In 2017, the United Nations circled out June 27 as the day to celebrate micro, small, and medium scale businesses for their contribution to global economic growth. But the day isn’t just another ghostly observance, unknown to the vast majority of the world’s population. It’s a reminder that ‘small time ventures’ are just as crucial to the planet’s expanding prosperity as are the billion dollar corporations.
Consider this: the International Council for Small Businesses says that MSMEs constitute over 90% of the world’s businesses, employs anywhere between 60 and 70% of its workforce, and yields half of its Gross Domestic Product. Another way of looking at this: if it were not for these enterprises, the world would have only half the riches it currently does.
This isn’t a section of the commercial landscape to be trifled with. While news bulletins tend to skew their coverage towards the fewer but wealthier mega-corporations, policy-makers know that there’s trouble for the economy if the clouds over the small business space turn dark.
The story is no different closer to home. SMEs contribute as much as 48% of Nigeria’s annual aggregate income, according to the National Bureau of Statistics. Available data suggest that ours is one of the world’s most entrepreneurial societies; there are well above 50 formally registered small businesses for every 1,000 persons living in Nigeria, a measure attained by only two dozen other countries.
But the enterprise building journey isn’t plain sailing. As much as 80% of small businesses fail within the first five years of coming into existence. And of the fraction that comes through the early stage, only a few go on to become truly successful companies. There are several reasons why this happens. And they aren’t all just down to shortcomings on the part of their founders or employees.
If you’re a business owner, you’ll know what the big drawbacks for emerging enterprises are in these parts: erratic power supply, poor transportation systems, bureaucratic bottlenecks, duplicated taxes, etc. Sometimes these things seem like they’re fixtures of our commercial space, always seizing newer establishments and forcing them into oblivion.
A number of public and private sector initiatives have come on the scene to tackle these issues. Business service firms are providing small businesses with the skills and information they need to navigate the tough economic landscape. Others are helping to plug the holes in various value chains by linking producers and suppliers with the sellers willing to pay a premium for their services.
However, a lack of access to finance typically comes top of the list of complaints drawn up by entrepreneurs. In Nigeria, for instance, it’s said that only 31% of SMEs have obtained some kind of loan from formal lenders. A recent survey by Connect Nigeria also showed that Nigerians are still overwhelmingly reliant on personal savings and financial assistance from family and friends to fund their businesses.
The United Nations says that this year’s MSME Day activities will shine the spotlight on funding needs for small enterprises. This year’s theme- Big Money for Small Businesses – fits with this agenda. The aim is to draw attention to the role these companies could play in achieving some of its Sustainable Development Goals (SDGs), and hopefully, drum up more financial support to help make this happen.
Source: UN
Featured image source: the United Nations