" ITREALMS: Between obligation and survival of SMEs - ITREALMS

Monday, September 03, 2018

Between obligation and survival of SMEs - ITREALMS

All may not be well with the much professed ease of doing business in Nigeria, despite the launch of ‘Ease of doing business code’ especially for the Small, Medium Enterprises (SMEs). REMMY NWEKE writes on the need to understand the obligation of the government and survival of SMEs for common good.
Nowadays, for every business let alone the Small and Medium Enterprises (SMEs), there is no doubt that  due to technological advancement in the contemporary world including Nigeria, that most of the tools to propel growth and success largely depends on source of power supply, moreso steady electricity availability and supply, will affect their tax fulfillment or otherwise.

Doing business in every society entails that business owners and government owe each some obligations which pave the way for the enabling environment to prevail and businesses to thrive. One of this obligatory facts is payment of taxes to the government to enable them provide what is required for improved society to flourish, be it business or private life.

An open sourced online encyclopedia, Wikipedia, defined tax as a mandatory financial charge or levy imposed upon a taxpayer such as on workers' income and business profits including SMEs by a given government in order to fund various public expenditures. Just as we were told that public corporations are funded via taxes.

Public expenditure, according to experts at Wikipedia is spending made by the government of a country on collective needs and wants such as pension, provision, infrastructure, etc. Even as until the 19th century, public expenditure was limited as laissez faire philosophies believed that money left in private hands could bring better returns.

Reducing Labour Market:
And because every grown adult female or male, may not find a work space in government or public institutions, entrepreneurs exist in various scales beginning as SMEs; usually made of enterprises that employ fewer than 250 persons and which have an annual turnover not exceeding 50m euro, about N21,135,600,000.

The Small and Medium Enterprises Development Agency ofNigeria (SMEDAN), led by the Director-General/Chief Executive Officer, Dr. Dikko Umaru Radda, says its mandate, according to SMEDAN Act of 2003 is to promote the development of the Micro, Small and Medium Enterprises (MSME) sector of the Nigeria economy, describing micro enterprises as  the bedrock for SMEs.

SMEDAN also pointed out that poverty, due to lack of access to income earning opportunities and lack of capacity to take advantage of the opportunities, is a social malaise that is threatening global prosperity in general and national economic growth and development in particular, thus, a well-developed MSMEs sector has proven to be one of the most veritable channels to combat poverty.

So, SMEDAN said its positioned to serve as vanguard for rural industrialization, poverty reduction, job creation and enhanced livelihoods, as well as working in liaison with other institutions in both public and private sectors to create a good enabling environment of business in general, and MSME activities in particular.
This presupposes why the like of Ezebunwa Tailors, came to be.

Ezebunwa and optimization of creativity:
A typical clothing and fashion design outlet, Ezebunwa Tailors, set up with five employees, each have a sewing machine attached to them of various brands and for them to be productive, at least two are mechanised and for the fashion designing aspect that brings in the income based on the creativity of designers, but these cannot be optimised manually.

So, there is need for power supply to be steady, either through the public electricity power supply formerly known as Power Holding Company of Nigeria (PHCN) and currently operating as electricity distribution companies, under the privatisation effect of PHCN by the federal government or the self-generated power supply with generating sets.

One key benefit, Nigerians were told of privatisation is to make the services of hitherto public corporations readily available, same promise precisely was made on power sector of the economy, on availability of electricity supply to more number of the populace, mainly to boost the SMEs including the artisans, vulcanisers, fashion designers, retail shop owners and small media outfit based on influx of social media in the economy. The like of LindaIkeji Blog is battling the patronage space of advertisers with the mainstream media among others.

Lumos Mobile Electricity:
MTN Mobile Electricity also known as MTN Yellow Box, is a partnership between MTN Nigeria and Lumos, makers of PayGo off-grid solar home, which can only be used for lighting up rooms, charge mobile phones and power appliances like fans, Light-Emitting Diodes (LED) television sets, laptops, tablets - all day, every day, but no related industry machine of any guess.

To join the Yellow Box, customers must have an active MTN SIM dully registered and after installation, they can pay with ease via their MTN mobile lines, as low as N25,000 which includes one-off N20,000 payment and maybe N4,500 for 30 days, outside installation charges.

Although Ezebunwa Tailors cannot use Yellow Box, the likes of LindaIkeja can, without much ado.

Dilemma of MSME:
According to Ezebunwa Tailors, a normal day starts with making patterns clothe materials brought in by customers who may want them for one occasion or another. His dilemma is that there is no steady electricity power supply during the day. So, as early as 7:30am his location in Oshodi-suburb of Lagos, witnesses power supply interruption brought near mid-night, that is, an approximated six to seven hours which terminates at 7:30am or before 8am; when ordinarily that should be the time for the power to be available and steady too in a work environment and commercial area like Oshodi-Lagos.

Over a period, he could not force workers to stay over the night working for fear of damaging people's materials, especially when they are catching sleep. In fact, previously it has led to some staff injuring themselves because they were sleepy and fingers entered the wrong place like the machine needle, leaving the employee heavily injured which cost him additional money to keep such staff healthy and return to work. When reminded on the need for staff insurance, his argument was that those personnel prefer to be paid well enough than to talk of insuring them, then on whose account or resources, he retorted?

