Today’s economic challenge of a deep recession has brought about some far-from-positive developments. They include shedding of work force by some companies, budgetary astringency on the part of government and the organized private sector (OPS), a disturbing rate of mortality of small- and medium-scale enterprises and the growing weakness of the naira, compared to the American dollar and euro. In effect, the recession has come with a natural and telling high cost of living, with inflation or consumer price index (CPI) close to 30 percent. Within this cheerless matrix, economists and entrepreneurs are concerned with just what should be done – on both short- and long-term bases – for the survival of micro-, small- and medium- scale enterprises, in recognition of their back-up roles in the architecture of the country’s political economy.
The Executive Secretary of the Lagos-based Institute of Entrepreneurs (IOE), Dr. Rotimi Oladele, offered that there was a pressing need for the federal government to formulate and implement, in spirit and letter, economic policies that would be favourable to the development and growth of SMEs. The survival and sustainability of SMEs, at a time of recession, calls for strategic investment at the micro-level of the national economy, in a classical economic fashion, so as to help the ugly effects of the doldrums.
Oladele’s offer also included such components of enabling milieu as single-digit interest loans, with fairly long moratorium to SMEs, the provision of such incentives as steady power (electricity and petrol) supply, good roads, railways, water etc., so as to boost the confidence of SMEs’ skippers as emerging employers of labour, creators of wealth and boosters of the macro economy. Their role, within the context of Oladele’s thinking, becomes relevant, at a time the Nigerian government is bent on the diversification of the economic base – well away from oil, which has, in recent years, suffered a rebellious dip in its price at the international market.
In addition to government’s loan for SMEs, Oladele did say, at the quarterly capacity building conference of the IOE, with the theme: “Survival of SMEs Under Recession”, that it was necessary for prospective beneficiaries of government loans to have trackable identity with a synchronized collaboration with banks, the Nigeria Police Force, Nigerian Immigration Service (NIS), Federal Road Safety Commission (FRSC), Vehicle Inspection Officers (VIOs) and amongst others, the Nigerian Identity Management Commission (NIMC).
The charge of government and banks, to whom SMEs’ skippers owe a duty of loan repayment, is to ensure that they are individuals with integrity and are, indeed, utilizing their loans for the agreed purpose. Even so, truth is that, lately, some beneficiaries of government loans have been a huge disappointment. A human and financial resource specialist, Mr. Jide Majiyagbe, who represented the Director-General of the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), Dr. Dikko Umaru Radda, retold, at the IOE gathering, an unreadable story of a man, who had access to about N10 million. The married man, whose name was not disclosed, did just one good thing with a fraction of the fund: he hired an office, somewhere in Lagos, where he hoped to start his business. The rest of the fund he expended on buying a new Toyota Camry for his lass, with whom he lived in a hired apartment. It took the complaint of his abandoned wife to his creditors to expose him. He was jolted by Majiyagbe’s threat that he should choose which prison he would like to spend the next five years for his criminal conduct. Thereafter, he started calling Majiyagbe, regularly, to negotiate his way out of the looming crisis. That was the same married man, who wanted to be an entrepreneur, but refused to pick Majiyagbe’s calls or call him, soon after he got the first tranche of the government’s funds. Many, perhaps, are such unreadable tales of the mismanagement of funds meant for the development of the SME sector, especially during the immediate past Goodluck Jonathan administration. That, too, explains why, in agreement with Oladele, the first profile of an entrepreneur should be integrity. It embodies such profiles as character development, discipline, customer relations, regular payment of tax and, where applicable, regular servicing of loan.
It was posited at the IOE gathering, during which some entrepreneurs were inducted, that these traits, amongst others, were crucial for the survival of SMEs during a period of recession. It is of integrity that a true entrepreneur “is a brand that has to be analyzed before any attempt is made to offer him for sale (scrutiny) or promote him for consideration and acceptance.” It is of integrity, further, that a true entrepreneur survives a recession. As an animate object, he speaks, as an “attractive personality”, who’s a “bank of ideas”; “a team leader”, who’s “an impactful story-teller” about the market, but mainly with reference to his product and services. It is such disciplined entrepreneurs, Oladele observed, that such skippers of industry – the likes of the late Dr. Gamaliel Onosode, who was the first fellow of the IOE and Dr. Christopher Kolade, and former governor of the defunct Western Region – Brigadier-General Rotimi Oluwole, who needed a Dr. Victor Olunloyo to provide him with a four-bedroom bungalow – would probably like to associate with. That is in recognition of his profile as someone who has, in pressing the Blue Ocean theory of entrepreneurship, created a new market, a cluster of customers and a fairly elastic demand for his products and services.
Put tersely, integrity, in the management of an enterprise, attracts venture capitalists, who are willing to partner with an entrepreneur based on his record of achievement and reputation.
It is therefore binding that government and fiduciary institutions that are offering preferential funds to entrepreneurs should monitor, very closely, their beneficiaries with the active involvement of SMEDAN. It also calls for entrepreneurship education and skill acquisition under the supervision of the IOE. While it may require a partnership involving the universities, polytechnics, colleges of education, National Board for Technical Education (NBTE), Nigerian Universities Commission (NUC) etc., and the intent is to curb the gargantuan waste of funds meant for entrepreneurial endeavours for which tertiary institutions are very notorious.
At a time of recession, an entrepreneur who’s a faithful payer of tax, in Lagos State, say, may have a fairly easy access to SME-related funds, for that is the first prerequisite to enjoy any state-fund facility.
But, since government would seem to be scrounging, on account of recession, Dr. ’Folu Olagunju, who’s the Head of Administration at the IOE, suggested crowd funding for SMEs, under a very strict supervision of government, with the identity of benefactors publicly known. Crowd funding is akin to an equity, in which the public is enjoined to provide a cousin of counterpart funds for the running of a promising enterprise. It could also be a form of voluntary contribution to that effect. In some instances, it attracts interest for contributors. In the Middle East, where crowd funding is quite popular, it attracts little or no interest. The snag here, in Nigeria, is the unshifting public distrust of the exercise; it having failed in the past – for lack of integrity on the part of the managers – and is now a subject of a rather protracted litigation.