The definition of Small and Medium Scale Enterprise [SME] according Central Bank of Nigeria [CBN] is an enterprise that has working capital (excluding land) of between N5 million – N500 million and labour force of between 11 and 300. It is complete with MSME. The ‘M’ before the SME is called Micro, and that used to be from N1 million – N5 million, but has been reduced to N1 million – N3 million by Nirsal Micro Finance Bank [NMFB], a Micdro Finance Bank [MFB] owned by CBN. This was stepped down because of the phenomenal increase in poverty in the country, Nigeria. NMFB further subdivided the Micro or cottage enterprises into 3:
– MINI MICRO which is N1 – N500,000.00,
– MICRO which is N500,001-N1.5million and
– MICRO PLUS which is N1.5 million – N3 million.
The whole of these 3 ranges assume 1 to 10 employees, excluding cost of land and property. Note, this is operating i.e working capital, not starting capital. That means these are cash for servicing cash flow, not fixed assets.
Now, N3 millions – N50 millions means small business while N50-N500m is Medium enterprise. Small have employees of 11 to 50 excluding cost of land and properties in the capital flow while medium has 51-300 employees.
Beyond this, it is taken to be big/large businesses. But how many businesses in Nigeria is working with operating / working capital of up to N500 millions? This translates to the fact that apart from government organizations, Ministerial Departmental Agencies [MDA], regulating agencies eg Ministries, FIRS, Customs, SON, NAFDAC, NCC, etc and then Multi National Companies [MNC] eg TotalElf, ExxonMobil, Agip, Shell, MTN, Shoprite, SPA, etc, too few of Nigerian companies can operate over N500 million working capital with up to 500 fulltime employees excluding cost of lands and buildings. That means 99% of our businesses are Micro and Small enterprises i.e businesses with N1 – N50 millions working capitalizations. That is a terrible comatose economy. Why will people get job? Which companies can employ people? If you name is Nigeria economy, can you carry the weight of employment?
The highest employer of labour outside government is not employing up to 4,000 full staff [ie non casuals and contract staffs] while a single company in US, most Europeans and Asians, some single companies employ over 1million. There are American companies that have over 2 million employees in their payroll even in one campus. In our economic systems here, most times, we resort to bribing people with unproductive job even when we know the person is not going to produce not a dime, even sharing money to people.
Knowing this What Kind of Person Ought You Be?
You need to get into real involvement in a practical “hands-on” entrepreneurship as an employee because you’re not sure the day you’ll loss your job, a student because no matter what you are reading, entrepreneurship is a must course.
Leader Mike Ihezue writes from Port Harcourt.