The economic leap of a handful of developed
Nations is predicated on the performance of SMEs and the general conditions for
operations. Most nation's GDP rely on SMEs to take a scale up. Paying attention
to SMEs is an undisclosed secret of developed nations and the bane of ignorance
of developing nations.
SMEs in Personal View
Small and medium scale enterprises,
can be defined by assets, they are the custodians of the market. They in most
cases have direct linkups with final consumers and could tell when a country
records a high ease in doing trade, they are micro and many, they gasp for
breath in challenging environment, they are stressed over gaining local
confidence on their products and services especially in African nations, they
get wounded by unhealthy policies. Though they do not have the resources of
large companies, their essence is entrepreneurial and are very important to the
innovation and growth of a country's economy.
European View
SMEs are non-subsidiary independent
firms which have small investment capitals, with small annual business
turn-over. , Small firms are generally those with fewer than 50 employees and
an upper limit of 250 employees. However, some countries set limits of 200
while US considers 500 employees’ threshold. The European perspective gives
room for lifting the financial bar: the turnover of medium-sized enterprises i.e.
50-249 employees should not exceed EUR 50 million; that of small enterprises
i.e 10-49 employees should not exceed EUR 10 million.
Government Involvement
The European Union in 1st January
2005 had enforced a community act, state aid and funding programmes where SMEs
can be granted higher intensity of national and regional aid than large
companies.
The principles of SMEs as economic
contributive businesses have not changed over the years, rather the environment
have and will constantly change. Business environments are constantly moving
from kiosks, physical warehouses, brick shops to e-commerce, digital base,
seamless transactions and delivery across seas, validating bordelessness in the
bid of improving human’s experience in the world of commerce. These changes go
with a huge demand for evolving supportive technologies and incentives to build
a business model around the trend, but sadly, a huge percentage of this demand
is a weight on the shoulder of governments that aren't up-to the task. SMEs
should be supported by legislations like the public procurement act, business
friendly land use act, improved deregulation of our grid system to constantly
supply electricity as cheap as though they're subsidized, improved ICT,
telecommunications affordability etc.
SMEs are the Economic Backbone
According to the International
Council for Small Business (ICSB), Micro, Small and Medium-sized Enterprises
(MSMEs) make up to over 90 per cent of all firms, provide up-to 60%
employments, and account for 50 per cent of Gross Domestic Product (GDP) of any
economy.
According to SBA (gov. 2016), The
SMEs are the backbone of successful economies like the Uz`3SA, EU and China;
where over 43 million small businesses employ about 60 to 70 % of the overall
workforce, and generate more than half of the nations’ gross domestic products
(GDP).
USA; A Case Study
As of 2016, there were
28.8 million small businesses in United States of
America, against 18,500 large companies in the US., which accounted for
99.7% of US businesses. (Source: SBA Gov 2016).
In the 4th quarter of 2016,
private-sector employment increased by 1.7% as the US small businesses
employed over 57.9 million people. 23 million of these businesses are self
employed and home-based; indicating that SMEs are the biggest employers of
labor, job creators, and contributors to the Nation's GDP. (abakin biz school).
The US has a GDP that is almost $17 trillion which is a quantitative measure of
the United State’s total economic activity.
Liberty Capital Group in one of her
recent report had indicated that “around half of the American workforce is
employed by a small business, and almost 67% of all new jobs are generated by
small businesses”. However, the US small businesses are challenged with growth
and easiness to link up to economic uncertainty, accessing capital while faced
with a write-off in favor of bigger corporate ventures. Low consumer spending
and regulatory burdens also have slight effects on SMEs in US.
China; A Case Study
The People's Republic of China with
estimated 1.4 billion population holds SMEs as significant drivers of their big
economy.
SMEs in China are considered rather
bigger relative to that of Europe or the United States considering labor
intensity in production and its large demography. China Bureau of Statistics
(CBS) had in one of their yearly reports said that, the number of China SMEs
rose to over 40 Million in 2004 against Europe which stood at about 19 Million
in 2003. In 2015, 97.9% of all registered enterprises were SMEs, contributing
68% of China's export and 58% of her GDP (According to China statistical year
book). They're creating employment opportunities amounting to 82% of total
employees in China and responsible for 75% of new yearly jobs.
Awake Nigeria
Nigeria as Africa’s largest commodity
market can have SMEs also boost her economy in areas such as; employment
creation, poverty reduction, and industrial development amongst others, this
boost the development of indigenous technology, diversification of the economy;
and forward-integration with established sectors in Nigeria such as the banking
industry, telecommunication sector, oil and gas, etc.
According to National Bureau of Statistics
(NBS) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN),
they reported that in 2013, Nigeria had 37 million MSMEs with 36 million
recorded as micro businesses and they employed as at Dec 2013 59,741,211 which
represents 84.02% of Nigeria's total labor force. This sector has contributed
48.47% of the nation's GDP and 7.27% of the total exportation volume in same
year.
However, this is the most neglected
sector in the nation according to experts, haunted by poor local content
promotion, affinity for foreign products and doubtful local patronage,
bureaucracies to obtaining loan with huge interests, monopoly of government
cronies, unfavorable land use act, shady public procurement and poor
enforcement of public procurement act, power, just to mention but a few. Though
many government agencies and institutions have played and continue to play
significant roles in the growth and improvement of SMEs in Nigeria; but more
efforts are required for a faster development pace.
While I appreciate business tycoon – Tony
Elumelu CON, for his entrepreneurial benevolence rendered to young
African entrepreneurs annually, I like to point out that we need more of the
Elumelu’s to make a massive impact by pushing in direct investment in
entrepreneurship and small businesses across all major economic sectors in
Nigeria like Agriculture, Information Technology, Manufacturing, Arts/Fashion,
Entertainment and most importantly investments in major market hubs like
Onitsha, Nnewi, Kano. seaports and international airports should be opened in
these zones for ease in export trade, the Lagos-monopoly is cankewormic to
sales, industrial zones in the nation should be developed and provided with
constant electricity grid.
Conclusively,
I like to affirm that there are no doubts that small and medium scale
enterprises are essential for rapid and sustained economic growth and
development of African nations as growing economies. It becomes expedient to
take speedy actions on this discourse so as to meet up the space with the United
Nations Sustainable Development Goals.
Ohanwe, Emmanuel. I.
Content creator cum Economic analyst.
+2347034930975
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