SME funding as panacea to Nigerian Prosperity

By Bayo Ogunmupe

According to the Nigerian Bureau of Statistics (NBS), Small and Medium Enterprises have contributed 48 percent of Nigeria’s Gross Domestic Product (GDP) in the past five years. They account for 50 percent of Nigeria’s industries and 90 percent of our manufacturing, in terms of number of enterprises. A 2020 World Bank report notes that most Nigerian SMEs do not grow, they remain stagnant or exit. However, a few exhibit rapid growth in productivity and scale. Indeed, some startups shape the Nigerian economy through new and more productive business models. The World Bank report also noted further that compared to large firms, SMEs are more likely to fold up permanently. But a strong SME dominated economy bolsters the economy’s resilience in diversifying the domestic economy, thereby reducing fluctuations in the global and private capital inflows. Sadly, poor SME funding, and overregulation threaten the sustainability of SMEs. In a 2020 survey, 57 percent of SME chief executives cited multiple taxes and levies and the absence of technological aid as challenges of SME growth. Lack of access to credit and overregulation remain the bane of SME development in Nigeria. Without finance to facilitate transactions, the entire SME supply chain comes to a halt. Trade finance becomes highly relevant here, by introducing liquidity via a Central bank of Nigeria (CBN) special allocation. One of the segments that has been impacted the most by the exit of large global banks from frontier and emerging market economies as economic fallout of the COVID19 pandemic was its subsequent impact on SME funding. Thus, financial inclusion in Nigeria is yet to peak as most SMEs operate in the informal sector and are largely unbanked. Hence their viability cannot be ascertained Indeed, the hurdles that impede growth in the informal market have not been effectively tackled. For example, customs clearance in the ports requires tons of paper documents which slow down trade activities by forcing unnecessary supply chain bottlenecks. These bottlenecks form a hurdle for most SMEs who require ease of doing business and valuable financial products offered by the banks to drive their growth plans. It is for this reason that I advocate a separate one trillion naira special funding allocation for SMEs. That was how China, India and South Korea escaped from poverty strangulation to transition into industrial societies. Digitisation is another enabling policy option for a rapid SME propelled industrialization. Moreover, the pandemic has accelerated the adoption of digital trade finance solutions by SMEs. While technology driven solutions are becoming more and more relevant, much of the trade finance sector, is still paper driven, with manual processes slowing down access to finance. To digitize trade finance, the entire ecosystem needs support to participate in how to unlock value. This includes how to integrate activities between role players and regulators, the banks and other non-bank financial institutions. This drives a concept known as digital trade ecosystem. It is an online platform that facilitates the exchange of data between partners in trade finance networks. It is a catalyst for this sector. While innovation and advancement in technology are important. To leverage the positive impact of digitization, there are issues that have to receive urgent attention. These issues will leverage the positive impact of digitization on SMEs. First issue is a focus on a system to facilitate coherent industry-wide solutions that can operate on the world’s scale. This is particularly relevant to Nigeria with the opening of the African Free Trade Area which we expect to be a big driver of cross border trade in Nigeria. The second issue is standardization. This is an important issue to the sector because only parts of the African Continental Free Trade Area finance process are subject to digital innovation. Which is why the end-to end digitization across the trade value chain remains fragmented. We need common language technology and credit scoring systems to facilitate faster access to solutions. Finally, we need to focus on more agility in the regulatory space. An example in this age paperless communication, is the limited acceptance of electronic documents and digital signatures on contracts by banks and other stakeholders. Millions of dollars of transactions could be freed up through the adoption of these digital tools. Digitization must be supported by easy foreign currency availability and the regulatory reform in the appropriate treatment of trade finance. However, Nigerian government failure to formalize the operations of over 34 million informal micro- small and medium enterprises (MSMEs) in Nigeria has continued to minimize the potential of the Nigerian economy. Latest figures from the NBS show that of the 39,654,385 SMEs in Nigeria, 34,413,420 operate informally. This makes it impossible for the government to regulate and harness full benefits from them; particularly in terms of taxes. As contained in the 2020 SME survey jointly conducted by the NBS and the Small and Medium Enterprises Development Agency (SMEDAN). The assets of the SMEs were valued at N8.41 trillion in 2020, despite the pandemic. If nothing is done to formalize this sector, we cannot fully optimize the potential of the Nigerian economy and the growth expected cannot be actualized because the informal space is very

