Minister of Trade and Investment, Mr. Olusegun Aganga, spoke with Business Editors during a Stakeholders’ Forum to kick off the first of its kind National Enterprise Development Programme (NEDEP). The minister said NEDEP will reposition the MSMEs sub-sector as the major driver of job creation and wealth generation.
How will you situate the MSMEs sub-sector within the context of President Goodluck Jonathan’s Transformation Agenda?
If we are going to develop our economy and turn our quantity advantage into productive advantage, one of the most important sectors that we have to focus on is the Micro, Small and Medium Enterprises, MSME sector. Even developed economies rely heavily on MSMEs for job creation, wealth generation and inclusive economic growth. But what has stopped us in the past from developing this very important sector?
Despite the little support the MSME sector has received over the years, it has played a big role in our economy. Currently, the sector contributes about 75 percent of Nigeria’s Gross Domestic Product and employs more than 45 percent of our people.
Based on the survey we conducted in 2010, there are about 17.28 million MSMEs in the country, employing more than 32 million people. However, if you look at the mix of the 17.28 million MSMEs, about 96 percent of them are actually micros. If you go deeper, you will discover that only four to six percent of their funding is from organised lenders.
This means that most MSMEs lack access to affordable finance. Also, most of them don’t have the skills required to run their businesses. So, it is a big opportunity that we have missed for many years, and that is what the National Enterprise Development Programme (NEDEP) wants to address.
How is NEDEP different from other MSME development initiatives that were introduced by the government in the past?
The National Enterprise Development Programme is an initiative spearheaded by the Federal Ministry of Trade and Investment and its three parastatals – the Bank of Industry, Small and Medium Enterprises Development Agency of Nigeria, SMEDAN and the Industrial Training Fund, ITFs.
This is the first time ever that these three parastatals under my ministry are coming together to develop and implement a programme that will revolutionise the growth of the MSME sector in Nigeria. This is quite different from when different parastatals saddled with the responsibilities of seeing to the development of MSMEs had no collaboration that could have a significant impact on the Nigerian economy.
The development of NEDEP was guided by similar enterprise development models in Asia, Africa and the One Local Government One Product (OLOP) pilot projects in Kano and Niger states. Our objective is that within the next two years of implementing NEDEP, the programme will generate 3.5 million jobs and an estimated five million direct and indirect jobs.
You said that the target of NEDEP is to create about 3.5 million jobs within the next two years. How do you intend to achieve this?
Yes, our goal is to create about 3.5million direct jobs and five million indirect jobs through NEDEP. It may sound like a big number but it can be done very easily. We intend to achieve this through a combination of strategies. The first strategy is to look at the database of MSMEs, which says that we have 17.28 million MSMEs in Nigeria.
Out of this number, about 94 percent of them have no access to funds and they are surviving. Most of their funds come from personal savings and contributions from families and friends. What we intend to do is to take 25 percent of those that have scalable products and businesses that we can support by helping them to build their businesses and at the same time providing them with funds.
If we are able to reach the top 25 and each MSME creates one job, which is about three million jobs created within two years. In addition to that, we are looking at One Local Government, One Product, based on the areas where we have competitive and comparative advantage. We are looking at these across the value chain to make sure that even when they produce their products, they will be able to sell them within the same state.
This will produce a number of enterprises which we will support as well. And where we have skills gap, we will form them into cooperatives and Self Regulating Organisations (SROs), so that each one of them will, in their trade, have a yellow book. If for instance, you are looking for an qualified electrician, you can pick up the yellow book to find out all the electricians that are qualified and registered within your location.
One of the major problems militating against industrial and economic growth in Nigeria is the inconsistency of government policies, which many Nigerians refer to as ‘policy somersault’. How will you ensure the continuity of NEDEP?
The first thing is to have a robust MSME policy, which we have worked on in the past four to five months. This policy will soon go the Federal Executive Council for approval. This will ensure that we have a strong policy for the MSME sector. Secondly, in Nigeria today, you will discover that almost every Ministry, Department and Agency of government is engaged in the MSME programme at a small level.
Even the international development agencies and institutions in Nigeria are currently engaged in one form of MSME programme or the other. Most of these programmes are not well coordinated, either at the state or federal government level.
Therefore, there is the need for a structure around MSME development to ensure that there is proper coordination at the state and federal level so that we can have adequate data to develop the sector. The best way to achieve that is by setting up an SME Council comprising the states, Federal Government and the private sector. This is what other countries have done to have a structured approach to the development of MSMEs.
The third thing we need to do is to make sure that we inculcate the culture of enterprise development right from the schools. This entails having enterprise training in various educational institutions’ curricula such as secondary and tertiary institutions.
This type of initiative will ensure that before students graduate from school, if they are entrepreneurially minded, they already have a rough idea of the type of business they want to set up and how they will access funds. Already, we are working with the National Universities Commission to make sure that we have Enterprise Societies and Clubs in our Universities.
There is no doubt that we have quantity advantage as a country due to our large population, but it is very important to stress than an average Nigerian is naturally an entrepreneur. What we need is the right policy structure and support to grow and develop the MSME sector.
That is why the three major agencies under my ministry responsible for MSMEs development, finance and industrial skills development have come together to drive NEDEP. While SMEDAN will provide business training and support, ITF will provide the skills required for specific or specialised businesses and BoI will provide the funding.
Have they started working on the initiative already?
The interesting thing about NEDEP is that each of these agencies has already done some work in most of these areas. For example, SMEDAN has done One Local Government, One Product initiative working with the Japanese, based on a similar programme they have in Japan.
They have done this programme with three sub-sectors in pilot states such as Niger and Kano. In the same vein, BoI already has partnership with about 17 state governments in the area of financing MSMEs. Also, ITF has training and skills acquisition centres in most parts of the country.
They have concluded plans to establish 37 Industrial Skills Training Centres, one in each state and the Federal Capital Territory, with six centres of Advanced Skills Training for Employment for skills broadening and upgrading in addition to Sector-Specific Skills Training Centres to cater for the skills need of manufacturing, Agric-Agro allied, construction and other critical sectors of the Nigerian economy.
In each of the 46 centres, training will be offered in 25 trade areas. Each of the 25 trade areas will enroll 25 trainees in line with international best practice for effective hands-on learning. So, as you can see, we already have the structures in place. What is required is for them to work together under NEDEP in order to make the desired huge impact.
No matter how laudable NEDEP is, it cannot achieve the desired result without collaboration with the state and local governments. How do you intend to secure their support and buy-in?
Already, we have the support of 17 state governments that have been working with BoI, ITF and SMEDAN, in the area of MSMEs development, skills training and acquisition, as well as business services development. With NEDEP, we will have the National Steering Committee, State Government Steering Committee and the Local Government Steering Committee.
In all these, we will involve the state and local governments, the private sector, development banks, agencies and private individuals. Most of them are already excited about NEDEP and have indicated their interest and willingness to work with us. That is why, even with the short notice of this meeting, we still have almost all the commissioners here. We will ensure that anyone and everyone that has any contribution to make is part of NEDEP.