The position of Small and Medium Sized Enterprises in the development of any nation’s economy cannot be overemphasized particularly Nigeria’s. Successful economies like that of the USA, EU, and China have SMEs at their core, they provide the backbone upon which the economy stands so strong. These countries with over 43 million small businesses absorb about 60-70 percent of the overall workforce equally generating more than half of the national gross domestic product (GDP).
Today, SMEs are particularly important to any economy. In any modern day economy, they are the major player as it concerns job creation. It has been seen that a large share of the unemployment reduction in many countries around the world in recent times, has been due to SMEs. These are the same countries that contribute significantly to GDP growth around the world and also help cash flow in the economy. The Governments rely on SMEs to make their economy better. This is not peculiar to only Nigeria or Africa but also the EU, USA, and China.
In the United States of America for instance, 23million out of the 28.8 million of businesses are self-employed and home-based, indicating clearly that small businesses are the greatest employers of labour, job creators and even the largest contributors to the country’s Gross Domestic Product which is well over $21.5 trillion, this is an adequate description of the Nation’s economic activity. This ought not to appear as a surprise in a country where 67% of all new jobs are generated by small businesses and about half of the American workforce is employed by small businesses.
Also, the backbone of the economic development of the People’s Republic of China is Small and Medium Enterprises. China’s case is quite interesting because of the peculiarity they have in comparison with the European Union and the United States of America. China is much bigger in terms of the labour intensity as regards production, with a population of 1.418,599,017(about 1.5 billion people) as of March 2019. In 2003 SMEs in the EU was about 19 million, in 2004 china’s stood at 40 million according to China’s Bureau of Statistics.
Of the entire database of registered enterprises in the country, SMEs constitute a large 97 percent, contributing close to 58 percent of China’s GDP and 68 percent of the total export value, according to a 2015 china statistical yearbook. SMEs also play a major role in job creation, with about 82 percent of the employees in China coming from the SME sector. This shows that the SME sector is responsible for the creation of over 75 percent of jobs there.
If SMEs play an important role in the development of other countries, then it certainly does in Nigeria as well. As at 2013, the number of registered MSMEs in the country stood at 37,067,416 companies according to the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria(SMEDAN). This sector employs 82 percent of the total Nigerian Labour force, absorbing about 59,741, 211 persons as of December 2013. Also, the Micro, Small and Medium Scale Enterprises has contributed to the nation’s Gross Domestic Product GDP in no small way adding about 48.77 percent to it while contributing to her exportation volume about 7.27 percent in the same year.
The figures are pretty low in the Nigerian business sphere in comparison to her global counterparts the EU, China, and the USA. This owes to obvious stiffening factors, especially the poor state of infrastructure to provide encouragement, a lack of which provides constraints for the MSMEs to thrive. A lack of power supply, investment capitals, difficulties in marketing, distribution of products, communication problems etc. are a few of the problems that choke SMEs in Nigeria. While the obvious solution to the aforementioned problems will be the Nigerian Government and concerned institutions and authorities coming to the rescue and making entrepreneurship and SMEs a priority. This will solve only a part of the numerous problems MSMEs face in the country.
One of the factors responsible for Chinas’ economic prowess is the maximization of her key asset, a large population. China utilises this to strengthen the economy and in turn, increase the Gross Domestic Product (GDP). Nigeria has a strong human asset as well and can use this to raise the numbers in an unbelievable manner. For instance, if one of the 37 million registered SMEs employs at least one individual, 37 million Nigerians have joined the workforce and strengthened it. This will largely affect the economy immensely. MSMEs are undoubtedly key to the growth of the Nigerian economy. But like the USA, China and EU, she will need to look inward and identify with her peculiarities and how they can be factored into making the economy stronger and enviable.