Also, he told ITREALMS that every over-night duty has to be paid extra which most customers are not willing to support, because despite producing good designs, Ezebunwa Tailors have to be competitive to remain in business, in spite of outrageous billing system by Ikeja Electric.

When asked why he had not requested for prepaid meter, Mr. Ezebunwa confirmed to ITREALMS, he did apply and even visited the Okota office of Ikeja Electric, where he was told by officials that his Lagos suburb of Oshodi, has been divided into parts and his street, Oshodi Road by Church Bus stop, is not on the list of supplies for now coupled with the lack of prepaid meters.

Additionally, the chief designer at Ezebunwa Tailors, says for them to remain in business, he had since invested in generating sets for own 'independent power supply' to ensure that seasons like Christmas and Eid festivals do not elude them. Yes, it has brought about more patronage by customers but then, sustaining such own 'independent power supply' is a dip in the income of his enterprise, due to daily consumption of fuel, which is not less than N5000 on a normal day until when the generating sets began to consume more fuel.

He migrated to diesel and Lister industry generating set to ensure sufficient power supply of all his machines at the same time without fear of unwarranted power surges. This, he lamented has not been easy because the landlord gave a condition for installation of Lister, perceiving it as progress in business, despite not knowing if he took loan to procure the generating set. As gathered, this landlord had requested that whenever the Lister is on, he should also have electricity supply in his part of the compound in exchange for the land to mount the equipment. Left with no other choice, Ezebunwa agreed.

In order to augment the scarce power supply, he introduced board charging ports for neighbours at a token of between N50 and N100 per battery full charging.

Growth challenges for SMEs:
However, desirous of improving his business, Ezebunwa engaged an auditor to help him do the account and process the tax clearance certificate required to access certain bank loans. Initially, it took a while to situate where his outlet at Oshodi-Lagos should be reporting for tax matters. This was resolved with the knowledge that the Federal Inland Revenue Service(FIRS) has an office at Osolo Way, Ajao Estate; due to some contracts and anticipation that more Ministries, Departments and Agencies (MDAs) may engage Ezebunwa Tailors.

For the Lagos State Inland Revenue Service (LIRS), he is satisfied with the engagement, but largely cannot understand why getting tax clearance certificate from FIRS should take over a year to come. This, for Ezebunwa is discouraging, moreso an expansion plan, to an extent, he asked the consulting auditor to request FIRS to outline what is holding the process of the certificate, and as at the time of this report, such outline is still being expected.

Ikeja Electric, keeps promise:
Reacting to the power situation in the Ikeja zone, including Oshodi-Isolo, Head, Corporate Communications, Ikeja Electric (IE), Mr. Felix Ofolue, said they kept promise to customers, especially by recent unveiling of aggressive metering plan commencing distribution of single and three phase prepaid meters across its network, in keeping with its promise to ensure that its customers are metered, thereby reducing the incidence of estimated billing.

The first batch of meters, he said, have been delivered by Mojec International Ltd, MBH Power and Beacon Power Services Ltd, which allowed for remote data access and vending, and contributes significantly to the energy conservation advocacy of IE.

He noted the meters, largely tamper-proof, will also help IE deal with recurrent cases of illegal meter bypass, energy theft and other illegal issues that have plagued distributing companies (discos) with regard to older and less secure meters, stressing that though the meter itself was free, an installation cost may apply.

He explained that customers would receive meters in line with a schedule of distribution that was feeder based, after they had filled out the application form which is available at any IE’s offices and the official website.

“Once the customers have been approved, location surveyed and other relevant technical assessments carried out, our technical partners overseeing that specific location will handle installation of the meters” he said, pointing out that over 85,000 meters may be installed in the first roll out phase which will take place concurrently across the six (6) Business Units in IE’s coverage area. The roll out is different from the MAPS roll out agenda, which follows the National Electricity Regulatory Commission (NERCs) Meter Asset Provision Regulation Approval by the Federal Government, set to commence towards the end of the year.

Above all, the advantage of encouraging SMEs cannot be over emphasized as it’s hoped that government will deliver on its part of making the business environment conducive to further encourage entrepreneurs and other SME operatives to fulfill their obligation to the state with pride.

In a developing economy like Nigeria, the role of SMEs needs upscaling given the number of youths entering the labour market daily to tap from this because developing SMEs helps to achieve sustainable growth as a centralized theme, based on its vital role in the country’s over-aching production networks and economic growth of Nigeria. 

Some industry watchers at MAARG consulting, posited that contributions of formal SMEs are 50 per cent of total employment and 33 per cent of the national income of emerging economies.

Other advantages for SMEs may not be limited to encouragement of team spirit, availed with easy loan in most countries where its value is cherished, direct involvement of individual owners to assert requisite controls where expedient, instance decision boosts the process as market gets more dynamic.

Therefore, SMEs are now being considered to be important aspect of economic growth and dying economy like Nigeria, needs true SMEs to strengthen the economy and pave the way for more angel investors to pick interest.

SME charges lower rates to their clients by providing a quality business.  It’s a proven fact that when the state economy is in better condition, the SMEs flourish. In spite, SMEs are the boosters to the country economy by affording extra revenue and employment like Ezebunwa Tailors, the society will be better for it.

*ED, Ops

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*Carton of a small tailor by Kachimsicho Nweke - KC Arts

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