Why Nigeria Straddles the Blind Alley

By Bayo Ogunmupe Of the many cardinal programmes embedded in the Buhari Presidential campaign, I cannot decipher a single promise fulfilled by President Buhari since 2015. With an array of lawyers in his cabinet, a senior advocate of Nigeria as his vice president, another as his attorney general; and yet another as his minister of works. None of them including other distinguished professionals could persuade him to stand by his promises and at least fulfill the most pressing one, that of insurgency, the widespread kidnapping, banditry and ethnic cleansing in Kaduna, Zamfara and Benue states. This he could do simply by approving the establishment of the regional policy force and the national Guard to relief the Nigeria Police Force from its onerous task of guarding federal roads, federal buildings, the nation’s dignitaries and judges. Sadly, Buhari just found himself enmeshed in the inanities of the time: kidnapping, banditry and ethnic cleansing in such states as Kaduna, Zamfara, benue and Plateau states. No positive solution he found for the abatement of the hostilities. Like former President Olusegun Obasanjo, he is just there playing power politics. Obasanjo withheld allocations due to Lagos state for no just cause. Obasanjo caused the impeachment of his fellow party man, Governor Rashidi Ladoja of Oyo state. There was no justification for it. Whereas, in other climes leaders engage in politics in order to empower the people, make people prosperous and eradicate poverty and squalor. For instance, Franklin Delano Roosevelt during his campaign promised Americans that when he becomes president he would eradicate poverty. And he did by establishing the Social Security Act of 1935 by which he paid old age pensions to indigent people 60 years and above. But in England, old age pensions started with the Elizabethan Poor Law of 1601. Can we get such examples in Africa? I doubt it very much because we straddle the blind alley instead of real life solutions. For Obasanjo, instead of rebuilding the flawed Nigerian Constitution 1999, he frittered away his time withholding monetary allocations to Lagos for no just cause. Viewing the Nigerian landscape with the spectacles of normative logic as an epistemological system of analytical reasoning and cognition, we see escalating insecurity as a justification for holding on to power interminably. Indeed, the foundation of sustainable economic growth in Nigeria was premised on single digit inflation threshold, however at the moment, our hopes have been dashed as inflation is galloping towards a three digit rate. Recovering from the pandemic in 2021, with our GDP rising above 4 percent and inflation climbing out of reach owing to our penchant for foreign consumer goods. The cost of living is now on the rise, high cost of food, fuel, energy, housing and with our ungovernable economic environment, insecurity has made life more dangerous than ever before. With escalating insecurity, government is eyeing a military handover rather than a peaceful transition between two civilian governments. Unwillingness to hand over to another civilian regime is the reason why he could not stop budget padding which a tech outfit BudgIT discovered in the 2022 budget. It discovered 460 duplicated projects valued at N378.9 billion inserted into the budget by lawmakers where padding has become endemic without any consequences and their complicit civil servants. Moreover, up to $400 billion of public funds have been stolen between 1960 and 1999, Another anti corruption agency, the Human and Environmental Development Agenda said Nigeria suffers illicit financial outflows of about $18 billion yearly. And according to a report by the US Department of Commerce, at least 40 percent of all procurement from public sector funds in Nigeria is lost to corruption. More than these, government has refused to force agencies to return unspent funds. They are the reason why government is straddling the blind alley. They want to hang on to power as long as possible given the timorous and timid habits of our people.

