By Ese Erinmwingbovo.
The economic development of any society is measured primarily by employment generation through increased business activities and industrialization.
Such economic development is centered on the availability of infrastructural facilities and capital, especially to Small and Medium Enterprises (SMEs), known to be the engine of economic development, driver of employment and the laboratory of innovative ideas.
This sector of the economy has been acclaimed to account for about 70% of employment and generate up to 90% of business activities annually in USA.
While such data is not readily available in Nigeria, the support for small business in most parts of the country is very weak despite the potential to provide employment and revenue for the government.
The challenges faced by most small businesses and entrepreneurs are lack of Infrastructural facilities, inability to secure capital and poor skilled labor force in addition to other pervasive societal ills- lack of security, corruption, high level of dishonesty etc.
The public sector is often responsible for setting the stage for employment generating investment by the private sector; creating enabling environment for entrepreneurship.
The Edo state road construction and rehabilitation activities by the present government are one integral part of such infrastructural requirements for economic growth.
In order to have impressive economic growth and industrial development, states must have integrated policies and programs that address all facets of the challenges confronting small business.
Such integrated policies and programs are often called –Industrial and small and medium enterprises (ISMEs) policy.
The management and funding of such policies could be public-Private partnership, modeled along the line of Small Business Administration (SBA) of the USA:
- Development of Infrastructural Facilities /Industrial Parks
Infrastructure plays an important role in industrial development.
The provision of developed land, building, water facilities, sewages , power connection, access roads and common facilities areas will free up capital for young and upcoming investor to channels such capital primarily to the core business model and management.
The current practice whereby an investor spend a lot of money in land acquisition, development , building, water , sewage and power connection including power plant purchase discourages investment by tying up capital that would otherwise be used for the core business.
Hence the provision of these infrastructural facilities through the development of industrial parks by government ( SBA ) and lease them to entrepreneurs will facilitate investment , boost economic growth and create employment that will generate revenue for the state.
- Capital – The availability of capital is at the heart of any business venture. Without finances there will not be investment. Government must provide budgetary and fiscal tools to drive investment thereby creating jobs.
The state government should provide Capital subsidy scheme under the SBA model. Under the scheme, interest on loan for industrialization should be in single digit (5 -7%) with five to ten years payback period and 12 to 24 months moratorium.
The present situation where loans are awarded for over 20% interest rate and the requirement of collateral by way of developed property is not progressive and does not promote investment; most of the investors especially the young, vibrant and innovative entrepreneurs cannot afford such collateral.
- Small business Administration (SBA)
The united state of America Small Business Administration (SBA) was created in 1953 to help Americans start and build small businesses.
The SBA provides loans, training, education, development, management, administration and monitoring of businesses.
SBA loan programs are government–backed guarantee on part of the loan, designed to enable private lenders to make loans available to creditworthy borrowers who would otherwise not be able to secure loans from conventional institutions.
In additional to nurturing business, it also helps in trade, marketing and sales of goods and services.
- Edo State Small Enterprise Administration (ESSEA)
Edo state can enact Edo state small enterprise Administration act, similar to SBA whose primary responsibility is to facilitate the creation and nurturing of SMEs through partnership with the private sector.
The ESSEA should provide subsidized government-guaranteed loan to facilitate the creation and nurturing of SMEs.
The (ESSEA) administration can partner with Local Banks, Bank of Industries, African development banks, World banks and wealthy citizen through venture capital outlay as bases for the funding of ESSEA.
The state government may have a direct investment in certain areas to emphasize interest and drive government policy preferences like Agriculture, food preservation and processing industries.
- Encouragement of Local businesses
The state government should patronize the local businesses by enacting a direct policy of purchasing goods and services from the local businesses before going out of the state and local government.
This keeps the community naira circulating and helps the local economy. Also all businesses must hire 50% of their various levels of their work force from the local community in which the business is cited and apportion 50% of their profit in supporting local communities and state in area of their choice in which they do business.
The economic development cum poverty alleviation in Edo State required vibrant integrated policies that are based on public-private partnership, that drive job creation and provide the state much needed revenue while reducing societal vices.
