FX disaster halts SMEs’ growth, operators lament

Operators of Small and Medium Enterprises say that the aim of increasing their companies is turning into much less possible because of the hostile financial setting, particularly the international change disaster, which is hitting import-reliant industries notably laborious.

Enterprise growth desires look much less seemingly for business gamers as Nigeria’s Gross Home Product which grew by 3.19 per cent within the second quarter of 2024, up from 2.51 per cent in Q2 2023, nonetheless suffers from the chance of inflation.

In keeping with the Nationwide Bureau of Statistics, inflation has surged to 32.70 per cent and compounded with naira devaluation and excessive borrowing prices, small companies which make for greater than 80 per cent of the labour power are caught with out growth in sight.

The Nationwide Vice President of the Nationwide Affiliation of Small-Scale Industrialists, Segun Kuti-George, in a dialog with The PidomNigeria, highlighted how growing enter prices have pushed many companies to the brink of closure.

“The financial scenario is presently hostile to companies as a result of the price of enter goes up day-after-day,” Kuti-George stated. “Plenty of companies are closing store. The very first thing we needs to be taking a look at is survival.”

He famous that companies can survive and doubtlessly develop by embracing innovation and diversification.

In keeping with the NASSI Vice President, “For any enterprise to live on and develop underneath the present scenario, it needs to be modern,” citing Samsung’s evolution from tomato farming to electronics manufacturing for instance of profitable diversification.

He harassed that companies might discover new merchandise in associated or totally completely different areas to create different income streams.

Industries with growth potential, Kuti-George stated, embody agriculture, agro-processing, and know-how.

As an example, a beverage producer may diversify into water manufacturing, utilizing present sources to minimise extra prices. “You simply search for merchandise that received’t require a lot funding for you to have the ability to produce,” he defined.

Kuti-George additionally suggested companies to contemplate exporting, notably underneath the African Continental Free Commerce Space, as Africa presents development alternatives with demand for Nigerian merchandise.

Moreover, he emphasised the significance of embracing know-how and automation to cut back operational prices and improve output.

Equally, the Director of the Nigerian Affiliation of Small and Medium Enterprises, Eke Ubiji, identified that foreign exchange volatility is a major barrier to growth, particularly for companies that rely closely on imports.

“Solely companies that foreign exchange doesn’t disrupt a lot usually tend to develop,” Ubiji stated.

He added that corporations that supply uncooked supplies regionally and produce items in excessive native demand stand the perfect likelihood.

Ubiji cited the success of Nigeria’s homegrown car producer, Innoson, which has thrived by catering to authorities companies and native patrons who would in any other case face excessive prices for imported automobiles.

The NASME director famous, “As a result of Innoson produces his automobiles regionally, they’re shifting out there. By the best way, quite a lot of authorities companies and firms are shopping for from Innoson.”

Nevertheless, huge companies like Innoson are higher positioned to entry capital and creditworthiness, than small companies elevating a problem.

Ubiji addressed funding for small companies and talked about that banks and monetary establishments who monitor market tendencies are prone to assist companies with viable growth plans.

The PidomNigeria spoke with an business skilled, the CEO of Made-in-Africa Model Ambassador, Flora Mbeledeogu, who defined the significance of understanding goal markets and conducting feasibility research earlier than increasing.

“You don’t simply hear, ‘Oh, it’ll be good to have my product in Ghana,’ and simply rush off,” Mbeledeogu stated, stressing the necessity for in-depth market analysis to establish competitors and match.

She urged small companies to look out for individuals of their sectors and find out how they expanded into any nation and leverage their expertise to maneuver into these areas.