Notes you should read every week

By Bayo Ogunmupe

Being positive does not mean you ignoring the negativity around you; it means overcoming the negativity within you. The peace, happiness and effectiveness of your life greatly depends on the quality of your thoughts. On the average, most of your stress comes from the way you respond, not the way life is. Adjust your response and all that stress is gone. Truly, inner calmness among chaos is a superpower that frees you to focus more effectively on what actually matters. The trick is to be present. Don’t waste away all your days waiting for better ones the next moment. Just appreciate where you are today. You’ve come a long way, and you’re still learning and growing. Be thankful for the lessons. Take the lessons and make the best out of them. You don’t need to engage in every petty argument you are invited to. Take this to heart and your future self will appreciate it. Because as you age, you will learn to value your time, heartfelt moments with loved ones and peace of mind, much more. Little else will matter. Everyone you encounter is struggling in some way. Some people are just better at hiding it. So even when you have good reason to be angry, don’t be hateful. Rise up with boundaries and grace. Remind yourself that peace is not the absence of pain, but the presence of love. The bottom line is, in spite of the real world challenges you face, the biggest and most complex obstacle you will ever have to personally overcome is your own mind. In other words, you aren’t responsible for everything that happens to you in life, but you are responsible for undoing the self-defeating thinking and behavioral patterns that these undesirable experiences create.. Therefore, you can think better, which means you can tap into your subconscious and ultimately live better. Thus, think better when you are in the heat of a tough moment and take guidance from such practice at all times. What you think you become; what you feel you attract and what you imagine you create. Don’t talk—act; don’t say—show and don’t promise—prove. Persistence is omnipotent. Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent—President Calvin Coolidge-US president from 1923-29. Your perspective is always limited by how much you know. Expand your knowledge and you will transform your life. And the more you know the more you earn, and the greater your self-confidence. Which is why you become what you think about most of the time. The words you speak become the house you live in. Never give up on what you really want. It is difficult to wait but worse to regret.

Time to End Opaque Budgeting is Now

An editorial by The Guardian Following widespread padding in the 2022 National Budget by Federal lawmakers, there came bursts of outcry for a change in the budgeting process. Thus, the National Assembly agreed that by 2023 they will abolish the current envelop system of budgeting, which is opaque. This opaque budgeting results in the capping of funds notwithstanding the needs of a government ministry, department or agency. Instead, it would be replaced by the programme- based budgeting. Otherwise called Line, Item or Incremental budgeting, the opaque system of budgeting has for several years been receiving bashing from economists who described as archaic. Whereas, many countries have abandoned the opaque budgeting system in place of the programme based, Nigeria continued to practice it despite that it had done nothing to improve the economy or the lives of the Nigerian people. Under the arrangement, National Assembly members say there is an absence of a coherent and systematic of exerting legislative control over fiscal decisions and priorities of the Federal Government. Since we still have 10 months more to get to 2023, legislators should start programme based budgeting from now. Moreover, while signing the 2022 budget, President Mohammed Buhari complained saying: “I must express my reservations about many of the changes that the National Assembly has made to the 2022 Executive Budget proposal,” going ahead to enumerate, “some of the worrisome changes, the 2022 budget that I just signed into law provides for aggregate expenditures of N17.127 trillion, an increase of N735.85 billion over the initial Executive proposal for a total expenditure of N16.391 trillion.” Buhari further complained that “provisions made for as many as 10,733 projects were reduced while 6, 576 new projects were introduced into the budget by the National Assembly.” But the National Assembly members who worked on the Appropriation Bill before the Presidential assent promptly rebutted the Presidential allegations of budget padding or distortions, insisting that all the Legislature did to the Bill was the needful and within their legislative oversight. However, the import of these Executive/Legislative altercations is the stillbirth that the 2022 Appropriation Act has become. This much is implied in the President’s closing remarks when, short of withholding assent, he pointedly announced his supplementary budget, soon to be sent to the National Assembly. Apparently, this is to return to square one in the making of a truly acceptable 2022 Budget. Thus, the signing of the 2022 Appropriation Act was a mere ritual which, in the words of the President, was to sustain a predictable January to December fiscal year, as provided for in the Constitution. And this is the onset of the orphaning of the 2022 Budget and indicative of an economy still lost in the woods. As we await Buhari’s supplementary budget, it is appropriate for the federal lawmakers prepare for the adoption of the new budgeting system. With the key managers of the economy joining The 2022 Committee to create the Nigerian leader of their choice for 2023, we warn that opaque budgeting is an avenue to perpetrate corruption, budget padding and the like and that this is the right time it should be abandoned. This time 92 percent of our budget goes for debt servicing isn’t the time to continue with wasteful spending. This is the time to allow our budgets reflect reality. The dire straits of our economy and our indebtedness make it impolitic to divert trader money being handled by the Bank of Industry to the Ministry of Humanitarian Affairs. This is the time to curtail our penchant for spending wastefully. It is unrealistic for us to invent our way of doing things when we have no history of inventiveness. We can only imitate, and we should do so within reason. Legislators are expected to have their input in every budget not creating new projects without planning. Spending money without recourse to evaluation isn’t part of project management. We have members of the Commonwealth of Nations and North America to imitate. Budgets that are realistic and implementable are the way. Programme based budget system is in vogue, let us embrace it with alacrity.

