Small and Medium Enterprises, SMEs, are businesses without much capital and whose number of personnel falls below certain limit. Despite these obvious limitations, when compared to the limited liability companies, the SMEs are said to be responsible for driving innovation and competition in many economic sectors.
The Central Bank of Nigeria, CBN, defines small and medium enterprises in Nigeria according to asset based and number of staff employed. The criteria are asset based equal or less than N5 million, and a staff strength equal or less than 100 employees.
Nigeria as a country, today needs the Small and Medium Enterprises, SMEs, because they contribute meaningfully to economic development. They are in the forefront of output expansion, employment generation, income redistribution, promotion of indigenous entrepreneurship and production of primary goods to strengthen industrial linkages.
The sector is responsible for about 70 percent of the total industrial employment in the country and between 10-15 percent of the total manufacturing output. The agricultural sector which comprises mainly of SMEs have promoted indigenous technology and increase utilisation of local raw materials; arguably, they are the strongest promise the country has for industrial growth.
The era of 1980s can be said to be golden years of SMEs in Nigeria; those were the years of the Nigerian Industrial Development Bank Ltd, NIDB, and the Nigerian Bank for Commerce and Industry, NBCI. These federal government development Banks were specifically dedicated to the development of SMEs in the country.
Analysts say the rate of unemployment escalated when the mechanism for sustaining SMEs were dismantled by the introduction of Structural Adjustment Programme, SAP, by the Ibrahim Babangida’s administration. Unemployment is now the greatest problem confronting the country and it is said to be the major cause of urban unrest and escalation in violent crimes.
About 60 percent of the country’s population is presently unemployed, while over one million graduates from our tertiary institutions join the army of unemployment people annually. Nigeria must build capacities to develop more SMEs by empowering these unemployed citizens through technical training and financing.
Analysts say in countries where SMEs are given priority attention, they cater for over 65 per cent of the national employment and contribute significantly to the GDP. In the country presently, the sector is moribund because of multiplicity of problems.
The coming on board of the Managing Director/Chief Executive Officer of Heritage Bank Plc, Mr. Ifie Sekibo has brought succor to the SMEs in the country. The bank had committed about N23.5 billion in its operation for the support of SMEs in Nigeria in the past two years.
Speaking recently in Abuja at a young entrepreneurship programme tagged: Leadership clinic, an evening with Ifie Sekibo, organised by Guardian of the Nation International, a non-governmental organisation founded by Linus Okorie, the Heritage Bank MD reiterated the bank’s support for SMEs, adding that by the end of this year, the bank intends to grow this volume to about N100 billion. “We have already started working towards achieving this goal”, he said.
Mr. Sekibo described Small and Medium Scale Enterprises, SMEs as the key to the future of the country, stressing that one of the visions of the bank is to support young entrepreneurs to contribute to the socio-economic development of Nigeria.
He said that the bank has invested heavily in the SMEs sector, including clinics and mentoring sessions aimed at getting young people to believe they are the solution to their own problem, adding that with the right attitude and vision, success would be achieved.
According to him “you need team work, corporation and the right attitude and vision to build strong institutions, which is the focus of the bank at the movement”.
The MD further explained that he believed in tenacity which comes from entrepreneurship, stressing that building partnership with like minds and changing mindset could do a lot for the nation. He stressed that for young Nigerians to build a good future, leaders should begin to think about vision related change.
He said that thinking rich will not add any value to Nigerian youth but advised the youth to focus on wealth creation, which he said is the right channel to economic development and which Heritage Bank is investing.
He disclosed that based on the understanding that SMEs are the engine of growth in any economy, the bank has supported various sectors in the SMEs space, especially those that have the potential of creating more employment in the country.
“We have supported SMEs’ operators in the area of bottled water production, printing companies, beverages, those in the agricultural sector and other operators in the SME space,” he said.
He noted that in the process of engagement with the sector, the bank noticed certain challenges-one of which is that an average SMEs’ operator in Nigeria does not have a streamlined book keeping and accounting records, and as a result of this, it is difficult to get reliable records that would assist in an informed judgment on the true worth of their businesses.
He explained that in most cases “we are constrained to rely on the customers’ banking activities. What the bank is specifically doing to get them improve on this is to render advisory services to them.
“We interact with them on day to day basis and on monthly basis. We organise advisory workshops where we take them through the rudiments of running businesses better, for the ultimate benefit of the economy.”
He further said that one of the areas Heritage Bank has helped SMEs’ operators, is on how to differentiate between a company’s business operational cash flow and that of personal cash flow.
“We do this to enhance shared value because as their businesses get better, we also get better as a bank, it is also another way of reaching the unbanked.”
He urged the government to hinge the planks of its current economic diversification on a massive support for the SMEs as it is being done in many developed countries.
“For many of the developed economies we see today, they all have SMEs as the support base of their big corporations, whether in America, Europe, Latin America or Asia. That is the way to go as a country. If we do not support the SMEs, the economic growth we are all talking about will not happen.
“We should see the SMEs as the catalyst to change and economic growth the government is talking about.” He said.
The Heritage Bank boss maintained that the decision to assist SMEs to become large corporates that would last generations was one of the cardinal objectives of the bank, adding that in the next few years, the bank would get some SMEs listed on the Nigerian Stock Exchange, NSE.
He explained that the bank was looking beyond deposit mobilisation to assist the SMEs realise their objectives, noting that the purpose for organising clinics was to ascertain the challenges SMEs’ operators face with a view to providing the necessary support to make them perform better.

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