Empowering Small-Scale Industrialists in Nigeria

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Bishops in Nigeria have recently urged the government to foster an ‘enabling environment that will promote the growth of small-scale industries.’ Given the  worsening economic situation in the country, life has become increasingly challenging for Nigerians who are grappling with persistent poverty and hardship. Hence, the government can support small-scale industries, especially in rural areas, to enhance productivity, reduce unemployment, and promote social cohesion. By supporting small-scale industrialists, poverty can be alleviated through income-generating opportunities for individuals and households created by tiny industries.

The Role of Small Industries

Small and medium enterprises (SMEs) contribute approximately 48% to Nigeria’s Gross Domestic Product (GDP). They also account for 96% of businesses and provide 84% of employment according to Moniepoint statistics.Thus, it is vital  to support SMEs given their role in labor generation, economic growth, and poverty alleviation. Establishing trustful relationships between industrialists and enterprises to facilitate transactions and foster partnerships is equally vital. Confidence with industry partners, such as suppliers and distributors, is critical for the success of an endeavor. In this aspect, before engaging with other businesses and firms,  industrialists must conduct their due diligence to establish the credibility and reputation of potential employees, partners or customers using background checks or public records. These sources can reveal information such as criminal records,  financial stability or legal/regulatory compliance from which sound business decisions can be made.

Agro-Industry is a Viable Sector

Partnerships in the agriculture sector must also be vetted to ensure the success of small-scale industry. The agriculture sector makes a significant contribution to the economy of Nigeria, accounting for more than 19% of  GDP in Q1 of 2023. Blessed with fertile land and a favorable climate, crop farming, aquaculture, and livestock raising are among the most profitable agricultural endeavors in the country. Unfortunately, the agriculture sector, like other sectors in the Nigerian economy, is beset with problems. Productivity is relatively low due to a lack of high-quality materials (seeds, fertilizers, and pesticides) and agricultural equipment. 

In addition, farming practices are outdated, and there is a lack of infrastructure, such as roads, irrigation systems, and storage facilities. Certain areas that are devoted to agricultural activities may also face insecurity issues and conflicts that cause disruptions and displacements. Other factors that impact the sector include a lack of access to finance, market constraints, and policy problems.

Access to Finance

The good news is that there are ways to support and empower small-scale agro-businesses and industrialists. For one, access to finance is a major obstacle faced by enterprises in the country, with a World Bank document reporting that only 6.7% of firms have a loan or active line of credit (LoC). In the 2024 Budget of Renewed Hope by the Federal Government, N250 billion will be allocated to provide financial assistance to micro, small, and medium enterprises in agriculture, manufacturing, services, and trade sectors. Under the Micro, Small, and Medium Enterprises Development Fund (MSMEDF), loans will be available at an interest rate of 5%, which will hopefully encourage credit uptake. In addition, there are several financial and empowerment programs that will improve access to funds. 

Skills Training, Incentives, and Infrastructure Development

For example, the Youth Entrepreneurship Development Programme (YEDP) targets young entrepreneurs by offering training and mentorship as well as access to a N50 billion fund. The Government Enterprise and Empowerment Programme (GEEP) is another N100 billion facility that can provide small loans to petty traders and micro-enterprises. Women-owned businesses across sectors can also access a N50 billion loan fund. To stimulate businesses, government agencies are mandated to give at least 40% of procurement contracts to MSMEs, while the One Enterprise Per Local Government (OPLAG) initiative intends to establish at least one feasible enterprise in each local government across the country. Tax incentives, such as reduced tax rates and exemptions, will be made available as well. Access to markets is strengthened through trade fairs, exhibitions, and online platforms. Likewise, the government aims to streamline business registration and licensing processes to make it easy for small-scale industrialists to get started. Furthermore, infrastructure development, which is another significant impediment to industries, is also addressed by Nigeria’s 2024 budget. With an allocation of N150 billion, roads, electricity, and internet connectivity will be improved. 

Small-scale industrialists across Nigeria can leverage policies and programs offered by the government to initiate, promote, or scale their enterprises. By taking advantage of loan facilities at favorable rates, training and skills development, networking opportunities, tax incentives, and market access, the chances of an agro-industry taking off and succeeding are considerably higher.