To be Godly is to be Good

By Bayo Ogunmupe According to the Psalms of David in the Bible: “Good and upright is the Lord; therefore he instructs sinners inn his ways.” Psalm 25:8. How would you define “goodness” or “the good life?” The French philosopher Jean-Jacques Rousseau defined happiness as “a good bank account, a good cook and a good digestion.” Some would say the good life is physical. They think it doesn’t get any better than a long soak in a hot tub, a back rub and a drink at the pub. Others would say the good life is material. They think if you have the mansion, the Mercedes and the money, you’re living the good life. But the goodness isn’t about feeling good, looking good, or having goods. It’s about being good and doing good. And just like we need a clock to tell time and a ruler to measure distance, we need a universal standard for determining goodness. And we have one: God. “Good and upright is the Lord; therefore he instructs sinners in his ways.” Without a universally accepted standard for goodness, it becomes a grey area, a matter of opinion. Adolf Hitler thought annihilating the Jews was a good thing. Suicide bombers think killing innocent human beings is a good thing. And such thinking cannot be countered with a simple, “that’s not good.” What’s to keep a Hitler or suicide bomber from saying, “that’s just your opinion?” The word good stems from the old English word with the same connotation as God. It literally means to be like God. Goodbye is the shortened phrase for “God be with ye.” So, the universal standard for goodness can only be decided by one who is universally good, and that One can only be God. “The Lord detests the thoughts of the wicked, but gracious words are pure in His sight-“ Proverbs 15:26. Sometimes we say to people half in jest, “Try to be good, and if you can’t be good, be careful.” The idea that if can’t be good make sure you’re clever enough not to be caught. But in reality, our lack of goodness is no laughing matter. Goodness that used to meet a universal standard is now a matter of personal interpretation and preference. And an epidemic of public officials whose private conduct leaves us shocked hasn’t made things any better. James Madison one of the framers of the US constitution and who later became US president wrote: “The aim of every political constitution is to obtain as rulers men who possess most wisdom to discern and most virtue to pursue the common good of society.” Nowadays, surveys show that trust in our political and business leaders is at the lowest point on record. They have only two things in mind: to get rich and to stay in power. The Bible says, “Righteousness exalteth a nation: but sin is a reproach to any people,” Proverbs 14:34. You must get personally involved in politics to stop evil from triumph. The revered British statesman Edmund Burke said: “All that is necessary for the triumph of evil is that good men do nothing.” One person, plus God, can change things. Try to be that person.

