The federal government recently released the full list of the 27 key industries and products included in the revised list of ‘pioneer status’ incentives for prospective investors.
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At the end of the meeting of the Executive Council of the Federation, FEC, the Minister of Industry, Trade and Investment, Okechukwu Enelamah, disclosed the approval given to the 27 industries.
The Minister of Information and Culture, Lai Mohammed, later confirmed that the creative industry was among the 27. Earlier, the trade and investment ministry announced the lifting of the administrative suspension on processing pioneer status incentives, PSI, applications for prospective investors in the country.
Some of the benefits of the pioneer status include tax relief, mainly for corporate income tax. Here is the full list of the 27 industries to enjoy the pioneer status.
•Mining and processing of coal;
•Processing and preservation of meat/poultry and production of meat/poultry products;
•Manufacture of starches and starch products;
•Processing of cocoa;
•Manufacture of animal feeds;
•Tanning and dressing of Leather;
•Manufacture of leather footwear, luggage and handbags;
•Manufacture of household and personal hygiene paper products;
•Manufacture of paints, vanishes and printing ink;
•Manufacture of plastic products (builders’ plastic ware) and moulds;
•Manufacture of batteries and accumulators;
•Manufacture of steam generators;
•Manufacture of railway locomotives, wagons and rolling stock;
•Manufacture of metal-forming machinery and machine tools;
•Manufacture of machinery for metallurgy;
•Manufacture of machinery for food and beverage processing;
•Manufacture of machinery for textile, apparel and leather production;
•Manufacture of machinery for paper and paperboard production;
•Manufacture of plastics and rubber machinery;
•Waste treatment, disposal and material recovery;
•E-commerce services;
•Software development and publishing;
•Motion picture, video and television programme production, distribution, exhibition and photography;
•Music production, publishing and distribution;
•Real estate investment vehicles under the Investments and Securities Act;
•Mortgage backed securities under the Investments and Securities Act; and
•Business process outsourcing.
In a similar development, the Federal Government is in the process of designing a special tax for Small and Medium-scale Enterprises in the country as a way of ameliorating the challenges of multiple taxations being faced by operators in the sector.
The Minister of State for Industry, Trade and Investment, Hajiya Aisha Abubakar, who disclosed this in Lagos during the maiden edition of the Simply Nigerian Fair, said the government intended to leverage on technology to put in place a system of taxation that would target the SME sector.
“The best solution to the taxation challenges of SMEs would be to leverage on technology. Once you are able to use technology and SME-based tax, it will be shared appropriately and will reduce the hassles of multiple taxations where different people come to require taxes of them. We are working on it but we do not expect it to take effect before mid-2017, because we have to invest in the technology,” she said.
The minister, who expressed satisfaction with the creativity of the exhibitors, noted that most of the products on display were exportable.
Abubakar said, “I am impressed by the creativity displayed by these young entrepreneurs. Most of their products can be exported. I have encouraged them to work closely with the government. I have also introduced them to the She Trade, which is under the International Trade Centre for women-owned indigenous businesses.
“We also have the Nigerian Export Promotion Council’s training programme for exporters as well as the African Growth Opportunities Act, which ends in 2025. These are all opportunities opened for our young entrepreneurs to export these fantastic products to the outside world.” One of the organizers of the fair, Mrs. Temi Shenjobi, said the aim was to bring operators in the SME sector together for the purpose of networking and getting them to patronize one another.“It is also to expose them to the market since as small business operators; they may not have the resources to showcase their products to the larger public.”
It is germane to note that, Small and Medium Enterprises (SMEs) as defined by the National Council of Industries are business enterprises whose total cost excluding land is not more than two million naira (N2, 000,000) only. The Federal Ministry of Commerce and Industry defines SMEs as firms with a total investment (excluding cost of land but including capital) of up to N750, 000, and paid employment of up to fifty (50) persons. Despite an understanding of the importance of MSMEs in Nigeria in particular, there is a dearth of information about their number, people they employ and sectors they operate in within Nigeria. The Micro, Small and Medium Enterprises are globally acknowledged as the oil required to lubricate the engine of socio-economic transformation of any nation. The MSME sector is strategically positioned to absorb up to 80% of jobs, improve per capita income, increase value addition to raw materials supply, improve export earnings and step up capacity utilization in key industries. The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) was established in 2003, to facilitate the promotion and development of a structured and efficient Micro, Small, and Medium Enterprises (MSMEs) sector that will enhance sustainable economic development in Nigeria. In the year 2010, SMEDAN and National Bureau of Statistics (NBS) conducted a survey to combat the challenges associated with building a credible and reliable MSME database required to strategically reposition the sector.
