for use as security or collateral. From the opinion poll, it was further gathered that a very high-interest rate is one of the most significant barriers for small businesses to access funding in Nigeria.

SMEs are discouraged from taking loans from banks, as they cannot agree with the loans’ price. Because it will only increase their debt burden, and that can negatively affect the value of the businesses. Other factors discovered that affect the access to finance for SMEs are cumbersome application procedures, short loan maturities, collateral requirements and the novel coronavirus (COVID19), which has drastically changed the lender characteristics, among others.

The COVID-19 has had devastating economic effects on the world, and countries are experiencing a decline in economic output. Majorly, SMEs have been hard hit in Nigeria with their business continuity severely threatened.

The economic impact of the COVID-19 pandemic is very high, and perhaps the government might need to consider more pragmatic palliatives such as social and fiscal policy palliatives targeted at these SMEs for sustainability.

These include providing more low-interest credit facilities and tax breaks- particularly cutting taxes to increase disposable income. Most SMEs run their businesses on loan facilities, and the current situation has impeded their capacity to access or service current loans.

Nigeria’s government needs to continually support this significant sector, given its potential growth and poverty reduction opportunities. Consequently, interventions and policy responses to promote access to finance for these SMEs are recommended. The key recently released guidelines and requirements to access the Central Bank of Nigeria (CBN) announced COVID-19 palliative measures worth N3.5 trillion for businesses, should be relaxed to promote wider eligible participation of SMEs.

Those that truly and meaningfully require it might not be able to access it, especially the micro-businesses and Small firms if the current requirement is not reviewed. Besides, government and regulators may take initiatives to reduce the interest rate for SMEs, which can foster the growth of the SMEs and contribute to the economy and (net) employment creation.

From the aforementioned, it is also apparent that SME operators need to pay adequate attention to the structure of their businesses, adopt good corporate governance, prepare a financial statement when due and keep proper records.

The symmetry of information in the companies will strengthen the capacity to access finance for growth. Where necessary, the engagement of knowledgeable professionals can also make a substantial impact on your business operations and give advice on innovative SME financing.

For instance, the capital market can present opportunities and give alternatives to bank lending. Therefore, to achieve the right type of funding for your business, it might be necessary to seek advice or professional guidance. Good luck!

How may you obtain advice or further information on the article?

Dr Timi Olubiyi is an Entrepreneurship and Small Business Management expert. He is a prolific investment coach, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and a financial literacy specialist. He can be reached on the twitter handle @drtimiolubiyi and via email: [email protected], for any questions, reactions, and comments.

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Unlocking Full Human Potential: Growth, Diversity, and Purpose

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In Nigeria’s diverse workforce, the conversation around diversity and inclusion (DEI) extends beyond gender to address tribal diversity, socioeconomic representation, and other cultural nuances. Policies that promote inclusivity are crucial for fostering collaboration in Nigeria’s multicultural corporate environment.

“An organisation is only as good as its people. Ensuring those people perform to their best is the role of human capital. Today, the field has a range of tools to ensure real-time engagement and agile interventions for optimal job satisfaction and performance”, – Catia Teixeira, MultiChoice Africa Holdings Group Executive Head of Human Capital.

In both our professional and personal lives, we all strive for growth and development. These opportunities are deeply rewarding, supporting the kind of self-actualisation that makes life most fulfilling. In the Nigerian workplace, where career growth often intertwines with societal expectations and the drive for self-improvement, human capital plays an even more significant role. Opportunities to grow are not just fulfilling but are deeply rooted in our collective ambition for a better future.

Employee engagement is a reflection of how actualised individuals feel in their roles. Engaged employees are more likely to perform at their peak and contribute positively to the workplace. In Nigeria, where the “hustle culture” is celebrated, organizations must create environments that not only nurture growth but also recognize and reward the efforts of their people.

When employees feel enriched and their work aligns with their aspirations, the results are transformative. Growth and development are not just personal milestones—they are the foundation of a thriving organization and, by extension, a more productive society.

Identifying Growth Opportunities

In every workplace, some employees stand out from the first day, while others take time to grow into their potential. Talent management processes must cater to both. For instance, a twice-yearly organizational talent review can help Nigerian companies identify where employees excel and where they need support.

Interactions within the workplace also play a crucial role. In Nigeria’s highly networked professional landscape, creating opportunities for cross-departmental collaboration can open new doors for employees. Systematic development plans, supported by tailored training, ensure that these opportunities translate into tangible growth.

Take the MultiChoice Academy, for example, which offers over 4,000 online courses spanning finance, HR, marketing, and other fields. This mirrors the Nigerian appetite for continuous learning, especially as industries rapidly embrace digital transformation. While face-to-face training remains valuable, customized e-learning platforms are pivotal in bridging knowledge gaps and preparing employees for the future of work.

For any training program, balance is key. Organizations must align employee development with business goals while ensuring individuals feel empowered to pursue their aspirations. In Nigeria, induction programs that connect new hires with company visions and purpose are critical to building this alignment.

