AfDB grant: SMEDAN strengthens funding, capacity for MSMEs

Capital is one of the most important factors needed to drive sustainable growth of Micro, Small and Medium Enterprises (MSMEs). That explains why Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has secured grant from the African Development Bank (AfDB) to conduct a feasibility study on all the 23 Industrial Development Centres (IDCs) preparatory to their upgrade and conversion to Micro Small and Medium Enterprises (MSMEs) cluster parks.

The study, which is sponsored by a grant of approximately $600,000 or N183 million, secured from the middle income country technical assistance fund of AfDB, is the first to be granted to the Ministry of Industry, Trade and Investment/SMEDAN to encourage and improve sustainable entrepreneurial development specifically targeted at SMEs in the country.

The centres were established in the 60s and 70s to provide middle level manpower in woodwork and metalwork to local industries. They were subsequently transferred to the agency for proper attention.

The underlying objective of the project was to establish Common Infrastructure Facility Centres that would resolve some of the challenges faced by Small and Medium Enterprises (SMEs) with particular regard to accessing work space and common amenities like internet access, water, power, roads among others. The facility is projected to improve the global competiveness of SMEs, by reducing overhead costs and enjoying economies of scale as is usually the case with clusters.

SMEDAN Director-General, Dikko Radda said the agency has considered turning the industrial Development Centres (IDCs) to industrial clusters to address work space problem for Micro, Small and Medium Enterprises (MSMEs) and promote economics of scale derivable from the agglomeration of critical mass of enterprises.

So far, SMEDAN has secured a grant from the African Development Bank (AfDB) to conduct a feasibility study on all the 23 IDCs preparatory to their upgrade and conversion to MSMEs cluster parks.

“Small businesses are spread all over the country and reaching out to them to provide solutions to their needs may be a daunting task to achieve. This is so obvious because services required by them are not provided by one agency. For instance, while skill acquisition is the prerogative of IITF, managerial skill is for SMEDAN whereas finance is the role of institutions like Bank of Industry,” Radda said.

“To address the problem, a clinic was established, called the MSME clinic. In the team are all the various stakeholders, SMEDAN, Corporate Affairs Commission, Bank of Industry,  Standard Organisation of Nigeria (SON), among others. The clinic is domiciled in the office of the Vice President while SMEDAN provides the secretariat. The team tours the country under the leadership of the Vice President, Yemi Osinbajo, to meet with SMEs and discuss their problems with them. Each member of the team takes its turn to provide solution to the array of challenges confronting the business owners. Problems are diagnosed and solutions proffered,” he added.

Continuing, he said accreditation is another important pillar in sanitising the MSME sub sector. “Business Development Service Providers (BDSPs) are many and varied in scope. Some BDSPs have national coverage, some regional and some state. One of the most important role they play is loan facilitation and other business development support services. Consequently, institutions such as SMEDAN and BOI have partnered them to provide trainings and loans to MSME. This important role underscores the need to accredit them through a recognised and acceptable institutional framework that will bring credibility to bear on their analysis and recommendations.  SMEDAN has established the accreditation framework for the BDSPs,” he said.

A Lagos lawyer, Moses Adike,  said “ensuring that BDSPs provide standard service to MSMEs has been on the front burner for some time now”.

SMEDAN has achieved some milestones in the establishment of the framework for accrediting the BDSPs in partnership with the Department for International Development (DFID). The project has a complementary component – The Credit Information Portal. The portal when deployed, would provide information to MSMEs towards accessing credit. MSMEs can now access reliable information for their credit needs from various financial institutions.

Radda has recognised the need to boost SMEs operations by putting in place strong measures that confront these challenges facing the sector. From the implementation of the One Local Government, One Product (OLOP) Programme, National Enterprise Development Programme (NEDEP), establishment of the SME Rating Agency of Nigeria, credit information portal, ICT development to implementation of the nationwide MSMEs clinic to mention but a few, SMEDAN is helping the Federal Government to realise its vision of improving the economy and lives of the citizenry.

To support the agency to carry out these reforms and innovations, Radda is seeking for amendment of the Act that established the agency. The idea is to re-position it to accomplish its mandate.

The process, which originated as a follow up to resolutions taken at the maiden Management Retreat of the agency since coming to office some two years ago, has scaled through the first and second readings at the National Assembly. When passed into law, it would provide the right ammunition to fight the obstacles in its path to success.

Radda said SMEDAN will continue to strive for excellence and strategic growth through forming strong partnerships with reputable public and private institutions. This is in order to build an all-inclusive and conducive business-to-business and access to market environment.

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