The bureau revealed its survey results: there were 17.28 million MSMEs in Nigeria employing 32.41 million people.
The Small and Medium Scale Enterprises (SME’s) are a sine qua non to the growth, development and progress of Nigeria’s political economy.
The SME’s are the secret of the economic success of many Asian countries.
But the SME’s have not been ably supported by government the way it ought to, especially by way of legislation, provision of facilities and tax holiday. In the country now, abundant talents abound but the snag is that there are no sufficient avenues to access soft loans to actualize burgeoning ideas and those that have struggled hard to establish cottage industries find it extremely cumbersome to get assistance from financial institutions, as they are only willing to give out loans with highest yielding return within the shortest time possible.
Today in the country, the SME’s are confronted with a myriad of problems, namely lack of capital, inadequate management arising from lack of capital to even fund training and acquisition of skills, restricted access to institutionalized credit and management skills. There are managerial deficiencies in marketing, account and finance, human resources and production.
There is no gainsaying that good management strategy will have a positive impact on the modus operandi of SME’s in Nigeria. We concede that, there are serious inherent problems with Nigerian SME’s especially in terms of ownership, management, record-keeping, structure and even cultural constraints.
But to perpetually bemoan these short-comings is tantamount to a deliberately stunting of the development of the national economy.
For the SME’s to succeed in Nigeria certain things must be done. The federal government must provide adequate finance for the sector and foster understanding between fund managers and operators of the SME’s for the scheme to materialize.
Similarly, research institutes like the Federal Institute of Industrial Research, Oshodi (FIIRO) must be adequately funded. Furthermore, the state of socio-economic infrastructure is grossly inadequate; hence government should provide and sustain infrastructures which are capable of fostering and strengthening the various activities of SME’s in grants and subventions with attractive projects.
It should be recalled that the Bank of Industry (BOI) was established in 2001 to cater for SME’s in Nigeria when former Nigeria Industrial Development Bank (NIDB), Nigeria Bank for Commerce and Industry limited (NBCL) and National Economic Reconstruction Fund (NERFUND) coalesced to form BOI. At inception, these three financial institutions owed a total sum of N17.7 billion with NIBD accounted for N2.816 billion, NBCL N3.694 and NERFUND N11.2 billion.
So right from the inset, the BOI which was expected to provide the much needed fillip for small and medium scale industries were enmeshed in debts.
In a related development not much is heard of the Small and Medium Industry Equity Investment Scheme which was set up by the Central Bank of Nigeria (CBN) to enhance spirited efforts to revive SME’s in the country.
However, since the scheme was instituted in 2001, its impact has not been maximally felt by those who are desirous of its doings. The government must match its preachments with actions, if indeed, it really wants the people to be gainfully employed and not be a burden on the government, then it must create the enabling environment for private enterprises to thrive.
People can employ themselves where there is constant power supply and availability of other basic amenities that can take away the burden and stress of investing in a hostile environment. Even, it is on record that, Multinational companies have left Nigeria for some other climes, as the cost of doing business here is just too high for comfort. There is no doubting the fact that SME’s are crucial to the long overdue development of the Nigerian state.
According to a recent survey and findings by Economist Insight, to support SME productivity, Nigeria’s government must stabilize macroeconomic policy and install a more transparent tax and customs system. In its survey it also buttresses the need to support greater productivity gains, the importance of now turning to simplifying the tax system, reducing import barriers, stabilizing macroeconomic policy and building a more transparent customs system.
