It is indisputable fact that the current crisis (Covid-19 Pandemic) is posing threats beyond what most governments can handle – especially, in terms of economy. Economic structure has been struck deeply by the lockdowns and social-distancing policies. Most affected are small and medium enterprises (SMEs), i.e., regular entrepreneurs which involve lots of friends and family members that mostly rely on daily income to feed themselves and their families.
However, let’s first understand the concept of small scale industry in Nigeria as there is perception that only those that have millions of naira in their businesses are only called small scale industrialists.The federal and state ministries of Industry and Commerce have adopted the criteria of value of installed fixed capital to determine what a small scale industry is, and in this respect, the value has varied from N60,000 in 1972; N159,000 in 1975; N250.000 in 1979; N500,000 in 1986 to a fixed investment of not more than N2,000,000 in 1992 and N5,000,000 in 2003 and beyond. These figures are exclusive of land and building and subject to government determination and the prevailing objectives of public policy.
In the wake of second tier foreign exchange market (SFEM) and system analysis program {SAP), this value has now been reviewed and subsequently, increased to five million naira. Since this happened, there may be a need to classify the small scale industry into MICRO and SUPER MICRO business, with a view to provide adequate incentives and protection for the former. In the meantime, any business or enterprise below the upper limit of N250,000 and whose annual turnover exceeds that of a cottage industry currently put at N5,000 per annum is a small scale industry. The National Directorate of Employment (NDE) concept of a small scale industry has been fixed to a maximum of N35,000. By and large, this is important to let people know that they can obtain loan to expand their businesses if they keep some particularly documents always.
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After the World Health Organization (WHO) declared COVID-19 a pandemic on March 11th, 2020, huge impact of this virus on peoples’ lives wax stronger. The novel coronavirus outbreak has a severe impact on the livelihood of households and business activities – resulting to drop in global demand for goods and services, declining consumers’ confidence, and a slowdown in production among others. With this issue of the pandemic, a lot of programs have been put in place to help small scale businesses glow in post Covid-19. Some burning questions that need urgent answers are: “what does the future hold for small scale entrepreneurs (SMEs) and what policies can help them get back after COVID-19?” However, this Covid-19 pandemic has shown us there are four (4) important things to take very serious, most importantly – after Covid-19, below;
Proper Record Keeping: People doing businesses should have record of their customers’ ledger – so that it will make them to forecast their revenue in term of sale and get in touch when there is a new goods. This will also enable them to keep day-to-day transaction which is financial record for them to know the progress of their business because a lot of people doing people usually thought that they can memorize all what is going on in their businesses.
Financial Management: You must know, down to the last dime, where the money in your business is coming from and where it is going in order for your business to thrive and succeed which is cash flow for a business. If you are the owner of your business, you need to allocate a salary for yourself every month so that you just won’t be going inside the purse of your business to carry any money for your need or your family.
Borrowing Money: Another major thing is borrowing money to finance the business. Borrowing money such as loan to finance a business is good but people usually make mistake of using the money for renovation of shop or company which will not generate revenue to their business. If a person borrows money, he/she ought to use the money for buying goods that will generate revenue at the end.
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Register Your Business With C.A.C (Company Allied Act Matter): The truth is, as seen, people don’t like to register their business with C.A.C which is good. This is because they will be able to monitor your people after you and also use that opportunity to expand your business.
With the above points, if small scale businesses can take these serious, they will progress and see a lot of opportunity because the importance of small firms in rural areas and big cities could also be seen in economic benefits of shopping locally. Small businesses contribute to local economies by bringing growth and innovation to the community in which the business is established. So the federal government and state government know the important of it; they are looking for ways to help them.
Presently, the Federal Government through the Central Bank of Nigerian (CBN) with various circulars and pronouncements has announced some stimulus packages which is N50 billion as CBN Covid-19 Intervention Fund for SMEs. The scheme shall be funded from Micro, Small and Medium Enterprises Development Fund (MSMEDF) and the eligible participating financial institution for the scheme is NIRSAL Microfinance Bank (NMFB).
Albeit, there are a lot of opportunity for small scale businesses post Covid-19. The people doing businesses need to re-strategize, re-tool and re-plan on how they do there businesses. This is because, businessmen need to (always) be able to present their financial position of their business at any time, and not only when they want to obtain loan – that they will be in urgency in looking for ways to draft one.
BELLO Idris Opeyemi is a business-writer, an opinion writer and a 300level Accounting Student from Ahamdu Bello University, Zaria.He can be contacted via [email protected] or 07068412138