BusinessEconomic Mirror

SMEs: Panacea for economic growth of Kwara

By Mike Adeyemi
Perturbed by the recent World Bank report that ranked Kwara 30th out of 36 states including the FCT and the lowest in the North Central in the ease of doing business index, it is incumbent on the government to adopt SMEs as lubricant to rejig her poor ranking.
In Kwara state, it can be said arbitrarily that small-scale entrepreneurs dominate the work force; carrying about 50%. This is due to the unquestionable fact that government jobs are scarce especially for the educationally-disadvantaged.
However, the educated and enlightened also find themselves in this class wilfully or otherwise. Nonetheless, there are more less-educated persons in the class of small scale entrepreneurs because they are more classified as un-skilled labour and there is limited place for them in the competitive labour market.
The role of small and medium scale enterprises (SMEs) in a state economy cannot be underestimated. Small and Medium enterprises have been considered as the engine of economic growth and for promoting equitable developments.
They are seen as veritable engines for the development of entrepreneurial capabilities and indigenous technology which will generate employment in the country.
Most of the developed countries that gave prime attention to SMEs have been experiencing significant reduction in unemployment, increase in standard of living, reduction in crime rate, increase in per capital income, rapid growth in GDP, substantial local capital formation, high levels of productivity and equitable and sustainable industrial diversion and dispersal.
In the light of this, SMEs are of great impact in the areas of utilisation of local raw materials, employment generation, encouragement of rural development, mobilisation of local savings, linkages with bigger industries, provision of regional balance by spreading investments more evenly, provision of avenue for self-employment and provision of opportunity for training managers and semi-skilled workers. Above all, it can be generalized that small-scale enterprises are poised towards alleviation of poverty in any society.
Alas, SMEs have not been able to propel economic growth and development which are the quintessence for mitigating the effect of poverty, hunger, unemployment and low standard of living on the economy of Kwara State.
It is no surprise that in a typical and prominent Nigerian state like Kwara, the said benefits of small-scale entrepreneurship have not been fully harnessed due to certain factors which constitutes challenges to their attainment. The problems of SMEs in Kwara are financial problems; lack of infrastructural facilities; government unfavourable fiscal policies and policy inconsistencies; and internal characteristics and problems of SMEs.
This piece therefore attempts to discuss the factors influencing or determining the performance or effectiveness of small-scale enterprises as they act as economic engine of growth in Kwara state.
For the purpose of this analysis, immediate and noticeable factors affecting small-scale enterprises in Kwara state will be considered as: finance, infrastructure, electricity (power supply), management and accounting practices, government policy and educational and technical-know-how level(s).
The purpose of this empirical analysis however in the long run is to come up with propositions that can help manage these factors effectively such that the attendant benefits of small-scale entrepreneurship as an economic propeller and bait to ease of doing business can be achieved in Kwara state.
One salient factor that has had so much magnitude on the performance of small-scale enterprises is finance. To start up and maintain any kind of business, the availability of a reasonable capital base must be justified.
Finance is the life blood of a business organisation and no business can function properly in the absence of adequate fund.
Suffice to say that Kwara State Government has made remarkable contribution in the area of finance. The immediate past government in the state flagged-off N250 million micro credit intervention schemes for SMEs, designed to strengthen the capacity of cooperative societies to contribute in boosting economic activities in the state.
The fund was disbursed through 10 microfinance banks short-listed for the exercise by the state government. However, beneficiaries of the programme have been observed to be indigenous small scale.
SMEs establishment is considered to be important at present days. They involve in job creation in this modern day economy. In recent times it would have been noticed that the unemployment reduction all over the world is due to the lots of emerged SMEs.
Out of the SMEs contribution, there is a significant growth in GDP and proper money flow across the economy is noticed. SME charges lower rates for their services by providing a quality business. When the state economy is in better condition, the SMEs will flourish.
This is because these enterprises have great potential for employment generation, economic empowerment, poverty alleviation, improvement of standard of living, substantial local capital formation, achievement of high levels of productivity and capacity, means of achieving equitable and sustainable industrial diversification and dispersal, appreciable contribution to gross domestic product, increase harnessing of local raw materials and technological and export diversification.
For development to be sustainable, certain conditions must be met. These include continuous capacity of the various development institutions to bring about growth both in the economic, social and political sectors; a continuous quantitative rise in Gross Domestic Product (GDP); a continuous structural transformation of the economy, political capacity to implement development programmes; high rates of social and ideological transformation and radical changes in institutional, social, administrative and economic structures to be able to cope with new competition.
SMEs are therefore, the engine and lubricant for achieving sustainable economic development.
Economic development is the sustained concerted actions of policy makers and communities that promote the standard of living.

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