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Despite High Foreign Exchange Rate, Inflation, Business Owners Trudging on –Bello

Damilola Bello is a small scale business owner and business cluster leader and Senior Business Strategist, Small Business Growth Partner at Flutterwave, a fintech company that provides e-payment infrastructure for service providers across Africa. In this interview OLAOLU OLADIPO, she talked about the challenges being faced by small and medium scale businesses in Nigeria. Excerpt:

Can you kindly give an appraisal of the prevailing economic and business environment?

The major issues we have been having are the twin issues of inflation and the exchange rate. As we speak today, the exchange rate is high. The cost of importing goods, shipping and clearing them (the goods) has gone so high. I saw a report last week suggesting that goods imports into the country have dropped to about 40 per cent. Even the cost of purchasing goods and services for personal consumption has gone up too. Those who make and manufacture things locally do so with exorbitant costs. Unfortunately, for manufacturers, they cannot sell these goods at the price that the people can afford. The implication of this is that the volume of sales of manufactured goods has gone down drastically. That’s what I can say about the prevailing economic situation in the country.

From the way you’ve spoken, the situation is dire, how are your members surviving and keeping afloat?

I don’t know how any economic situation can grind businesses to a halt. What we are doing is to have regular conversations on how to surmount the situation. We have deployed some kind of strategies such offering some form of discounts to our customers here and there. We are also using several strategies to get our customers to buy our products and services.

Can you be more specific on how the issue of taxation has impacted negatively on the operations of your members?

Taxation has not really been the main issue because I remember that the government decided in its own wisdom not to tax small scale businesses for some years. If it is consumption tax, that is being paid by higher scaled businesses.

But some businesses in the country complain of huge and multiple taxation. Are you saying your members are not being negatively impacted?

I believe that it is only a big manufacturing concern for those who have a staff size of over 15 who have one issue or the other with huge and multiple taxation. If my community members are buying or using products and services being offered by the big concerns, it will definitely show in the cost of commodities and services being put out or offered by the larger scaled concerns. That is when the complaints will be. I can say that it is an indirect impact that the issue of taxation is having on our people. Like I said earlier, it will impact the cost of goods and services of our members.

As a business owner, how do you want the government to intervene in the twin issues of foreign exchange hike and clearance of raw materials that your members use?

I am not an economic expert but I am sure that there are so many factors and ways that the government will need to look down and say ‘you what? We need to find a way to strengthen the naira. I know that there was a time that the Central Bank (of Nigeria) was trying to do one or two things in that direction. I mean to shore up the value of the naira to allow for importation of goods and services, especially raw materials by our members. There is a hike in the cost of inputs such as the raw materials which are sourced from places that are far off away from the country’s central economic hubs such as Lagos, Port Harcourt and Abuja. If the roads were good and transportation very good too, this will not really be the issue that we will be grappling with. I know someone that tried to send foodstuffs from Benue State to Lagos but is facing many hassles because they are afraid of insecurity coupled with the fact that the roads are terribly bad, which means that you have to spend a longer time on the roads. This will ultimately make these raw materials to perish faster. That’s the major thing that we have been complaining about for a long time. We have been calling for constant electricity supply. We have been clamouring for an enabling environment for businesses to thrive.

What about your members who depend on raw materials from outside the country? How are they coping?

I don’t think our members source raw materials from outside the country. I’m not sure about that. Our members have places where they buy their materials here locally but if there is any raw material that we are buying outside the country, the cost of buying them boils down to the issues of foreign exchange. Let’s assume that you buy your materials abroad for $5, which is sourced for N100, that will go for the sum of N500 which is not so expensive. But if the same item now goes for N1,500 you can now see that it has become so expensive. That’s a huge leap in the cost of production for our members. That’s what the issue is.

Are your members getting any form of support from the government and what kind of support are you getting?

I know that the government has set up some supporting institutional structures for the SMEs such as SMEADAN but I have not heard of anything from them for a while. I know that some of my members are applying for small business grants. I mean the ones that the banks offer to them. They take loans too from some non-governmental organisations that are not linked in any way to the government but we have not gone to the government for any aid.

Are you now saying that your members are not feeling the impacts of SMEDAN?

Personally, I haven’t gotten any kind of feedback from them.

As a business cluster leader, how best do you think the government should assist small businesses?

I will urge the government to consider setting up business clusters in all the 36 states of the federation to have startups and to nurture new and old businesses across the country. I think this is what we need at this time.

How do you want the government to assist in terms of providing markets both locally and foreign for your members?

I think just working to better the economic environment will have a ripple effect that will solve this.

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