The President of the Lagos Chamber of Commerce and Industry (LCCI), Babatunde Ruwase, can confirm that loanable funds are actually available with the Bank of Industry (BoI) and other like-minded government agencies saddled with the responsibility of assisting Small and Medium-scale Enterprises (SMEs) grow. He, however, pointedly affirmed that most SMEs cannot access such loans due to a litany of reasons, which include improper book-keeping system and low knowledge of corporate governance.
Ruwase, an erudite Fellow of the Institute of Chartered Accountants of Nigeria (ICAN), also harped on the readiness of LCCI to continue to collaborate with governments at all levels in the area of enhancing the continuous growth of SMEs, while improving on the ease of doing business.
We turned 130 years last year and for an institution to have existed for that long, it means there are certain things we have been doing right. For us to put in less than two years and claim the glory will be irresponsible. I can only say we have been able to maintain the tempo. We have been there to enhance a collaboration between businesses and government, both at federal and states level. We are here to make some input in governance. We tell government what businesses are like and we get feedbacks from people too. We have been lucky that government sees it as positive engagement. That is what we take advantage of and it has helped. It has also helped in ease of doing business. We have also been very visible as much as possible. Whatever achievement that has been made isn’t my making but we have been able to maintain the tempo.
What we have seen is that in truth, the funds are there and even the foreign funds are there. The problem is that the SMEs are not yet getting the funds because they are lagging behind in the area of record keeping and corporate governance. We try to make them realise that you have to be well organised. Something you cannot measure, you cannot access. We are taking it on as an organised business association to tackle the challenges head long. There are conditions attached to it and that is the only way such funds can be accessed. Of course, like you said, the conditions are stiff but don’t forget that recently, government brought up a policy where you can collateralise your business. If you have a small business, you don’t have to go for title deeds. The worth of the business can now be collateralised. We are lucky that the present government is actually working on empowering that sector of the economy and I think it can only get better. We will keep engaging them a whole lot more and keep intensifying efforts on it. Few weeks back, I led a team to BoI and we got them say to us that if certain things are met, people would be able to access these funds. Some SMEs are not even registered with the CAC (Corporate Affairs Commission). There are things that have to be done. The government has also ensured that businesses are well captured and that is why they introduced 50 per cent slash off business registrations. We are getting to the point where we all know that the only way to get the economy working is by empowering SMEs. The big companies would have to employ less people as they try to acquire more in the area of technology but for small and micro businesses, if we can make them effective, things will work. The challenge is not just about funding but also about infrastructural decay. If we can tackle that, it means we are going to achieve more. More so, power is another thing that should be worked on which the government is doing and I hope the tempo continues.
Ease of doing business
This is something that government has been working on but it has not really made impact. The best way to have it well addressed is for us to automate as much as possible. If one thing to do is to provide access to funding, what about regulatory compliance? We also still have the issue of corruption knocking at our doors, making us not achieve business objectives and regulation. The way to tackle it is by automating as much as possible. Let us also have a timeframe for approvals. I think that automation would really help all of us. It has to do with the fact that corruption still sets in because most of our systems aren’t digitalised. We also have the challenge of bureaucracy in the system.
Presently, we have the presidential body that has been created to tackle the problems. To be sincere, we are now far from where we are coming from. Government has also been there to assist our people. If you don’t know something, the opportunity might be there and you don’t even know it exists or how to go about maximising it. We educate our members to pass their challenges to us and we see how we can tackle them for them.
Again, what I know is that the Government Enterprise and Empowerment Programme (GEEP) is meant to empower the poorest of the poor. The TraderMoni, MarketMoni and FarmerMoni have all been provided for in the budget. We can’t tell government not to give it out to people it is meant for. I don’t see anything bad in that. At some level, N10,000 is a lot for people who run about on their businesses. In some countries, the poor get such. I will rather say government should do more on that. We haven’t even given it a thought until now that you asked. Are we supposed to tell them not to give out the money? If they had consulted us, I wouldn’t have said they shouldn’t give. You need to know that government also entails taking from up and giving to the lower. If they are giving the money to people to expand their businesses and there is transparency, I won’t condemn it. An average Nigerian lives below $1 a day. So, how many dollars can you get in N10,000? Think about it. So, we are not against it.
I am a very realistic person. There are no cheap funds anywhere. What determines interest rate is the level of inflation. Today, the level of inflation is double digits. That is the same lenders would have to lend out. How much does government bonds go for? It is double digit. The government would have to create a funding scheme that is off inflation rate. That is one way we can have interest rate at one digit. We also have to work on our economy and see how we can tackle inflation. It is what you get in that you give out. We have been talking about the total removal of petroleum subsidy on PMS. It is better to subsidise production than consumption. We have to focus on production. We even use more of diesel. The PMS is only used for automation and mobility. It would be wise of any economy to subsidise production instead.
Contribution to GDP
The contribution is still very low because when you look at our GDP, it is only in agric that SMEs have contributed more, and not even large scale agric. When you talk about creation of employment, then you can say that SMEs have really tackled the problem of unemployment.
It is very bright and rewarding. If we can tackle the major challenges like that of power, it will be better for us. Infrastructure is another. Another challenge to tackle would be bad roads, and if that is done, I can see massive growth in our SMEs. As I earlier said, if we can as well automate our frameworks, that is the man to man contact, we will be better for it. The enormous levies on SMEs should also be removed. It is quite worrisome to see that these levies are from people who are meant to protect the SMEs. On the overall, if we can deal with power, road, and regulation, I am sure that would unleash the hidden potential being kept comatose. The problem of double digit inflation would have been addressed. We will be producing a lot and exporting a lot. The Apapa gridlock is an economy on its own that has grown out of an economy, and we have to dismantle it. It started with the tank farms at Ibafo before spreading to Western Avenue and Oshodi-Apapa Road. The gridlock disappeared when the president came to Lagos but now back. It tells us that it has to do with the will to tackle that.