The Future Project continues to empower youth in Nigeria through the Accelerate Labs program with support from Microsoft Nigeria .
We have been able to enhance/scale Small and Medium Enterprises (SMEs) in Nigeria by forging linkages and partnerships with business innovators.
Following on the success of the first two (2) Streams of Accelerate Labs, we leveraged on the key learnings and recorded multiple success stories.
It is common knowledge that Small and Medium Enterprises (SMEs) in Nigeria have not performed very well. They have contributed just a small percentage of the GDP unlike the other emerging economies in the world. The challenges being faced by our own SMEs are quite a lot with these being the reason for the slow growth of SMEs in Nigeria.
Some of the major challenges we found to be the reason from the Accelerate Labs program include:
Poor managerial skills
From interaction with our participants, the common problem is poor leadership which is as a result of lack of proper training and poor capacity building. Most people go into businesses without adequate knowledge or entrepreneurial skills on how to run businesses.
We also noticed that some of our participants from South-East Nigeria had better managerial skills partly because they take business seriously compared to other regions.
Poor or inadequate infrastructure
The poor state of infrastructure in the country has been a major obstacle to the growth of SMEs. Only few entrepreneurs can survive without power. The epileptic or irregular power supply has contributed significantly to the high cost of doing businesses in the country.
Apart from power, lack of good access roads and other social amenities have also hindered the growth of SMEs.
Lack of access to funds
Most SMEs find it difficult to access funds or capital. Although we have a number of companies that offer loans to SMEs, sometimes the process of accessing these loans can be a bit exhausting. Other times, the collateral needed may not be within the capacity of the business owners
The issue of funding, therefore, is a major challenge for SMEs in Nigeria. Various governments have helped a lot in addressing this issue. Some of the measures include grants by Federal Government, low-interest loans from the Bank Of Industry and Bank of Agriculture. Lagos is also trying through the Lagos State Employment Trust Fund (LSETF).
Most SMEs in our accelerator program cannot compete with items or products from other countries. The government has also not helped in this area as a lot of goods are smuggled into the country – most of them substandard. When combined with the high cost of production in the country, locally made goods can hardly compete in the area of pricing.
In Nigeria, there is still preference for imported goods over locally made goods. For instance, we have so many of our entrepreneurs who are into fashion or producing naturally made fruit drinks but do not have the required patronage needed to scale their business. This is a major issue that eventually leads to the closure of many businesses within the first few years of operation. No business can survive in the long run without enough sales to cover operational costs.
Multiple Taxes and Levies
We noticed that many SMEs are subject to so many taxes and levies from local government to federal government. So many agents are involved in the collection of taxes and levies. This has given room for unauthorised levies and taxes. The impact of this on the operational costs of SMEs cannot be overemphasised. Measures need to be put into place to streamline these taxes to help SMEs.
Overall, it is exciting to see many young people actively invested in making a difference in their society and taking ownership of their future. We recorded a huge number of entrepreneurs apply for the program without even the promise of funding their business ideas. Many have gone further to improve themselves and create employment for others. This shows we are definitely on the right track towards our development.
Read » Survival of SMEs in Nigeria: A case study of Accelerate Labs on YNaija
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