THE AGONY OF THE SMALL AND MEDIUM SCALE ENTERPRISE
You will agree with me that every day
new businesses are being birthed in our beloved country called Nigeria, which
is a good sign because the economy of great nations are entrepreneurial driven.
It is also disheartening to note that four out every five new business ventures
that sets out barely makes it past the fifth year in business, for obvious
reasons which I will be pointing out in this article. Being in business for seven
years now and having worked in the financial sector both in the public and
private arm I have over the years observe the trends in the business sector of
our economy and have come to the conclusion that the economy policies of our
country are not designed to favour SMEs.
Heavy
Taxation:
In my opinion I think our taxation laws are not favourable to small and medium
scale enterprises. I am of the opinion that SMEs should be given tax holidays
for their first five years in business before the relevant tax agencies begin taxing
them, this will allow them build stability in business and give them a soft
landing while facing the harshness of doing business in this part of the world.
In some cases, it is multiple taxation like we see in the cases of VAT deductions
from bank accounts as well as other tax related charges being charged which I
feel is completely unnecessary if you want such business to grow. In fact, the
moment you get an office space the Local Government Authority, State Internal
Board of Revenue and other Agencies are already pursuing you like it is a witch
hunt and I don’t just understand why. To pay tax when your business is yet to
go full swing, are you serious?
Unavailability
of Financial Aids: In advanced countries Development and Specialized Banks are
established for this purpose to provide young businesses with the needed funds
to grow and expand their businesses at reasonable interest rates which is
usually single digit but in Nigeria reverse is the case though we have the
likes of Bank of Industry, Bank of Agriculture having these funds, the problem most
times is that accessing these funds becomes problematic due to the stringent
measures put in place and I ask, how then are the SMEs supposed to benefit this
way? In advanced countries these business owners go to these banks and collect
such loans at single digit interest rate, come to this part of the world and
invest such money and we call them foreign investors, allocating lands and
giving them undue opportunities we won’t grant our SMEs in this country. I have
always advocated that passion is a much needed currency for business owners to
start their venture however we can’t rule out the place of finance in business
expansion.
Excessive
Bank Charges: It is advised that business owners should separate their personal
finance from their business finance and one of the ways to do that is by having
a separate bank account from their personal account for that purpose, but what
baffles me is the fact that these banks are not encouraging SMEs to save money
at all or grant them ease of doing transactions. The charges are just too much ranging
from monthly maintenance fee to the N50 Stamp Duty charges which I am yet to
see what they do with it, then there is commission charged, bank charges on
bank transfers even in interbank transfers, SMS charges, the ATM maintenance
charges, the VAT or just one ridiculous charge or the other. Before my inflow
started to increase I found doing bank transactions rather difficult, because
by the time a client does a transfer of let’s say N10, 000 before you say JACK
ROBINSON! The said amount is less than N10, 000 due to some outrageous charges,
most SMEs can relate with this.
Government
Policies:
The duty of any government is to ensure a level playing field through policy
implementation that are favourable to its citizens and ensuring the ease of
doing business as a priority, I don’t think I can say same of the Nigerian
government. The Chinese government have made sure that the ease of doing
business on Chinese soil is quite favourable and so every day you Nigerians clamoring
to get Chinese visas to get to China and see what they can buy and bring back
to Nigeria thereby earning foreign exchange for the Chinese economy but the
moment these goods they have bought lands on Nigerian shore it is a different
story entirely starting from the clearing process and the numerous fees they
charge, it becomes burdensome and tiring and in most cases it is translated to
the prices of the goods when they finally hit the market, why won’t we have
inflation? There are times when government have seized import license and
handed it over to an individual like we have seen in the case of rice
importation, the question is, what then happens to the other business owners
with these license or who have placed orders?
Financial
Indiscipline: It would be unfair to just throw all the blame in the way of the
government without also pointing to the fact that some of these business owners
are also the architects of their own misfortune. A number of businesses have
gone down the drain to poor financial discipline skills on the part of the
owner and as such we have seen cases of frivolous spending or the conversion of
business finance for personal purpose and this is not healthy for business.
... to be continued
Enyinnaya Iroadumba
... to be continued
Enyinnaya Iroadumba
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