Why Nigeria's Regulatory Environment Is Vital For MSME Development - Muda Yusuf

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Thursday, September 03, 2020 / 05:30 PM / Bukola Akinyele for WebTV / Header Image Credit: IB Magazine

 

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An Investor-friendly Regulatory environment is vital for the growth and development of micro, small and medium enterprises (MSMEs) in Nigeria.

 

The Director-General (DG) of the Lagos Chamber of Commerce and Industry (LCCI) Dr. Muda Yusuf gave this opinion as a guest on WebTV's "Economy and Politics" programme which discussed "MSME, Governance and Capacity Development In Nigeria".

 

According to Yusuf, Nigeria has 41m MSMEs who are major drivers of the  economy, and have been adversely affected by the COVID-19 Pandemic.

 

Yusuf  called on government agencies to collaborate with MSMEs in order to improve productivity and generate larger investment inflows into the economy.

 

He said, the new Company and Allied Matters Act (CAMA) 2020 is a welcome development for business which would create value and give fillip to the whole idea of the ease of doing business especially for small businesses. According to him, the new requirements in the CAMA are good for SMEs particularly regarding the provisions for digital records, meetings and activities.


The Trade group leader made a strong case for a periodic review of the CAMA legislations to reflect the economic and business realities in the country.


On the various interventions from the Central Bank of Nigeria (CBN) so far he agreed that it was a step in the right direction considering the huge financial gap in the economy. He stressed that the real sector was vital to the economy and stimulus plans should be within the range of N5 to N10trn.  


According to him, most MSMEs complain about their inability to access funds. They also refer to lending discrimination with loans going to businesses and individuals who may not be in the best position to utilize them properly.

 

According to the economist, there has to be a proper framework for the adoption of a risk management approach to ensuring that the lending process is driven by transparency and accountability.


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He agreed that MSMEs require capacity building and increased level of financial literacy, to achieve sustainability in their operations. He also commended the Bank of Industry (BOI) for their support and engagement with small scale enterprises in the country.


In the area of financing he alluded to the fact that there was need for micro finance institutions to reposition their operation and prioritize funding for Micro-enterprises who constitute over 80% of the MSMEs in the country.


Key areas of improvement for the MFIs according to Yusuf  include;

  • Corporate Governance
  • Effective Supervision
  • Risk Management Framework
  • Capacity Development for Micro-enterprises
  • Advisory service for Micro-enterprise


Amidst the global economic uncertainties and looming recession the DG noted that an enabling policy environment was important to enhance investor confidence.

 

Policies like the foreign exchange management by the CBN should be liberalized to attract more investments.


"We need to improve on economic governance in order to respond to the looming  recession, indeed government agencies that interact with private enterprises must reform and improve their mode of operations. Nigeria  needs the right investment space that encapsulates policy, institutions and regulatory framework" he said.


He noted that the conditions at the sea ports and various local terminals need to improve. He called for more reforms and greater accountability by the fiscal authorities.  


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