SMEs are the backbone of any economy, irrespective of the level of development in that economy. SMEs could easily be located in rural areas, because they can survive on basic industrial infrastructure. SMEs have proven to help in poverty reduction, as they play important roles in developing countries like Nigeria, where poverty is most severe.
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Most often, SMEs are the only source of employment, as well as income among the rural poor and low-income earners. Asides poverty reduction, SMEs have gone a long way in poverty alleviation.
SMEs have also provided opportunities for people, in terms of technical acquisitions and local skills. The “Aba made shoes” in Nigeria, which is a demeaning phrase for inferior goods, is a clear indication of such technological acquisition in Nigeria. However, if such industries are encouraged, it will give rise to rapid economic development. Or how about the garri (cassava flour) processing and cloth weaving in Kogi east and central, which are also very good examples?
SMEs usually have high potentials for quick yield on investment. They, therefore, provide promising alternatives for the Nigerian economy. The national objective of growth, which is inclusive, can be attained by SMEs through the creation of highly productive jobs, directly or indirectly. These SMEs use local and natural resources in their production and utilize local skills. This fast tracks the increase of local development and consumer growth around both in their geographical areas and the entire region.
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The SME sector has encountered a lot of challenges since its inception in Nigeria. Challenges such as;
- Access to financing: Collateral issues, Interest rates, etc are part of the financial issues SMEs face.
- Inadequate public infrastructure: Most SMEs do not have any proper infrastructures which may not let them maximize their efficiency.
- Government regulation and policies: Time and cost of compliance like licencing requirements can be a problem for SMEs
- Human resource development: This involves a supply and demand mismatch in terms of the kind of skill set required for employment in an SME.
- Technology: SMEs operate at low levels of technology, because the cost of higher technology is far greater than what an SME can afford.
- Other challenges encountered by the sector include lack of skilled manpower…etc
In recent times, SMEs have begun to receive notable supports or grants from both governmental and non-governmental organizations who see the value SMEs bring to the economy and are willing to be a part of it. The size of these grants depends on the type of donor agencies.
SMEs are now more visible due to the presence of social media platforms which help them in fostering the relationship between buyers and sellers. Social media platforms have proven to be an effective medium for the sales and publicity of these businesses, thus, becoming the new marketplace for SMEs and their clients or customers. Also, a lot of partnerships are fostered on social media.
The Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) was also set up in 2003 to enhance sustainable growth and promotion of SMEs in Nigeria. Though significant growth has been achieved in the SME sector, there is still so much to be done.
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