Industrialising Africa through revamped SMEs
Africa Industrialization day was first conceived in Addis Ababa, Ethiopia during the 25th Ordinary Session of the Assembly of Heads of State and Government of the Organization of African Unity (OAU) held in July 1989.
During this session, November 20 was set aside as a day for global observance of industrialization of Africa.
The objective was to create a forum for African leaders to discuss progress and challenges facing the continent in its effort to attain the status of the industrialized economy.
Bodies like the African Union, the UN Economic Commission for Africa (UNECA), the United Nations and UNIDO plays important role in the narrative of economic prosperity of Africa and as much as possible raise global consciousness of the importance of industrialization of Africa and also remind the international community that more than 30 of the world’s 50 least developed countries are located in Africa.
African countries including Nigeria had in the past 26 years commemorated the day without failing. Each year, different themes are discussed with vigour so much that one would have thought that by now, Nigeria and indeed the rest of Africa would have come out of poverty owing to the turnaround of the industrial sector.
Issues like new information and communication technologies, acceleration of Africa’s integration in the global economy through effective industrialization and market access, strengthening productive capacity for poverty reduction within the framework of NEPAD, generating African competitiveness for sustainable market access, reducing poverty through sustainable industrial development, technology and innovation for industry: investing in people is investing in the future, business through technology had formed topic of discussion in the past.
However, this year commemoration focused more on women and youths. The theme: ‘’Small and Medium Enterprises for Poverty Eradication and Job Creation for Women and Youth’’ sought to engage policy makers on how important it is for them to formulate policies that are inclusive and sustainable at industrializing Africa in other for it to overcome its critical development challenges especially as it is clearly pointed out in the 2030 Agenda for Sustainable Development with reference to Goal 9 which calls for action to build resilient infrastructure, promote sustainable industrialization and foster innovation.
The Secretary General of the UN Ban Ki-Moon sounded a note of warning to African leaders on the need to be more proactive with regards to generation and expansion of existing SMEs in their countries.
He noted that inclusive and sustainable industrial development remained elusive as youths unemployment and gender inequality jeopardised the continent’s efforts to eradicate poverty while at the same time affirming the commitment of the world body to enhance African’s small and medium enterprise sector and stimulate economic opportunities for women and youth and also committed to promoting Africa’s progress towards economically enriched socially inclusive and prosperous societies.
The UN scribe said that the private sector in Africa contributed a projected 80 percent of the continent’s Gross Domestic Product (GDP) and supported 90 percent of all jobs.
His words, ‘’Small and medium enterprises (SMEs) have pivotal roles to play in the industrial development of Africa. Nevertheless, opportunities for youths and women generated by small and medium enterprises are limited, thus failing to harness the full entrepreneurial potential of the continent. This means less capacity for transformative socioeconomic development, innovation and value addition. Africa needs to invest in training and education for women and youth to industrialise, grow the private sector and achieve sustainable development’’.
He added that small and medium enterprises could provide solid foundation for sustained economic growth, job creation and poverty eradication.
As expected, Nigeria joined the rest of other African countries to commemorate the day. In the nation’s capital, a rally led by the labour union with the support of the ministry of Industry, Trade and Investment made its way to the National Assembly in other to place a demand on the parliamentarians to enact laws that would grow industries in the country. They demanded for stoppage of smuggling, fuel importation, and exportation of raw materials that could be used to revamp Nigeria industries, insisting that Nigerians should patronise locally made products among others.
It is no longer news that companies that used to be the drivers of Nigeria economy, symbols of national pride and source of job creation for the people have become moribund in past years.
The Minister of Industry, Trade and Investment, Dr Okechukwu Enelemah
however said as the new man in the helm of affairs in the ministry, he would do all that is needed to be done to return Nigeria to the path of industrialization by coming up with legislation to encourage the patronage of made in Nigeria products.
He said the bill when passed into law would assist the Federal Government to expand the domestic market and return Nigeria to the path of industrialization.
Specifically, he said the textile sector would be a major beneficiary of this legislation.
His words, ‘’the ministry intends to make manufacturing much more competitive and vibrant than what is presently on ground. We are mindful of the fact that manufacturing and industrial sector development is critical to employment generation, wealth creation and general economic transformation, to attain development, we must change. ”
Issues of the N220b SMEs fund domicile at the CBN had also been an issue of the months with no solution in sight. The fund is meant to be lent out to SMEs but complaints are rife of the nearly impossible conditions put in place by the apex bank for the accessibility of the money. One of the speakers at the Africa industrialization day described these conditions as the bank “asking SMEs to provide the kidney of an ant.”
Except workable and sustainable policies are put in place to address the legion of challenges facing SMEs in the country, this important sector of the economy may still have to continue to stagnate.
The managing director of the Bank of Industry Rasheed Olaoluwa hinted at a forum that except a very important sector of the economy which is power is overhauled speedily; the single digit lending rate clamoured for by SMEs will be a mirage.
Olaoluwa maintained that the reality on ground is that if banks have to be saddled with the responsibility of running their business on generating sets powered by diesel, then the banks will continue to shift their overall running cost to borrowers thereby making the single digit interest rate impossible.
The BoI boss said in other to assist SMEs, the bank had to appeal to commercial banks to add 6 percent to whatever the Monetary Policy Rate (MPR) is per time as set by the Monetary Policy Committee of the Central Bank of Nigeria (CBN).
This six percent he said will take care of operating cost of the banks in terms of generating their electricity and other infrastructures. He posited that except MPR is improved and government provides basic infrastructures especially electricity, SMEs will continue with two digit lending rate.
Olaoluwa advised banks to develop a five-year Strategic Plan from 2015-2019 to address challenges with funding the nation’s industrialisation agenda.
He also noted that innovative approach is required to tackle this social malaise of graduate unemployment in the country. “Our recent Graduate Entrepreneurship Fund strategy is to identify the innate talents of these young graduates as soon as they leave school, build their capacities for self-reliance; and also empower them to establish their own businesses, thereby creating jobs not just for themselves, but also for other youths that they may employ.”