THE NAIRA, THE DOLLAR, THE SMEs IN BETWEEN

Certainly businesses started the year 2016 with a lot of confidence, determination, planning and
hope. Interestingly, the year 2016 started businesses off to an erratic and unpredictable nose-diving of
global crude oil prices. Which inadvertently affects the local currency of Africa’s largest economy, whose
highest earning commodity is this “Black Liquid Gold”?

While the prices fell unrepentantly, exchange rates flew up drastically, songs of redemption haven’t left
the lips of so many in a long while such as this. Everyone hoped for a reprieve, still hoping and watching
what the apex bank of the Nation will put in place as stop-gap measures to limit the hemorrhaging effect
of this economic nightmare.

The Central Bank chose to come up with different policies, trying to see how we can manage the
situation, only as a reactive measure because of our strong dependence of crude and the foreign
currency it’s traded in globally. Still they are making attempts, ranging from the reversal of foreign
exchange deposits into local bank accounts, which hurt a lot of businesses and individuals at the time of
its implementation, the incredible emergence of a stamp duty levy on financial transfers done which is
currently making the rounds in certain debating circles, with its purpose, limits and benefits being
argued on their merits. More policies are expected to be revealed in weeks to come, no doubt a few will
be controversial, but sentiments aside, the overall long term effects they have on the economy should
be the first priority for the policy makers and the general public on the receiving end of said policies.
No doubt doing business in Nigeria has never been so unpredictable (even with prevailing
environmental challenges). Prices of commodities have gone up as high as 50% and more on an average,
with productivity not matching that pace of change. Strategies on how to plug this bleeding has been a
prevailing thought in the minds of every person in business, from the side-streets to Broad Street.
It is particularly not a tolerable time for the import-based businesses, from textiles to automobiles.
Realistically, there is only so much that can be shed on the end-user, if you still intend to stay in business
under any circumstance proceeding from this season. Hold on, because at least four out of five of the
items in our possession are currently imported, means we are all paying the high price from the
fluctuation and its ‘natural order’ price reaction to it.

The issues are glaring and the everyday adaptations that we ravel in. Nonetheless, all hope is not lost.
There have been several economic theories thrown up by experts on how to survive this experience, the
most practical that I have found thus far is diversification. But diversification without the aim of deriving
monumental export value from it is like taking oranges and swallowing the seeds, you are definitely not
going to be having oranges next year. Mineral resources make up the top 3 in the list of exportable
commodities, because we have become so dependent on what is extracted from beneath the earth
surface, circling us back to where crude oil has led us today will be a possible outcome of our constant
dependence.

Besides that isn’t primarily within the constitution of an SME, so let’s talk about a few options that fall
within our jurisdiction …
 PROCESSED FOOD: this is where the agricultural sector dominates the stage. Diversification into
agriculture shouldn’t just be to stem the tide on the importation of agricultural produce into the
country, but to respond with an export package which generates income not just from within
but outside the boarders of the nation. The demand for agricultural produce in Nigeria with its
potential supply can sustain us and give room for exports in more ways we care to imagine.
Processed food is a market we are yet to get a grip on in Nigeria, primarily because of the safety
and quality standards that it requires, but we have the capacity to meet these demands and
surpass them, if/when we are ready to do real business. Processed food is a Billion-dollar market
worldwide and Nigeria is yet to get its first hundreds of thousands in it, with a Nation of large
expanse of fertile landmass? It is unacceptable.

 FASHION/TEXTILE: The textile industry in Nigeria is due for an overhaul with its corresponding
policies that guide it. With our National population of over 170 million people, internally the
market is in surplus with very high demand because of our general culture of fashion awareness.
The global fashion industry is equally Billion-dollar growth market that keeps expanding with the
change in season (spring, autumn, summer), one could say seasons are catalysts in the fashion
industry. We can export our textile materials, either as finished wearable designs or regular
yards to be cut. It won’t just be exporting our resources for revenue, but exporting our culture,
identity and our story told by us in its true form.
Just to mention a few sectors with huge growth potentials for export.
Let’s take a quick look at acceptable guidelines to make these ideas and many more feasible and
profitable at the same time.

 Global Demand: your commodity must have a global demand for it. Without demand or
the influence to force it, supply becomes a waste on multiple fronts. And with the
limited resources that we have available, it wouldn’t be a prudent path to tread.
 Global Quality: international standard is the benchmark for any product or service to
compete and survive in the global market place. Demand won’t be enough to keep you
on the shelves, the acceptable quality will keep the door open.
 Easily exportable: perishables or non-perishables, fragile or otherwise, the logistics of
transportation, maintenance of the standards and physical conditions under which it
departed must be unchanged on delivery. Excuses have never made any business grow,
don’t position yourself to give them.
 Minimal manufacturing cost: without compromising quality, cutting cost is a primary
strategy in any enterprise. Minimal processing or manufacturing cost should be put into consideration to keep the profit margins reliable and also to buffer whatever losses
occur due to various factors, seen or unforeseen.

The Federal Government through the Bank of Industry, SMEDAN and relevant agencies should put
together an “EXPORT PACKET”, which is a fund set aside to assist and encourage local businesses
looking to export their goods. Paying particular attention to Agriculture, an “AGRO FUND” should be
dedicated to this cause. It should also be backed by policies that don’t make a camel passing through the
eye of a needle seem more feasible than accessing said funds. Until SMEs are seen to be worth investing
in, they won’t be worth patronizing.
Reactionary measures (which is usually our style) are never sustainable, like they say, ”the best form of
defense is to attack”. We need to adopt a dual strategy that is aimed at sustaining the motherland by
keeping the imports at a manageable level while swinging back with exports. Sustained long enough,
both lines would meet at a middle point and then we keep growing the exports, by this time,
dependence on imports would be brought to a minimal as a culture within the nation, not a culture
forced by policy, but adopted for necessity by the people.
Until we understand that getting our SME’s to play on the global market is what gets us global
relevance, we will continually and erroneously play small and believe to be big. When the scales do fall
off, we will then ask where we went wrong, was it with the Naira, was it with the Dollar or was it with
the SME’s?