" ITREALMS: Corporate governance key to SMEs growth

Thursday, July 30, 2015

Corporate governance key to SMEs growth


ITRealms


Stakeholders have agreed that absence of corporate governance is the major hindrance to growth of Small and Medium Enterprises (SMEs) in Nigeria, reports ITRealms.

They said that structure is a fundamental element of corporate governance that could catapult start-ups to the next level of business ladder wherein they would be able to attract funding as banks and equity investors are looking for scalable businesses that could guarantee return on investment.

The Chief Executive Officer, W-HBS Limited, a ManagementConsultancy firm that represents organizations prominently in financial matters, LanreOniyitan, addressing a gathering of start-ups, Thursday, at the quarterly SME Capacity Development Forum organized by the Republic Media Limited in Lagos, decried inability of start-ups which include kitchen and cottage businesses to build structures that would serve as roadmap for their businesses.

ITRealms gathered she told the audience that structure must include differentiating the business from the owner, having bank account that bears the business name, business process/manual/systems that define duties and keeps business going even in the absence of the owner, growth plan, predictability of where the company will be in next 10 years.

She said it is wrong to go to commercial banks for funding as start-ups because they have not built enough structure. Banks, she said, are looking for companies that can guarantee return on investment, saying that start-ups should organize themselves into cooperatives to be able to attract fund especially from Bank of Industry which could lend as much as half a billion Naira of SMEs.

She stressed that for a company to access the fund it must be able to affect farmers and the youth, adding that the Central Bank of Nigeria (CBN)guarantees its SME to the tune of 50 per cent and expect the company to collaterize the rest 50 per cent.

As part of the Corporate Governance, she told ITRealms that payroll must be consistent as investors and lenders are equally after such details. She also said that in such fund one must not ask for too much or too little, stressing that one must engage a professional financial consultant to be able to package the vision of the start-up to be able to access fund.

Speaking on Alternative Security Market, Mohammed A. Mohammed , representing Nigerian Stock Exchange (NSE) said the bane of SME include lack of corporate governance, poor management , absence of visibility study, inexistent accounting system, lack of business and succession plans.Other sources of hindrance to SME growth are inconsistent government policy, lack of basic infrastructure, security and accessing funds at cutthroat rates.

He also spoke on the criteria for listing in the stock exchange and guide to alternative finance which include approaching a Growth Ambassador who would tell potential canditates that it is achievable, institutional service providers, structuring the business into departments, staff structure, and a turnover that is up to N50 million a year.

A representative of AIICO Insurance, OlusolaAjayi stressed the importance of insurance even as he advised start-ups to take up certain covers like fire and burglary, good life, children education, pension for corporate risk management just as the Managing Director, TFS Finance Limited, Mr. Eddie Osarenkoe, addressed the issue of strategy in business.

The convener of the Forum and Managing Director, The Republic Media Limited, Mr. Monday Ashibogwu, told participants at the event with the theme “Tackling Challenges with Emerging Opportunities” explored potentials in Small Business Funding, and advised SMEs to buildfinancial inclusive business to be able to attract funding.

Cyriacus Nnaji/GEE

ITREALMS ... everything news digitally!

No comments:

Featured post @ITREALMS

Sophia Oluchi Nwafor of Urum wins Anambra State 'Most Innovative Content Creator' - ITREALMS

ITREALMS ... making leadership SENSE with digital news! A student of Nnamdi Azikiwe University, Awka, Anambra State in the Department of Eco...