President Jonathan's Speech At The 8th Annual MSMEs Conference

Remarks by

His Excellency, President Goodluck Ebele Jonathan, GCFR

At the

8th Annual Micro, Small, and Medium Enterprises (MSMEs) Conference

Organized by the Central Bank of Nigeria

Tuesday 19^th August, 2014

PROTOCOLS

1. I am delighted to join you here today at this 8th Annual Micro, Small, and Medium Enterprises (MSMEs) Conference. Let me begin by commending the Management of the Central Bank for hosting this important conference yearly, in support of the Transformation Agenda of our administration and our joint commitment to inclusive growth and job creation.

2.              Micro, Small and Medium Enterprises (MSMEs) are recognized, all over the world, as the engine of growth in any development oriented economy. Due to their inherent labour intensive production processes, they also provide a viable platform for job creation.

3.              All over the developed world, the contribution of MSMEs to GDP averages about 47 percent. However, here in Nigeria, MSMEs account for only 10 percent of our GDP.As reported by the Small Medium Enterprises Development Agency of Nigeria (SMEDAN), there are about 17.3 million MSMEs in Nigeria compared to the over 40 million MSMEs in Indonesia, whose population is only a little greater than ours. Some of the reasons adduced for this disparity are the limited access to finance, low production technology, poor infrastructure and lack of market access.

4.              Ladies and gentlemen, these challenges call for more concrete and concerted measures to enhance, and expand the activities of MSMEs in our country. The focus of this year's conference - Charting Ways to Resolve the Problem of Access to, and Cost of Finance to MSMEs in Nigeria - is, therefore, quite appropriate. 

5.              There is no doubt that a vibrant MSME sub-sector is indispensable for achieving sustainable transformation of the Nigerian economy. As Africa’s largest economy, with excellent prospects of becoming one of the 20 largest economies in the world in the nearest future, it is imperative that the challenges confronting MSMEs are addressed frontally, at this time.

6.              Our administration has already instituted a number of reforms to improve the enabling environment and build strong institutions that would fast-track the progress of MSMEs. Given that the structural transformation of the economy remains our core priority, we are investing heavily in critical infrastructure to promote job creation and inclusive growth. We are aware that inadequate infrastructure increases the cost of production by an estimated 30 percent, making Nigerian goods under-competitive.

7.              The Federal Government believes that stable power supply is the bedrock of our industrial development and economic progress. It will not only reduce the cost of manufacturing and services significantly, it will also engender investment and create jobs. With these economic benefits in mind, we are vigorously implementing the power sector reform programme.

8.              Under this Agenda, the Power Holding Company of Nigeria (PHCN) has been unbundled, resulting in the creation and subsequent privatization of several Generation and Distribution Companies (DISCOs) across the country.

9.              I am glad to note that in spite of the initial challenges associated with new ventures, some of these companies are already doing well. It is indeed encouraging that the CBN is working closely with the Ministries of Petroleum Resources and Power as well as the National Electricity Regulatory Commission to address the funding issues related to gas supply that would increase power generation capacity to 5,000 megawatts within the next few months.

10.         Ladies and gentlemen, in view of the enormous benefits of backward integration with local MSMEs, our administration has also initiated policies to promote large-scale manufacturing ventures in our country. The new automotive policy has already received commitment from investors such as Nissan Motors, which rolled out its first set of locally produced cars in April this year. Our expectation is that the associated patronage of the automotive industry would significantly boost the sales and survival of MSMEs in our nation.

11.         We have also unveiled the new National Industrial Revolution Plan (NIRP), as the roadmap for national industrialization. The NIRP would provide a strategic link between the industrial sector and the agricultural sector, where we have comparative advantage. 

12.         To further boost job creation, and harness the huge potentials of our teeming youth, a multifaceted entrepreneurship programme, ‘You Win’ was launched in 2011.  So far, 'You Win' is yielding positive results. A new crop of innovative and youthful entrepreneurs are emerging from the programme, and employing many more in the process.

13.         The huge food import bill that is threatening our national food security posture is steadily being addressed and effectively reduced. We are working vigorously to decrease rice imports through several policies and by working closely with the farmers, big and small alike.

14.         On the back of several interventions by this administration, including the provision of improved seeds, fertilizer and irrigation support, and concessionary loans, our farmers were able to produce 7 million metric tonnes of rice paddy between 2012 and 2014. To complement our effort, the private sector is investing in the various aspects of the rice value chain. For instance, the Dangote Group has just announced plans to invest up to US$1 billion in commercial rice production and the construction of modern integrated rice mills across the country. 

15.         I would also like to commend the CBN for its immense support for our Agricultural Transformation Agenda (ATA), particularly through the Growth Enhancement Scheme (GES) under the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL). As a de-risking mechanism, this innovative scheme has provided guarantees and interest subsidies of over N29 billion for 158 agro-dealers. It is also facilitating the supply of improved seeds and fertilizer to the primary producers in the agricultural value chain, with visible results.

16.         As part of measures to enhance the contribution of MSMEs to economic growth, the Federal Government will establish a Wholesale Development Finance Institution (DFI), which will provide long term funds of up to 15 years for industrial development. Existing DFIs would be restructured for better performance and improved access to finance by MSMEs.

17.         Distinguished ladies and gentlemen, the enormity of the task ahead demands immediate and dedicated action. That is why I am kick-starting today, the disbursement of the N220 billion MSME Development Fund to participating financial institutions and State Governments for onward-lending to MSMEs across the country. At the same time, we are addressing issues such as money and capital market options for MSME Financing, leveraging technology for financial services delivery to MSMEs, financing techniques for SMEs in the oil and gas, agricultural value chains and services sub-sectors.

18.         It is my hope that the Executive Governors will seize the opportunity provided by their Special plenary session to showcase their efforts to promote inclusive growth through micro credit delivery, job creation, poverty reduction and economic empowerment. I will be presenting ‘The Entrepreneurship Awards’ to deserving State Governments, financial institutions, individuals, cooperative societies, donor partners and other corporate bodies, who have distinguished themselves in entrepreneurship development in Nigeria in 2013.

19.         Your Excellencies, distinguished ladies and gentlemen, I am confident that these initiatives will assist us in consolidating the remarkable achievements we have made in our efforts to structurally transform our economy. We must continue to work together to build on this progress, so as to achieve the major goals of the Transformation Agenda, including job creation and poverty reduction. Our people must be provided opportunities to live better and more productive lives.

20.         On this note, it is my honour to declare this 8^thAnnual Micro, Small, and Medium Enterprises (MSMEs) Conference, open. I wish you all very fruitful deliberations. 

21.         I thank you.