A business enterprise involves business activities initiated for the production of goods and services to meet consumers’ demand with the aim of making profit. A business enterprise can be micro, small, medium and large sized. For the purpose of this article, we shall limit our focus to Micro, Small and Medium sized Enterprises (MSME). Basically, MSMEs form a major component of any economy in the world. Its impact on any economy cannot be underrated.
The importance of MSMEs is highly recognised even in developed countries of the world but unfortunately MSMEs have not played the significant role they are expected to play in Nigeria majorly due to lack of financial support and other major factors. Consequently, it has hindered the growth and development of Nigerian economy.
Therefore, we shall take a weighty look at the importance of MSMEs to the Nigerian economy:
Job Creation: Unemployment rate in Nigeria is an epidemic to the populace. We do not need a soothsayer to tell us the its negative impact on the growth of this country. Hence, the need for MSMEs to reduce the rate of unemployment and create more job opportunities in Nigeria.
Income Distribution: Creation of MSMEs can provide a lasting solution to uneven distribution of income that we are currently experiencing in Nigeria. This will result to free flow of income, this is because on the average, there will be an employment for a working class Nigerian.
Poverty Reduction: Poverty is a bane to any economy. MSMEs performance improvement is able to reduce poverty because it leads to an increase in income of employees and by extension induces a higher increase in the numbers of employees. Invariably, simultaneous increase in employment and labour productivity will reduces poverty rate in Nigeria.
Increase in Investment: An increase in investment will lead to an increase in economic growth. Therefore, the role of MSMEs is to promote investment in the economy. This will generate flow of income and in turns can further lead to more investment.
Utilisation of Local Resources: By encouraging MSMEs in Nigeria, local raw materials will be fully utilised. This will curb the excesses of imported over exported goods and services thereby leading to a favourable balance of trade. More so, the activities of Nigeria investors can attract their foreign counterparts to also invest in Nigeria.
In summary, it is obvious that MSMEs create a niche for both individual and economic growth. It is therefore paramount to encourage the need to support and establish as much as possible MSMEs in Nigeria. To bring this to fruition, some of the factors hindering the establishment and sustainability of MSMEs such as inadequate capital, poor infrastructures and low financial support should be properly addressed.
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