Nume Ekeghe writes on the N75 billion set aside by the federal government to help small businesses ravaged by the Covid-19
The Covid-19 pandemic has ravaged economies across the world with many countries, including financial heavyweights like the United Kingdom, spiraling into a recession.
Nigeria also hasn’t been spared. The country depends on crude oil exports as a main source of income and the pandemic has reduced the global demand for energy, crashing international oil prices.
The Minister of Finance, Zainab Ahmed had predicted that the country is set for a recession.
“For the government, it has been a particularly trying time,” President Muhammadu Buhari had said earlier this month, at a Ministerial review summit.
“As a result of the poor fortunes of the oil sector, our revenues and foreign exchange earnings have fallen drastically; our revenues have fallen by almost 60 per cent.”
To deal with the pandemic shocks to the economy, the Buhari administration has decided to look inwards, resolving to strengthen local businesses.
Through the Central Bank of Nigeria, the administration has provided financing for several schemes that cut through agriculture, health and industry.
In line with this, the administration is also now helping MSMEs stay in business through a N75 billion National MSME Survival Fund and the Guaranteed Off-take Stimulus schemes.
According to the Minister of State for Industry, Trade and Investment, Mariam Katagum, the schemes are a cluster of grants intended to support vulnerable small businesses in meeting their payroll obligations and safeguards jobs.
In a speech delivered at a media briefing last month, Katagum noted that the scheme has four main objectives: to stimulate direct local production in the 36 states of the federation and the FCT; to augment the payroll obligations of businesses in the health, production, education, hospitality, and food production sectors; to provide N50,000 grants each to an additional eligible 100,000 MSMEs; and the program is expected to save over 1.7 million jobs.
Lifting small businesses
The Survival Fund is the larger component of the two schemes with about N60 billion budgeted, according to the Director-General (DG) of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Dr. Dikko Umaru Radda.
“The MSME Survival Fund is a conditional grant to support vulnerable micro and small enterprises in meeting their payroll obligations and safeguard jobs in the MSME sector,” Radda, who is also the scheme’s publicity chief, said.
“The scheme is estimated to save not less than 1.3 million jobs across the country, and specifically impact on over 35,000 individuals per state,” he added.
The federal government has said special focus would be given to female-owned businesses. At least 45 per cent of the businesses funded must be run by a woman. Business run by people with special needs would also take at least five per cent of the available slots.
The scheme is expected to impact on service providers like bus drivers, taxi drivers, ride-share drivers and artisans such as electricians and plumbers.
In one component of the scheme, businesses with three to 50 people on their payroll will be eligible for payroll support for between three to 10 staff for three months.
These staff members would be paid between N30,000 and N50,000. At least, N500,000 workers would benefit from this pay roll intervention which targets small businesses in the hospitality industry, private schools, factory owners, law firms and hospitals.
Another component of the Survival Fund is the award of N50,000 grants to 100,000 small businesses.
According to Katagum, “this group of beneficiaries is encouraged to take advantage of registration through MSME Associations, registered Business Clusters, Trade Associations and Unions.”
The Survival Fund has also been designed to help 250,000 small businesses register with the Corporate Affairs Commission (CAC) for free. The Federal Government will pay CAC for each registration; all small businesses that require formalisation are eligible for this component.
Also, the fund provides a one-off payment of N30,000 as transport grants to selected artisans such as mechanics, taxi drivers, hairdressers, Keke Napep riders, Okada riders, plumbers, electricians, etc.
According to Radda, the main objective of the Guaranteed Off-Take scheme is to “boost production capabilities of small businesses with the view to ensuring that they remain in business.”
He also added that the duration of implementation would be same as the Survival Fund and target beneficiaries remain, “micro and small businesses registered in Nigeria.”
According to Katagum, under the scheme, the federal government will be guaranteeing the off-take of products such as face masks, hand sanitizer, liquid soap, disinfectant and processed foods.
Beware of fraud
On September 21, the federal government opened the online registration portal for the Survival Fund. According to Katagum, within the first 24 hours, approximately 138,000 individuals had logged on, created profiles and completed the first stage of registration with Kano, Kaduna and Lagos as the lead states.
She also noted that all successful applicants received SMS and email verification with a list of requirements for the second stage of the application, which commenced on October 1.
“Applicants will be required to upload details supporting their applications which will be verified and if successful, approved for disbursements,” she said.
She also addressed reports that the online portal for the registration had been under a series of cyber-attacks.
“We would like to assure the public that the application system is secure with multiple levels of encryption and any information loaded on the official application page is safe from cyber-attacks of any kind,” she stressed.
However, she warned the public to avoid falling prey to scammers who seek fees to help with the application.
“The Survival Fund will not at any time or for any reason request payment or facilitation fees to access the Grants,” Katagum said.
“The public is encouraged to report any such nefarious activities to the nearest security agents and follow up with a report to the PDO (Project Delivering Office) via the mediums provided on the website.”