One of the most rewarding aspects of human capital management is witnessing success stories unfold. In a country like Nigeria, where talent is abundant, but opportunities may be unevenly distributed, developing talent internally can make a significant impact. Long-term employees bring invaluable institutional knowledge, and nurturing their growth ensures they continue to drive organizational success.

At MultiChoice, we are deeply committed to equipping our workforce with the skills and confidence needed to excel. Whether it’s training young leaders, empowering women in leadership, or developing heads of departments, every investment in our people enhances their value – as individuals and as indispensable assets to the company.

What Diversity Means

At MultiChoice, gender equity remains a key focus. Women make up 46% of our workforce, and 46% of leadership roles are held by women—a significant achievement in a society where women often juggle professional aspirations with traditional family roles. Our promotions policy is designed to push these numbers to 50%, ensuring equity across all levels of the organization.

When entering new markets, MultiChoice intentionally applies its culture of inclusion, empowering women to excel in leadership positions. This commitment extends to addressing barriers unique to Nigeria, such as access to resources and mentorship for women in underrepresented fields.

Data Drives Change

To drive meaningful change, data is indispensable. Nigerian companies often face challenges like high employee turnover and workplace inefficiencies. By leveraging data, organizations can address these issues strategically.

MultiChoice uses platforms like Office Vibe to generate insights into employee engagement, satisfaction, and work-life balance. Weekly surveys and random polls provide actionable feedback, enabling quick interventions and fostering a culture of continuous improvement.

In Nigeria, where trust in leadership significantly influences workplace morale, data can also help bridge gaps between management and employees. Regular focus groups, coupled with robust analytics, ensure employees feel heard and supported. When organizations align employee needs with business goals, the result is a workforce driven by purpose and achievement.

The Collective Goal

In Nigeria, where community and collective growth are deeply valued, human capital strategies should emphasize the power of shared purpose. By investing in people, organizations contribute to a larger vision of national development.

At MultiChoice, every success story is a testament to this philosophy. From training young leaders to empowering women in leadership, the organization demonstrates that growth is a journey best undertaken together. For Nigeria, this represents a powerful blueprint for building a future where individuals and organizations thrive in harmony.

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Between Governor Bala and the Presidency

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Bala Mohammed Tinubu

Abba Dukawa

Although I’ve never met Governor Bala Muhammad in person, only seeing him on television, his recent outburst against the federal government’s economic policies resonates deeply with poor citizens’ view.

His concerns stem from empathy for the citizens’ going through unbearable hardships, which have worsened due to the economic situation where millions of citizens struggling with high cost of living, poverty and hardship, reflecting the reality on the ground where citizens face significant economic challenges.

His view resonated with the people in respect of political affiliations have praised Governor Bala for speaking truth to power, acknowledging that the economic policies aren’t working. But his outburst of the economic policies has sparked a heated response from presidency.

Even though President Bola Tinubu claims to have no regrets about his economic policies, aiming to strengthen the country’s economy, policies must be empathetic.

The Tax Reform Bills, in particular, have generated widespread concern, with experts warning of negative implications and advising the government to postpone the bill and engage in further consultations.

The National Economic Council, comprising 36 state governors and led by the Vice President, had expressed reservations about the bill, emphasizing the need for adequate consultation with stakeholders.

However, the Presidency swiftly rejected the NEC’s advice, stressing that the bill is crucial for supporting President Tinubu’s administration in bolstering the country’s fiscal institutions.

Governor Bala Muhammad’s expressed his concerns when hosting Sheikh Yahaya Jangir, a frontline campaigner for the Muslim-Muslim presidency, at the Bauchi Government House.

The governor urged President Tinubu to listen to Nigerians and correct his errors, stating that it’s his duty as a leader to tell the truth.

As Governor Mohammed noted, “I am sure you have heard that we are quarrelling with the president. Yes, it is true we are quarrelling because our people are suffering, and the president has refused to listen to us.”

His comments should not be seen as a critique of the president’s policies, not a personal attack. It’s essential for President Tinubu’s administration to understand the growing concern among Nigerians about the country’s economic direction and the need for effective strategies to address the current economic hardship.

The Presidency, through his Special Adviser, Sunday Dare, responded by urging Governor Mohammed to prioritize the welfare of Bauchi citizens instead of engaging in political posturing. Dare emphasized that the President’s administration is focused on national development and collaboration with state leaders.

It’s worth noting that Governor Mohammed has implemented various poverty alleviation programs, including the Kaura Economic Empowerment Programme (KEEP), to reduce the state’s high poverty rate. He has also prioritized education, with a focus on reducing the number of out-of-school children in the state.

Additionally, Governor Mohammed has taken steps to improve the state’s healthcare system,  His administration’s efforts to address these challenges echo the experiences of poor citizens in Bauchi State and across Nigeria.

Overall, Governor Mohammed’s commitment to addressing the pressing issues faced by his state and its citizens resonates deeply with the experiences of poor Nigerians..