Standing To Confront Bad leadership

By Bayo Ogunmupe

The spate of corruption and stealing in government necessitates the establishment of Aso Villa fellows like the White House fellows in the United States. The White House Fellows is a dozen of experts, a presidential Think Tank which sits weekly to solve raging issues in creative problem solving meetings. It reminds me of Brigadier –General Aminu Kano Maude, former Director of Finance, Army Headquarters who stole all the money allocated to be used to buy arms for the Army to fight Boko Haram. General Maude used the money to buy over 30 petrol filling stations, buildings and shopping malls all over Nigeria. It took over five years for the Economic and Financial Crimes Commission (EFCC) to trace the loot. The money was over N20 billion. The EFCC was able to recover 29 properties worth N10 billion. The EFCC is still searching for others. When caught while alive, EFCC couldn’t detain or prosecute him because of his links with the Fulani ruling caliphate of Kano emirate. It was only after he died of cancer that the embezzlement was made pubic. Along with the looting presided over by President Jonathan’s National Security Adviser, Colonel Sambo Dasuki, Nigeria cannot endure another lily livered leader who will allow his aides to loot Nigeria with impunity. Which is why we must confront and stop the 2022 Committee from foisting another clueless president on the nation. We don’t enjoy confrontation, but it’s impossible to grow without it. Healthy confrontation calls for speaking the truth in love. Just as God confronts each of us in areas where we need to grow, He expects us to do the same for others. Here are some guiding principles to help you criticize others without causing injury. One, talk to them not about them. Talk to them in private where possible, to be delivered graciously but firmly. Two, don’t exaggerate; give specific examples. Don’t hide behind words like, “I believe the Lord had shown me that you’re wrong.” Three, don’t leave them in a stew without clear direction on how to improve or what to do. The best approach is to calmly identify the problem and suggest ways it can be resolved. In the Nigerian political case, we are to get involved in guiding the politicians through the conventions to elect their flag bearers. Your goal isn’t to expose a politician’s weakness but to show the qualities necessary in the in-coming leader. Four, admonish like a good wife who criticizes her husband not to hurt him but to correct him. Be compassionate in criticism; confront rather than condemn. Healthy confrontation calls for your putting the other person’s well-being above your own. “The integrity of the upright guides them, but the unfaithful are destroyed by their duplicity,” Proverbs 11:3. Every honest or dishonest word and action either adds to or takes away from character. That’s what the Bible is saying in that quotation. You should therefore strive for integrity in all your dealings with others.

One Thing In Common With Life Regrets

By Bayo Ogunmupe Many people review their lives twice a year; during their birthdays or at the end of the year. For those who don’t know their dates of birth or those whose religious faiths do not permit birthday celebrations. As for me I review my life at the end of the year while leaving my birthdays for felicitations. Thus, December 31, 2021 was the last time I reviewed my life as a septuagenarian approaching the graveyard. Moreover, an old friend had regaled me with the circumstances of his retirement a week before. As the story of the retirement of Prince Adesumbo Ajibola triggered my memory about regrets and incidentally the day I caused my Nigerian Federalist news blog to be uploaded by my internet consultant. One of the features uploaded onto my blog was on regrets in life. In researching the feature I found that there are two major types of regret in life: things that we did and things we wish we had done. Indeed, all regrets are matters of commission and omission. But there is one key difference between the two, and that is how we tend to view those regrets later in life. While we sometimes regret things we have done, we are often fortunate enough to be able to reverse those situations, to apologize for them or to make amends with people we may have hurt. As an example , Prince Ajibola shared that many former high school bullies seek out the kids they tormented in the past; reconnect with them and apologize; with a positive outcome for both people. In these way, these regrets of commission can be fixed in some way. But the majority of our regrets fall into the omission category. Our biggest regrets, especially when we reexamine things at the end of our lives, are the things we didn’t do and the risks we didn’t take. Common regrets in this category include not asking someone out, not studying abroad, not studying law or medicine or a profession; not starting a business; not moving into the city and other missed opportunities. “People regret playing it safe.” If most of our regrets stem from failing to take chances, that’s an interesting lens through which to examine our thinking about risks. This, in particular applies to two major components of risk: psychological risk and financial risk. Psychological risk is represented by our fears of change, rejection, embarrassment and missing out on other fronts. These fears are what lead people to avoid going abroad or opting not to ask someone out. What we often fail to recognize in the moment is that many psychological risks in life are short term discomfort or embarrassment we feel when things don’t go our way, which rarely lasts a lifetime. Financial risk can be very different, depending on the context. For example quitting your job to start a new business could have real, lasting consequences for your family if your new venture fails. This is where having a baseline level of financial security is paradoxically essential to having the confidence to take risks. If you have no savings; live paycheque to paycheque or spend far beyond your means, taking a financial risk is much harder, unless you have nothing to lose. We think of a rainy day fund as protecting our downside, but it also increases our upside by increasing our ability to take chances. The next time you have a decision to make, especially when some risk is involved, carefully consider a lifetime of wondering “What if?” might compare to a few hours or days of discomfort or embarrassment. I know I would have regretted missing being inducted into the prestigious mastermind group, The Guardian Editorial Board if I had not tarried in pecuniary denial working as a freelance columnist for 30 years.