Mr. Eke Ubiji is the Executive Secretary, the Nigerian Association of Small and Medium Enterprise. In this interview with NGOZI AMUCHE, he attributes the recession in the economy to poor state of the Small and Medium Enterprise industry, and faults the stringent conditions in accessing development funds by SME operators. Excerpts
How is the current economic recession affecting the operations of Small and Medium Enterprises in the country?
The economy is in real bad shape and that has pulled a lot of our members down. The new Foreign Exchange policy is crippling our operations and making it difficult for us to import raw materials. Power supply is nothing to write home about, it is affecting the manufacturing sector and a lot of the SMEs cannot even generate their own electricity. Those who do it are using big generators, and they are spending a lot. You know the cost of fuel today and the cost of diesel are very expensive. So it is not really healthy doing business here.
How will you rate the monetary policies introduced by the Central Bank of Nigeria and how they affect businesses in the country?
They are laughable. Look at the Monetary Policy Rate that used to be 12 per cent; it has moved up to 14 per cent. Automatically it means that the interest rate will go up. This is also another discouraging aspect. To borrow at a high interest rate is discouraging and terrible. How can businesses survive on that? That is why there is low repayment experience. In the banking sector, a lot of banks are finding it very difficult to cope with huge bad debt.
Recently, the Federal Government through the economic management team engaged the services of external resource persons. Do you have faith in this process?
It is a welcome development to invite economic experts to brainstorm on ways to move the economy forward. It is a pointer that even the economic management teams are not having it easy and we hope they can proffer solutions to the woes before it is too late.
FG and some of its agencies have released different intervention fund for the growth of SMEs. How has the fund boost the operations of small entrepreneurs?
Most of the funds are not accessible and that has affected the pace of development witnessed in the sector. For instance, few months ago, the information we got was that only 45 per cent of CBN’s N220 billion SMEs fund had been disbursed since 2012, which is due to some hiccups our members encountered while accessing the fund. Also, CBN approached some banks for the disbursement but a lot of them didn’t accept the offer. For me, this could only be happening because something is wrong somewhere. It is either the total fund is not available or the banks will not benefit from the scheme.
What are the challenges faced by your members across different sectors of the economy?
Lack of access to fund is a problem for SMEs but not the major obstacle. Lack of information is the major problem of small businesses in Nigeria. There is a lot of information on the economy, interest rates on many companies and government’s website, which are highly beneficial to business owners but which we are ignorant of. How many business owners have the time to search for such information ? Yet, we complain of lack of access to funds. Most people are not even aware of the government’s policies as they affect their businesses; they just sit and criticise the government. There are also many businesses that are not aware of several incentives offered by regulatory bodies like the National Agency for Food and Drugs Administration and Control and Standard Organisation of Nigeria, among others.
What are your expectations from the current administration, led by President Muhammadu Buhari?
I expect FG to caution the CBN on some of its laughable policies that are not designed to grow the economy. If policies are not SMEs friendly, the economy cannot grow because small businesses are the engine room of every economy across the world. Access to fund should not be tied to unrealistic conditions. Limiting collateral to Certificate of Occupancy and other valuables should not apply to fringe players. We need to adopt the idea of collateral registry, which is in practice in Ghana. Collateral registry means that your jewelries, your movable properties, such as motor vehicles, televisions could be placed as collateral and if you pledge it, you can access fund. We have discussed that with the government and hope processes will be completed soon. We expect FG to tackle infrastructure as soon as possible else we can never come out of this recession. If you have the money and you don’t have power to do your business, what are you going to do? If care is not taken, you will use the money to buy big generator, buy fuel or diesel and the money will be gone. If we have access to regular power supply, it will boost our businesses and the economy at large.
