Democratizing development through public policy SMEs

Democratizing development through public policy SMEs

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The SME sector has established itself world-wide as a major force and backbone of the economy, through the creation of jobs and stimulation of economic growth. Accordingly, world leaders ought to do more in the area of public policy action and advocacy to promote the sector. Besides providing employment, household income, and taking the flak of economic adjustments going on around the world, the sector has helped to draw attention away from the rising failure of governance now rampant in the developing world.

Promotion of the SME sector has now become a global strategy of development on both sides of the development divide. In other words, policy action targeting to advance the cause of SMEs is no longer limited to developing countries. Even the more advanced countries have continually taken steps in this direction, probably doing more than the developing ones. The advanced countries have long since recognized that the value creation being ascribed to the sector is not just a passing development event but a crucial plank in the process of growth, national economic welfare, and the peace and stability of nations.

During the past three or four decades, developed countries have made significant efforts to implement programmes and policies to assist operators in the SME sectors of their countries. This is evidenced by the findings of several research works in that area. This effort has also been justified by the increasing contribution of the sector to the growth in output and employment in those countries. In the OECD countries where SMEs account for about 99 per cent of all firms, research shows that they are the leading source of employment and account for much of the job placements in diverse economic fields. About 60 per cent of all the jobs in the manufacturing sector come from the SMEs. They also provide about 75 per cent of the employment in the services sector. In terms of value addition, the SMEs are generating on the average between 50 percent and 60 percent of value added. In Europe, specifically, small and medium enterprises have continued to demonstrate dynamism and innovativeness, creating new technologies and products. They are responsible for about 20 per cent of all patents in biotechnology-related fields. In fact, over two thirds of the National Productivity Champions in Europe ─ defined as the most productive firms in their various European countries and industries – are SMEs. In the knowledge-intensive services, this contribution is in excess of 80 percent.

The contribution of SMEs to the output and growth of economies of the emerging markets is equally impressive. Here, they contribute as much as 45 percent of all employment and about 35 percent of GDP. According to the National Bureau of Statistic (NBS) in Nigeria, during the past five years, SMEs have contributed 48 percent of the nation’s GDP, which has helped to establish the country as the biggest economy in Africa. Thy also constitute 96 percent of all business entities in the country while providing 84 percent of all employment. These are by no means small issues but evidence of the need to take more pointed steps to improve the operating environment for small businesses in Nigeria.

Much is actually being done in that regard, especially by entities like the development banks, but there is need for coordinated and synchronized efforts, and the measurement of results. Compared to Nigeria, SMEs in South Africa make up 91 percent of all business entities; they contribute 60 percent of employment and 52 percent of that country’s GDP. There is indeed no more doubt that these small firms are usually dynamic and innovative. It is therefore a wise policy action to do things that make them spring up and develop. They are also a critical element in any effort to achieve inclusive growth. We can actually do more if we really appreciate the fact that much of our teeming population depends on the SME sector.

Given the state of the Nigerian economy and the direction to which things are headed, it is getting clearer by the day that surely, our hope is in the name of the SMEs, who make what we eat and wear. The country has been ruined by poor leadership from time immemorial, to the extent that it has become part of our culture to pursue what could be rodents in other climes while our house burns. As foreign investors pull out of the country, taking away with them some N1.8 trillion, for reasons bothering on escalating insecurity, and government’s apparent helplessness in the face of an imminent disaster, some people are busy struggling for top political positions and fat budgets.

It appears clearer every day that our hope is in the name of the SMEs, who make what we need

What should have been uppermost on our minds today should have been how to get fellow Nigerians who have been sacked from their homes by fellow Nigerians or people from God-knows where to go back home. But it doesn’t appear to be. What we ought to be focusing on is how to stop the democratization of crime – kidnapping, rape, murder and all known wicked works, which have become fancy trades in Nigeria, but again it is not. Nor are we honestly preoccupied by efforts to find a clear direction of public policy on stopping, through equitable policies, the widening gulf between the tribes and constituent parts of the country that have never been this hateful of one another – a looming disaster that everyone sees in the fog ahead but keeps mum. Rather it is about who emerges as leader of the senate and the House of Reps in the 9th Assembly, and everybody, including governors and traditional rulers, is into the “fight”.

Africa as a whole lost the 1960 Development Decade, but Nigeria appears to be the only one or the leader of those about to lose the current Development Decade. Our police system is still running on a 1948 law, even as lawmakers pat themselves on the back and struggle for position. Let us start from our areas of strength – the SME sector. We have the population, which may become a curse if we continue to dehumanize our sons and daughter by failing in our responsibilities to them. Let us reform our policy framework on development and get more practical. The talk of economic diversification has become deafening but action is vacuous. It should not be heard that we entered 2023 with an economy still standing on one leg. That will be failure democratized.

Let us seize the opportunity to rebuild our broken walls by ensuring that no Nigerian farmer is henceforth afraid of going to farm because of herdsmen. Let us use public policy with all its pervasive effects to build firm foundation of development by tapping from our strongest endowment – private enterprise. Government should stop and take stock of all the many intervention and social investment programmes it has launched and see who has been touched by them. The results will be revealing and hopefully shape the direction for the next 3 – 4 years.


Emeka Osuji



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