Most SMEs in Nigeria die within their first five years of existence, a smaller percentage goes into extinction between the sixth and tenth year, while only about five to ten percent survive, thrive and grow to maturity. SMEs encounter issues such as insufficient capital, irregular power supply, infrastructural inadequacies (water, roads etc.), lack of focus, inadequate market research, over-concentration on one or two markets for finished products, lack of succession plan, inexperience, lack of proper book keeping, lack of proper records or lack of any records at all, inability to separate business and family or personal finances, lack of business strategy, inability to distinguish between revenue and profit, inability to procure the right plant and machinery, inability to engage or employ the right caliber of staff, and cut-throat competition. The solution to the problem of Nigerian SMEs can only be realized if both the leaders and the citizens concertedly work together.
SMEs plays an important role in the economic development of a country. Their role in terms of production, employment generation, contribution to exports & facilitating equitable distribution of income is very critical.
The SMEs broadly consists of; the traditional cottage & household industries such as khadi & village industries, handicrafts, handlooms, sericulture and coir industries as well as modern SMEs-The traditional village and cottage industries as distinguished from modern SMEs are mostly unorganized and located in rural ares and semi urban areas. They normally do not use power operated machines/appliances & use relatively lower levels of investment & technology. But they provide part time employment to a very large number of poorer sections of the society.
They also supply essential products for mass consumption & exports.
The modern SMEs are mostly defined in terms of the size of investment & labour force. The industries (Development & Regulation) defines SMEs having less than 50 workers with the aid of power or less than 50 workers with the aid of power. Government is extending various steps towards SMEs.
In India, a unique instrument called reservation in the sense of legal ban on production by large units introduced in 1970s was for the safety and promotion of SMEs. In addition, the SMEs has been supported and encouraged by various government policies for infrastructure support, technology up-gradation, preferential access to credit, preferential policy support, etc. Specific Contributions of Small-Scale Sector:
The contribution of Small scale sector to the manufacturing sector and GDP as a
whole is significant in terms of its share in total value added; Small scale sector performs to the manufacturing sector and GDP as a whole is significant in terms of its share in total value added; SMEs can play a role in mitigating the problem of imbalance in the balance of payment accounts through its export promotion; While the large scale industries are expected to increase the inequities of income and concentration of wealth, SMEs are expected to help widespread equal distribution of income and wealth; Small sector may provide opportunities to a large number of capable and potential entrepreneurs who are deprived of appropriate opportunities; It can help to release scarce capital towards productive use; SSI can reap the benefits of lean production and can find new cost-efficient techniques of lean production; As small units can use resources more efficiently to the full capacity without any wastage, they may have higher allocative efficiency; As the element of risk is minimum in SMEs, more resources will be employed by large number of labor force.
Small and Medium Size Enterprises (SMEs) in Sub-Saharan Africa (SSA) are talked about a lot in the framework of growing unemployment and high population rates as the region rushes past the billionth person population mark (most of which is under 30). There are a number of international forums, which have focused on developing the region’s SME sector focused mostly on two elements: (a)SMEs are vehicles to employment and job creation. (b)SMEs are key to the region’s entrepreneurial environment needs.
But what else are they? What else needs to be further highlighted? What can those who seek to support their growth do better? We all agree that SMEs — just like big businesses-start with a vision, an idea, or fulfill a need in a community. But fundamentally, SMEs play a critical role in nation building, nation advancement, and a nation’s innovativeness. Development cannot happen without them; growth cannot happen without them; socio-economic paradigms shifts cannot happen without them; and poverty cannot be reduced without them. They are what produce a country’s middle class. This is their development enterprise role.
Whether one is in West, East, South or Central Africa, the sectors needing development or expansion are the same — agriculture, infrastructure development (power and transportation), manufacturing, and information technology.
SME stands for Small and Medium Size Enterprises, but today let’s change that acronym to Strong and Maverick Enterprises — reflecting the development enterprise space of SMEs and micro enterprises or MEs (employing 10 people or less). They are producing, designing, employing, and more importantly innovating. They are development entrepreneurs. It is very important to note that the present administration in Nigeria led by President Buhari has identified SME’s an engine of growth and catalyst for development; it is therefore devoted all the necessary attention to solve the problem of unemployment and grow the per capita income rapidly through the instrumentality of SMEs.
Ayobolu, a public affairs analyst contributed this piece from Lagos State.
