Small and Medium Enterprises (SMEs) play role in reducing the rate of unemployment in a country can’t be overemphasized enough. Their contribution to the Gross Domestic Product (GDP), especially on the African continent is highly significant.
Most especially in developing countries, SMEs are responsible for a large proportion of business ventures, while contributing to job creation and global economic development.
The World Bank estimates that 600 million jobs will be required by 2030 to accommodate the world’s increasing workforce. Thus the development of SMEs ought to be a high priority for the government.
We had a chat with Seye Olurotimi, the founder of MSME Africa, a platform for enterprise development, capacity building, news and resources for micro small and medium enterprises in Africa. He is also the convener of MSME dialogue, a quarterly event where issues that affect MSMEs are discussed and solutions are proffered to them.
He is a member of the MSME community of practice for the Nigeria Economic Summit Group and also an international partner for World Business Investment Angel Forum.
Seye is a mentor to some entrepreneurship programs such as TEF, Faith foundation, Leap Africa, owing to his interests in MSMEs, startups, learning and development.
Considering the contribution of SMEs/MSMEs to Nigeria and Africa, has the government done enough?
Well, I would say no and that’s not trying to castigate the government. But I think the government can do a lot more.
And I think it’s relevant we look at how they contribute as it is not just Nigeria or Africa. SMEs contribute up to 50% to the GDP, up to 90% of businesses, and close to 60-70% of employment are provided by MSME.
So that tells that they are the bedrock of the economy, but they are not getting the right attention. Why I said also is the fact that government should understand that their major role is to provide an enabling environment, not handouts and stimulus.
True that COVID-19 came and the government needed to provide palliative packages, stimulus and interventions, but the major thing they need to do is provide an enabling environment, and if I am to rate government in that aspect, I think they are still lagging behind.
A report from PwC on MSMEs 2019 says that 21% of the cost of MSMEs goes into electricity. So the question is, why have they not fix power? why did they not provide the infrastructure we need? So the government is still lagging behind in providing an enabling environment in terms of power, infrastructure and regulatory environment.
However, it doesn’t mean they are not doing anything, obviously, they are doing a lot of interventions, especially in Nigeria, but they can do a lot more by providing an environment that will let us thrive and grow.
Does the government policy scare off foreign investors looking at SMEs/startups on the Africa continent?
Obviously, yes, there is what I call policy somersault where there is a particular policy in place and then suddenly there is a change without considering how much investors have pumped into a particular sector.
A look at the case of Lagos state government banning the operation of ride-hailing platforms like Gokada and Max.ng, where we saw the founders meeting with the governor for what appears to be a rosy journey and in the next few weeks, they were banned.
This is a policy somersault that scares off investors as they are not sure of what happens next.
So I think, there is a lot to grapple with in our policy environment. Everyone wants to invest in a place where they are sure that in the next 10 to 20 years, their investment is protected.
However, I still think investors have some confidence in the African economy because when you look at Kenya and Nigeria, you see the amount of funding going into fintech.
So I think there is investor confidence, but there could have been a lot more if the policy environment in Africa is better than it is right now.
Why MSME Africa?
I started my first business in 2011 and by 2014, I packed up to seek a job which I did for two and a half years after which I came back to run my business.
However, I knew there was a gap, because there were a lot of things I did not know and I had to learn, so I told myself, ‘If I could help one SME/MSME avoid what I went through so that they know what it means to run a business, then I will do it.
That was the drive that led me to start MSME Africa, however, before the platform actually commenced, I began writing articles on Daily Times and other platforms about SMEs especially on branding, and I started getting speaking engagements, however, I thought we can do more than branding by proferring a holistic solution to SME challenges in terms of capacity development.
Thus, during the advent of COVID-19 in 2020 when I had a lot of time in my hands, I started MSME Africa basically because of what I went through trying to run a business and the gap that I actually saw within the space in terms of capacity development.
What has been the milestone of MSME Dialogue since its inception?
MSME dialogue is fast becoming a flagship event. MSME dialogue started with three editions, the first one had over 150 people in attendance. That was quite a traction we weren’t expecting, thus we got lots of calls from different parts of the world, with most of them coming from Africa.
The last one we held, had close to 300 people at a live event and we have extended our tentacle to speakers beyond Nigeria.
We have grown in reach, number of attendees as well as attracting sponsors around the event. We have been able to grow a community of MSMEs where we give them information on how to grow their business while providing them opportunities.
As a member of the world business angel investment forum, what factors do investors consider before funding a venture?
Angel investors just like venture capitalists are very much interested in the viability of your business, but of course, venture capitalists are more concerned about the equity part of your venture.
Angel investors may want to consider taking equity sometimes, however, what they look out for mostly is your pedigree, management team, track record, scalability, advisory board, number of new customers you reaching and volume of your conversion.
Why is branding necessary for SMEs?
SME branding is important because the brand you’re building today will determine how far you will go moving forward.
A lot of time, because you have not built a brand at the early stage of your business, by the time you are now trying to define what people will make of you, they will not disagree with the picture you are trying to present because you have actually confined yourself to a particular place.
Branding is about perception, it is about what people think and feel about you. It doesn’t matter if you are starting small, you need to create a very good perception with your audience.
Branding makes you bigger than who you really are and for you to attract a premium and not peanuts, you will need to build a big brand around your products or services as that is what will command respect for you in the marketplace.
As a mentor in the TEF and other entrepreneurial programs, what do businesses need to avoid to achieve success?
The first thing you need to do as a business owner is to separate your person from the business, a lot of time people get entangled in seeing the business as an extension of the person, this kind of mindset will not allow the business to grow.
As much as possible, start paying yourself a salary, such that when you exhaust it, you won’t dip your hands into the business account. You may remain broke for some while, but your business can’t afford to be short of funds.
The second is business development, which is sales. Some SMEs get one big contract and they literally go to sleep, waiting for the next big contract to come.
This is a pitfall, businesses must avoid, every day you must be at a stage of business development, closing a deal, waiting to send an invoice or expecting a payment, at least one of these things must be on your table.
The third pitfall to avoid, is not paying attention to personal development or capacity building. Passion can’t run a business, there must be room for capacity development as your profession may not afford you the luxury of having the knowledge of running a business.
Another crucial one is not having a mentor. Sometimes some people feel they have reached the point of not needing any guidance, but they fail to realize that, mentors have gathered invaluable experience to put them through.
Getting a mentor, doesn’t have to be a big name, it might take forever to get one, however, you can always get the less busy ones with a significant track record who you can learn from.
Lastly, there is a need for financial discipline. We need to learn how to delay gratification. Not all the money in the company’s account is your money.
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