Dukawa write it from Abuja can be reached at [email protected]

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Tinubu’s Titanic Wahala

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Letter to President Tinubu

By Tony  Ogunlowo

‘Titanic’ can mean something that is very big, gigantic or enormous and it was also the name of a ship that sank on its maiden voyage.

When the Titanic sank in 1912 it sank due to a number of avoidable factors: a ship deemed unsinkable that wasn’t fitted with watertight compartments, a ‘unprofessional’ seasoned captain who was apparently bullied into going at full speed through known ice-berg strewn waters, lack of common binoculars for the deck watch and the unavailability of enough life boats for all the passengers.

This all put together, as they say, was a recipe for disaster. Red flags were ignored.

Translating this to President Tinubu’s modern-day Nigeria, the avoidable factors that can sink the country are way too obvious.

Nigerians have long enjoyed the benefits of fuel subsidy. Costly as it is to maintain it’s enabled the economy to keep running by keeping the cost of things low. It’s removal, as can be seen, has created a domino effect, as the experts predicted, resulting in the prices of even the basic commodities skyrocketing as everyone passes on the additional costs.

With inflation currently at 32.7% and still rising, things are only going to keep on getting more and more expensive. As a result, the new minimum wage of N70,000 will have less purchasing power than the previous 2021 minimum wage of N30,000. If fuel subsidy removal was meant to boost the economy it has done the opposite and will stagnate any efforts to kickstart it.

The governments inability to control corruption or severely punish corrupt officials which is robbing the country’s coffers of billions and billions of Naira every year is a stumbling block for development.

If a corrupt government official who built 750 houses with stolen funds or an ex-governor accused of misappropriating N80 billion are allowed to walk around freely, supposedly on bail, without fear of eventual conviction it questions the message the government is sending out to future looters: if the culprits were in Russia or China the outcome will be totally different.

Even though an austerity economic policy may seem harsh like it was designed to rob Peter to pay Paul, it should be short, sharp hardship with green pastures in the foreseeable future – not ever! A good start will be to cut down on the number of foreign loans being obtained every year as their repayment can take a huge chunk out of the country’s annual income.

The new tax laws are long overdue and it should include that VAT earned in a state stays in that state: so, if your state doesn’t generate any VAT (- such as from the sale of alcohol products) you don’t get to share in what other states have collected.

Insecurity in the country is not something that started yesterday. Previous governments have blood on their hands for not nipping these insurrections in the bud before they grew to become monstrosities. You don’t pat yourself on the back, like the Nigerian Army likes to do believing you have the threat ‘under control’ – you eliminate the threat completely using what ever means necessary.

Unless the order (given by ‘Somebody’) is not to destroy them completely and to quote the late Sani Abacha,”…any insurgency that lasts more than 24 hours, a government official has a hand in it..”, no wonder Boko Haram continues to flourish and bandits like Turji Bello continue to taut the government. When the armed robber Lawrence Anini did something similar in 1986 he was fished out within months, tried and executed.

As I’ve written before the Nigerian Police Force is long past its sell by date and considering the ever growing population of Nigeria with its associated acts of anti-social behaviour its time to seriously consider devolving the NPF into state-run outfits. The growing popularity of state-run security outfits, such as Amotekun, proves this is feasible and effective.

Considering the fact the country is going through severe economic hardship the President, himself, should curb frivolous spending where possible: no more new Presidential yachts or planes ( – that includes the new one for the VP), a cap on ridiculous-no-real-job SA and SSA appointments and most important of all a cap on ALL politicians salaries and perks (which is to say if politicians are patriotic enough they’ll agree to a pay cut, forgo some of their benefits and pay for their own jaunts abroad).

Implementing the Steve Oronsaye Report which recommends merging and closing of ministries etc that has been passed over by every President since President Goodluck commissioned it in 2011 will cut government operating costs even further. This should not just be at Presidential level but extended to all the states: this will not just streamline the bloated and largely inefficient civil service but will also weed out ghost workers and white elephant project.

The ‘japa’ movement which the government is trying to discourage should be allowed to continue. It’s morally wrong for a government that can’t provide suitable employment for its citizens to try and prevent them from seeking opportunities abroad : ‘japa’ is not just limited to Nigerians, it’s a worldwide phenomenon.

People, British, American, Filipinos, are migrating worldwide to where ever there are opportunities for them to prosper. That’s the way the world works now: nobody is going to stay in a ‘sh*t-hole’ country if there are no opportunities for them to grow. Scr3w patriotism! It’s every man for himself! So, if a country can’t provide adequate employment opportunities people will pack their bags and ‘japa’! And if you restrict them from leaving the country what are they going to do? Get up to mischief – 419, cultism, kidnapping!

These same people send money back to their home countries all the time: Nigerians in diaspora in 2023 alone sent home more than $19.5 Billion Dollars. This is a huge injection of foreign currency for a country that desperately needs it.

So, just like the Titanic the warning signs are there and the inevitable that will happen should they be ignored. The question is which way is President Tinubu going to go. This is what I call the ‘Titanic Wahala’, ignore the obvious and the proverbial will hit the fan, sooner or later.

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