Post by Trade facilitator on Oct 15, 2021 22:56:49 GMT 1
Funding Opportunities For SMEs In Nigeria: The Huddles They Face
Small and Medium Enterprises (SMEs) in Nigeria are confronted by so many problems that continue to weigh them down and prevent them from achieving any meaningful success in their undertakings.
In other climes, Small and Medium Enterprises (SMEs) are considered as one of the most important industries required for sustainable economic development.
SMEs are regarded all over the world as major drivers of the economy especially in the areas of creating employment opportunities, creating and improving local technology, production and output diversification; SMEs also help in the area of development of indigenous entrepreneurship.
A country like Nigeria needs lots of small and medium scale enterprises to be able to employ its large and growing population.
According to the National Bureau of statistics (NBS), small and medium scale enterprises in Nigeria (SMEs) have contributed about 48% of the National GDP in the last five years.
There are about 17.4 millions SMEs in the country, and they account for about 50% of the industrial jobs in the country; and also contribute about 90% of all manufacturing sector jobs in the nation.
But in Nigeria, SMEs face a myriad of problems; the problems consist mainly of unfriendly business environments, lack of access to cheap or affordable funding or finance.
The SMEs in Nigeria are supposed to be particularly attended to by the government because of their importance in the scheme of the industrial and commercial parts they play in the economy.
Without government intervention in this country on behalf of the SMEs, they cannot exist in the mist of the harsh economic environment facing them daily.
Despite the significant contributions constantly being made by the SMEs in the country, great challenges still exist that hinders their growth and development.
Though the present Federal is trying to solve some of the funding problems facing the SMEs today, there is still so much to be done to bring some succor in the way of the companies.
A typical example of what we are saying is this; in Ikeja and its environs, as at now the Power Holding Company of Nigeria is carrying out repairs to their lines; as early as 7 am, power is taken off only to be restored in the evening by 7 pm when the SMEs must have closed and gone home.
Before they resume the next morning the power has been taken off again, and this will go on for the next 8 weeks at the minimum; the companies will be using diesel and petrol to power their generators for such a long period of time with diesel costing so much.
How can such small scale companies survive? Who will come to their aid? The Federal Government of Nigeria and several other private organizations have made several attempts in lessening the financial burden on the SMEs, but more still need to be done.
Now let us consider some avenues that SMEs in need of funding can use in raising funds for their operations without jeopardizing free flow of business operations by imposing some hindrances into the loans.
There are some loans you can take as a businessman and the terms of the loan will not allow you to operate at a level that you can make it; especially when repayment is too early not giving the borrower enough time to power the business before being asked to start repayment.
Many small scale businesses are being forced by circumstances to take loans from some microfinance banks that give out loans with very stringent conditions, and at the end of the day the borrowers start defaulting due to the stringent conditions attached to the loan.
CROWDFUNDING
Let us look at crowd funding as system of raising funds by the small scale business. Crowdfunding is simply a system of raising funds by entrepreneurs to start off a business idea or to expand an existing business. It involves raising relatively small amounts of money from a large number of people who each will contribute towards the actualization of that idea. This is usually done via the internet.
This funding method will benefit SMEs a lot, especially those with solutions to problems people are already having and they have solutions for those problems.
An SME can also appeal to the social nature of the community to raise funds from a large number of people to fight what may be a social cause. The community is already aware of the solution-proffering nature of the business enterprise.
The nature of SMEs in the country cannot accommodate short-term loans from loan sharks; the interest rates are too high and the repayment period is too short.
Stay with us for more on the funding methods available for small scale companies in Nigeria.
Small and Medium Enterprises (SMEs) in Nigeria are confronted by so many problems that continue to weigh them down and prevent them from achieving any meaningful success in their undertakings.
In other climes, Small and Medium Enterprises (SMEs) are considered as one of the most important industries required for sustainable economic development.
SMEs are regarded all over the world as major drivers of the economy especially in the areas of creating employment opportunities, creating and improving local technology, production and output diversification; SMEs also help in the area of development of indigenous entrepreneurship.
A country like Nigeria needs lots of small and medium scale enterprises to be able to employ its large and growing population.
According to the National Bureau of statistics (NBS), small and medium scale enterprises in Nigeria (SMEs) have contributed about 48% of the National GDP in the last five years.
There are about 17.4 millions SMEs in the country, and they account for about 50% of the industrial jobs in the country; and also contribute about 90% of all manufacturing sector jobs in the nation.
But in Nigeria, SMEs face a myriad of problems; the problems consist mainly of unfriendly business environments, lack of access to cheap or affordable funding or finance.
The SMEs in Nigeria are supposed to be particularly attended to by the government because of their importance in the scheme of the industrial and commercial parts they play in the economy.
Without government intervention in this country on behalf of the SMEs, they cannot exist in the mist of the harsh economic environment facing them daily.
Despite the significant contributions constantly being made by the SMEs in the country, great challenges still exist that hinders their growth and development.
Though the present Federal is trying to solve some of the funding problems facing the SMEs today, there is still so much to be done to bring some succor in the way of the companies.
A typical example of what we are saying is this; in Ikeja and its environs, as at now the Power Holding Company of Nigeria is carrying out repairs to their lines; as early as 7 am, power is taken off only to be restored in the evening by 7 pm when the SMEs must have closed and gone home.
Before they resume the next morning the power has been taken off again, and this will go on for the next 8 weeks at the minimum; the companies will be using diesel and petrol to power their generators for such a long period of time with diesel costing so much.
How can such small scale companies survive? Who will come to their aid? The Federal Government of Nigeria and several other private organizations have made several attempts in lessening the financial burden on the SMEs, but more still need to be done.
Now let us consider some avenues that SMEs in need of funding can use in raising funds for their operations without jeopardizing free flow of business operations by imposing some hindrances into the loans.
There are some loans you can take as a businessman and the terms of the loan will not allow you to operate at a level that you can make it; especially when repayment is too early not giving the borrower enough time to power the business before being asked to start repayment.
Many small scale businesses are being forced by circumstances to take loans from some microfinance banks that give out loans with very stringent conditions, and at the end of the day the borrowers start defaulting due to the stringent conditions attached to the loan.
CROWDFUNDING
Let us look at crowd funding as system of raising funds by the small scale business. Crowdfunding is simply a system of raising funds by entrepreneurs to start off a business idea or to expand an existing business. It involves raising relatively small amounts of money from a large number of people who each will contribute towards the actualization of that idea. This is usually done via the internet.
This funding method will benefit SMEs a lot, especially those with solutions to problems people are already having and they have solutions for those problems.
An SME can also appeal to the social nature of the community to raise funds from a large number of people to fight what may be a social cause. The community is already aware of the solution-proffering nature of the business enterprise.
The nature of SMEs in the country cannot accommodate short-term loans from loan sharks; the interest rates are too high and the repayment period is too short.
Stay with us for more on the funding methods available for small scale companies in Nigeria.
