Why Nigeria's Regulatory Environment Is Vital For MSME Development - Muda Yusuf

Thursday, September 03,2020 / 05:30 PM / Bukola Akinyele for WebTV / Header Image Credit: IB Magazine

An Investor-friendly Regulatory environment is vitalfor the growth and development of micro, small and medium enterprises (MSMEs)in Nigeria.

The Director-General (DG) of the Lagos Chamber of Commerceand Industry (LCCI) Dr. Muda Yusuf gave this opinion as a guest on WebTV's "Economy and Politics" programme which discussed "MSME, Governance and CapacityDevelopment In Nigeria".

According to Yusuf, Nigeria has 41m MSMEs who aremajor drivers of the economy, and have been adversely affected by theCOVID-19 Pandemic.

Yusuf called on government agencies tocollaborate with MSMEs in order to improve productivity and generate largerinvestment inflows into the economy.

He said, the new Company and Allied Matters Act (CAMA)2020 is a welcome development for business which would create value and givefillip to the whole idea of the ease of doing business especially for smallbusinesses. According to him, the new requirements in the CAMA are good forSMEs particularly regarding the provisions for digital records, meetings and activities.

The Trade group leader made a strong case for aperiodic review of the CAMA legislations to reflect the economic and businessrealities in the country.

On the various interventions from the CentralBank of Nigeria (CBN) so far he agreed that it was a step in the rightdirection considering the huge financial gap in the economy. He stressed thatthe real sector was vital to the economy and stimulus plans should be withinthe range of N5 to N10trn.

According to him, most MSMEs complain about theirinability to access funds. They also refer to lending discrimination with loansgoing to businesses and individuals who may not be in the best position toutilize them properly.

According to the economist, there has to be a properframework for the adoption of a risk management approach to ensuring that thelending process is driven by transparency and accountability.

He agreed that MSMEs require capacity building andincreased level of financial literacy, to achieve sustainability in theiroperations. He also commended the Bank of Industry (BOI) for their support andengagement with small scale enterprises in the country.

In the area of financing he alluded to the fact thatthere was need for micro finance institutions to reposition their operation andprioritize funding for Micro-enterprises who constitute over 80% of the MSMEsin the country.

Key areas of improvement for the MFIs according toYusuf include;

Corporate Governance
Effective Supervision
Risk Management Framework
Capacity Development for Micro-enterprises
Advisory service for Micro-enterprise

Amidst the global economic uncertainties and loomingrecession the DG noted that an enabling policy environment was important toenhance investor confidence.

Policies like the foreign exchange management by theCBN should be liberalized to attract more investments.

"We need to improve on economic governance in orderto respond to the looming recession, indeed government agencies thatinteract with private enterprises must reform and improve their mode ofoperations. Nigeria needs the right investment space that encapsulatespolicy, institutions and regulatory framework" he said.

He noted that the conditions at the sea ports andvarious local terminals need to improve. He called for more reforms and greateraccountability by the fiscal authorities.

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