The 2023 edition of BusinessDay Top 100 Fastest Growing SMEs in Nigeria held recently at The Stable, Surulere.
Welcoming individuals, business owners and an array of speakers at the annual BusinessDay event themed: “How SMEs can Thrive in an Age of Volatility” Frank Aigbogun, Publisher, BusinessDay Media Limited, commended MSMEs for their great works in creating wealth and employment in Nigeria.
“It is because of all of you that it is said that the SMEs are the greatest employers of labor in Nigeria. Without you, that will not be the case.
You are a great catalyst for economic development in Nigeria. You’re risking your personal and professional family capital just to make your own contribution towards economic development in our country.”
Keynote Address: MSME growth opportunities: Thriving in VUCA times
Giving the keynote speech, Prof. Joseph Nnanna, the Chief Economist at Development Bank of Nigeria, placed emphasis on the Challenges and Opportunities that exist for MSMEs during this VUCA period.
VUCA, he explained, means Volatility, uncertainty, complexity and ambiguity. It describes distinctly what has occurred in the last few years in the global economy, especially how it affects Nigeria locally and particularly.
“If you think about what had happened during the Covid-19 pandemic and the Russian-Ukraine war which is still ongoing, all these activities have caused inflation in the supply chain, trade partners had to change trade relationships and businesses had a rethink,” he said.
The business environment keeps changing at a rapid speed, new trends and technology continue to emerge. There were so many tech-based enterprises that came up during Covid-19. As a matter of fact, the ICT sector in Nigeria is one of the only sectors that had double digit growth.
Whether it is core information systems, technology-enabled businesses or you’re converting your traditional-based brick-and-mortar business to an online enterprise, all these businesses, especially if you were in the ICT space, exploded – they grew.
“A wise saying goes ‘a rising tide lifts all boats’ but that’s not the case in Nigeria,’ Nnanna said. “People just start a business because they see others doing it and making money without due diligence, research, business plans and other necessities. Without these, nothing else matters.”
You have to be on with the right information, be able to take on the risk and you should have people to convince to give you the credit.
“At DBN, we implemented a remote working policy which allowed us to work remotely during the Covid-19 period. Everybody worked remotely from their respective homes because we trust that we look at the output of the activities you have done on a weekly basis to track productivity.”
These days, it’s not just about the boss seeing you working so hard; as long as the output can be seen, felt and recorded, that’s all that matters.
Inflation was the bane of our existence, it still is. “We know inflation continues to rise exponentially without end because our questioning power has reduced.”
On the challenges faced by MSMEs despite being the engine of a nation, Nnanna listed them to include:
- Lack of access to finance
- Poor or inadequate infrastructure
- Unfair competition
- Multiple taxes and ledgers which are prevalent in Lagos
Stating further, he noted some of the demand and supply factors that can explain MSME finance gap to be:
- Information asymmetry – one person having more information than another and there exploiting the other
- High cost to reach and serve MSMEs relative to the revenue potential
- Lack of collateral
On the supply side, they are:
- High interest rate
- Lack of proximity to financial services – lots of people are not in close relationship with their banks and banks should look for ways to support customers beyond giving then credits
Advising business owners, Nnanna said: “If you’ve started a business and have no customers, you should do a recheck to understand if you did a market study to see if there was a need for the service you’re trying to provide.
It’s important to look for partners who are in our space, but may not be in the same sector. A problem shared is a problem solved. Talk to people, you don’t know where the next idea that would help you grow your business will come from.”
Growth opportunities available to MSMEs
Agriculture, manufacturing, education and health all grew much faster and stronger in 2014 compared to 2021. The only sector that continues to grow is trade because Nigeria is a trade country, everybody is buying and selling.
But the challenge is that the type and volume of trade that brings jobs are big trade items, not small ones.
Finally, Nnanna concluded his enlightenment at the BusinessDay Top 100 Fastest Growing SMEs programme by reteirating that “digitizing your business is critical or you will be left behind.”
