You may simply be among those saying that the investment in the SMEs in Nigeria has not shown any proportional effect and therefore should not be adequately funded. Obewe Nwachinemere has this to say:
A cursory glance at the structure of SMEs in
Nigeria reveals that 50% are engaged in distributive trade, 10% in
manufacturing, 30% in agriculture and the remaining 10% in services. A special
feature of Nigerian SMEs is that distributive trade component is generally
considered more commercially viable than the manufacturing component; hence
they attract more funding from banks and other financial institutions. Only 10%
of our SMEs are engaged in the manufacturing sector! That is not only
disheartening; it pinpoints the reason why the Nigerian SME space hasn’t pulled
as much weight as it ought in driving economic development. SMEs’ contribution
to industrial production and employment was 47% and 49% respectively in
Malaysia in 1985, 45% and 64% in South Korea in 1991, and 52% and 64% in
Germany in 1994, contributing more than 50% of the GDP of European and American
countries, and over 40 per cent in most of the Asian countries. Want to know the
reason behind their less dependence on imports? It’s manufacturing!
The implication is that we have continued to spend the nation’s foreign
reserves in the importation of finished consumer products that could be sourced
locally. The 2011 third quarter report on Nigeria’s trade by the National
Bureau of Statistics shows that “refined mineral products, textiles and
associated articles and vehicles, aircraft and associated parts, represented
the highest growth in imports between the third quarter of 2011 and the same
period of 2010 while crude oil exports contributed 95.3 per cent of total
exports.” Imports of prepared foodstuff, beverages etc. grew by 36.7 per cent
on a year-on-year basis. On a year-to-date basis, America has been Nigeria’s
largest import destination at N2.94 trillion (USA-N1.81tn) closely followed by
Asia (especially China) at N2.78 trillion and Europe at N2.76 trillion. Total
imports year-to-date to African countries stood at N882.8 billion by the end of
third quarter of 2011. This has resulted in the continued low capacity
utilisation and low production in Nigeria-based companies and industries
resulting in high unemployment figures in the country. Imagine the amount of
foreign exchange savings that local production could drive and the multiplier
effects on the economy!
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