SME’S AND THEIR ENVIRONMENT

In the recent National and economic discussions in the Nigeria of today, the phrase “SME’s are the
economic power house of any Nation” has been overused, overemphasized, over flogged, overdone,
with little corresponding practical overtures to back it up. Lots of promises, policies, seminars and
conferences steering this seemingly newly found (always found but never really acknowledged)
economic tool. We have been forced as a people to look beyond our Pot of Gold (Crude Oil) and seek
other sources like ‘kettles’ and ‘frying pans’ (SME’s), utensils we always forgot about, because of a
previous forgetfulness of a fundamental law of Nature, “The Law of Use and Diminishing returns”. Now
the pot has been overused, over scrubbed and now it’s got holes in it.

We are desperately doing all we can to plug these leaks while trying to get the other utensils to use. Also
forgetting that a kettle might boil water well but a frying pan will never deliver a “kokoless Amala” to
you, it will be like a bad case of waffles on a pressing iron, it never ends well. These overpromised SME’s
haven’t been provided with the operating environment to make these gestures yield sustainable
returns. This is operating under the assumption that a few do genuinely access these opportunities and
accommodations provided by the Government and parts of the organized private sector. Either they are
Zero interest loans (which is more of a Unicorn fantasy), Grants, Sponsorships or Collaborations, basic
infrastructural developments that should allow growth organically are either none existent, poorly
managed/maintained or just outright abandoned.

Massive infrastructural deficits are largely responsible for the sluggishness, massive overhead costs and
in some cases the extinction of certain businesses in Nigeria, which isn’t just limited to small businesses.
Commodities are overpriced due to varying factors, the most populous in our day is “the dollar” excuse,
even for a broom seller.
High transportation costs of moving goods and services from one location to another, either due to fuel
scarcity, bad road networks which are responsible for the loss of lives and property or traffic jams, which
leads to massive loss of man-hours which go undocumented.
Power generation accounts for up to 30% in the overheads of some organizations, in some cases 40%,
funds that could be diverted into productive use to expand or hire more employees to tackle the
employment scourge, one person at a time.

These factors cascade into spiraling expenses which the end user bears the brunt of most of. And let’s
not forget the VAT that auspiciously ties it all up as a nice bow. I am a huge advocate of paying taxes,
am also a huge fan of accountability and proper service delivery. Which is where the frustrations of many
stem from when the issue of taxes are being raised. Taxes are paid, but the dividends are in a “fixed
deposit” indefinitely – benefits are postponed.

It is unimaginable that taxes are being paid and the infrastructural deficits are this enormous, justifying
payment is always a philosophical commentary. I simply see it as the issue of the “the chicken or the
egg” which comes first, pay now and we promise you development or develop first with the previous
payments already in your coffers.

My advice, PAY NOW! Part of the responsibilities of a business and its interactions with its external
environment (which will be discussed later) is providing, proffering solutions and not being part of the
problem also has a box to be checked in the list.
As a Consulting firm, one of the first lessons learnt when interacting with clients and their businesses is,
to ADDRESS THE ROOT CAUSE, never fall into the trap of addressing cosmetic challenges which requires
a corresponding solution. Like the name implies,’ Cosmetic’, it will never last forever. Often times
temporary fixes do a lot more harm than not doing anything, down the line they are always more
expensive to remedy, with no exceptions.

Until certain infrastructural fundamentals are addressed, loans, any and every form of financial and
intellectual aid given to businesses will have their objectives frustrated with delays and waste. The
theory of cutting costs in a business will then be well prioritized accordingly, overheads and most
recurrent costs will have to reduce drastically, not the philosophy of underpaying staff and suspending
benefits under the same pretense.

So let’s take a quick look at the outcomes of a proper enabling environment with a population of over
one hundred and seventy million with sixty percent being youths …:
 With a highly productive population of over 100,000,000 Youths only, internally generated
revenue will grow exponentially.
 Businesses run with ease, less tension, higher productivity, more money.
 Staff is assumed to be better paid a little more than the current conditions.
 Higher profits = Higher tax payments for the Government.
 Higher GDP, better influx of Direct Foreign Investments.
 Better respect for the Nation, its people and the Government.
I believe the analysis is quite clear and simplistic enough… providing infrastructure is not just a civic
responsibility, it is also good for business and yes, including government business. It is an investment
that yields returns in itself with the primary costs of it being spent on maintenance after it has been put
in place.

All these are under the assumption that the Nation’s financial dependence and survival is dependent on
SME’s, which in this case it isn’t. But the picture does look great from this perspective if it were supposed to be.
The argument that countless other sources combined with these haven’t gotten us
developed is probably a conversation for another time.
But let the numbers be true and the rumors be false. Fiction is usually better embraced than Fact, but
we all know which of the two endures the most, infrastructural investment is being penny wise and
pound wiser.