SMEs make substantial contribution to GDP – Elumelu
By Ibidunni Banjoko
Tony O. Elumelu, CON, Chairman of Heirs Holdings and Founder of the Tony Elumelu Foundation said that the Small and Medium-sized Enterprises (SMEs) have substantial contributions to any economy.
Quoting available data, Mr. Elumelu noted that SMEs in Nigeria contribute up to 48% of national GDP, account for 96% of businesses, and provide 84% of employment. He specifically stated that SMEs are the lifeblood of any economy, and that countries that prioritise the success of SMEs position themselves for wealth creation.
Elumelu disclosed this at the 9th Lagos Public Relations Stakeholders’ conference which had the theme, “Leadership and Poverty Eradication”, held recently where he was represented by Niyi Onifade, Managing Director/CEO, Heirs Life as keynote speaker.
He explained that the development of countries like China, Germany, France, and others can be attributed to the success of their SMEs.
“In a country of over 200 million people with 40% of the population classified as youths below the age of 35 years, SMEs can create meaningful employment opportunities that will stall the alarming talent drain across the country. Government must create an environment and structure to enable capital flow freely across the country.
“The best way to do this is to incentivize the free movement of capital through the growth and development of small business enterprises. SMEs have the capacity to create opportunities for people to feed themselves and care for their families,” he said.
Mr. Elumelu argued that, to drive financial inclusion, leadership, governance, regulation and structure have a key role to play, adding that restrictive policies should be relaxed to encourage more people, especially rural dwellers to access financial services. He also advocated that regulatory requirements should be flexible and favourable to financial providers, which would then allow them to create more value-adding products and services for people.
“More importantly, our leadership must create rules and regulations that encourage growth and not stifle creativity. The success of any country is a testament to its leadership and its governance structure.
“Poverty alleviation must consist of deliberate programmes that reach the grassroots, and dogged commitment to implementing and tracking the plans, must not be the same as usual,” he said.
“Financial inclusion and social welfare programmes have been identified globally as panacea for poverty eradication. When people have access to financial services such as credits, loans, savings, life insurance, and others, they can fend for themselves and run sustainable businesses that would create a ripple effect in the country’s GDP.
“But access to these financial tools remains limited in Nigeria. We are still one of the top three unbanked countries in the world with 40% of our population living without access to financial services,” the ace banker and financial expert said.
On insurance, Mr. Elumelu said: “In terms of access to life insurance which could guarantee financial security for people and their loved ones, the insurance penetration rate is way below 2% in our country. This exposes a larger share of our population to risks, and even creates a huge class of people who remain dependent on the small percentage that seem to be well-off.”
In all, he encouraged the media stakeholders to play an important role in promulgating key messages that can influence people’s minds to make the right choices.
“The media is a very powerful tool that can be used to drive financial inclusion and social welfare in the country. Many of our people are ignorant when it comes to why, what, where, and how they can get certain financial products.
“Our media practitioners should actively utilize their platforms to sensitize, educate and inform the public on ways financial products and services can help improve their living conditions. It is not enough to report news; the media must also be accountable for informing the public of life-saving information that will enhance the quality of life. All of us, from the public to the private sector, must see ourselves as stakeholders and work together to get the job done,” he stated.
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