VP Osinbajo At The 27th Edition Of Nationwide MSME Clinic In Ebonyi On 05/03/2020

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REMARKS BY HIS EXCELLENCY, PROF. YEMI OSINBAJO, SAN, GCON, VICE PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA,  AT THE MSMEs CLINIC IN ABAKALIKI, EBONYI STATE ON THE 5^TH OF MARCH, 2020

PROTOCOLS

I bring you all very warm greetings from the President of the Federal Republic of Nigeria, President Muhammadu Buhari.

The President has asked me to congratulate you, the people of Ebonyi, The Salt of the Nation, as well as the government of Ebonyi State for being the first State of all our national MSME Clinic to have an MSME rerun, in other words, the second MSME Clinic.

If you may recall that in the first edition, neither the Governor nor I, was able to attend. However, when the Governor asked that we do this rerun, he mentioned it again to me at the National Economic Council that we make sure that the rerun comes very quickly, to organise the date because of the very important partnership between the State and the Federal Government.

So, let me congratulate His Excellency, Governor David Umahi, for a job well done not just in organising this, as I said, but also always for his mature collaboration at all times with the Federal Government and his leadership which is very important not just in the South East, but in the entire nation. I want to thank you for the warm hospitality you extended to me and members of my delegation.

I am encouraged by the number of outstanding MSMEs and individuals that I have had the pleasure of interacting with alongside the Governor this afternoon as I came. Based on what I have seen from the creative and passionate small businesses that are participating in this event today, I am confident that the rapid economic transformation of Ebonyi State and indeed Nigeria, is imminent.

Small businesses we all know, are the engines of growth of our economy and this is not mere rhetoric. It is a proven fact which explains why the Federal Government has consistently worked to create an enabling environment for businesses to thrive, especially small businesses. These efforts are evident in our Ease of Doing Business reforms which continues to be celebrated, not just locally, but internationally especially in the World Bank rating. And many of us can recall that in the last World Bank rating, we moved up very quickly, taking another twenty-four steps and we were declared to be one of the ten best reforming economies in the world. I think this is on account of the fact that we are committed to transforming the MSMEs and the business environment.  Asides from that, we have a whole new Finance Act. Many of us are familiar with the fact that the Finance Act 2020 introduces a wide range of tax incentives for small businesses and that the Act was signed into law on the 13th of January this year.

The principles that came with the Finance Act are given concrete expression to what we intend to achieve. Notably, the Finance Act completely exempts companies with a turnover of less than N25million a year from paying any Companies Income Tax at all. So, for all small businesses, businesses that turnover less than N25million a year, you are not required to pay any tax whatsoever. For businesses between N25million to a N100million a year, they will now pay an Income Tax at a significantly lower rate than what they paid before it is now at a lower rate of 20%, (from the previous 30% rate).  So, there is a 10% reduction for companies that make less than N25million to a N100million.

In a similar vein, the Act now makes it clear that services provided by Microfinance Banks are exempted from VAT. So, because Microfinance Banks lend to small businesses, we now insist that by the law, they are no longer required to pay VAT.

It is important to emphasize that small businesses must take full advantage of the opportunities offered by the MSME Clinics.  Just as the MSME Clinics provide an opportunity for the Federal Government regulatory agencies to let small businesses know about their requirements and business procedures, MSMEs are also expected to use this opportunity to bring up the challenges that they face and look for possible solutions alongside the regulatory agencies.

Today we brought several regulatory agencies; Bank of Industry and one of the lending institutions, the Corporate Affairs Commission (CAC), NAFDAC, SON, and several of the other regulatory agencies.  Part of the whole idea of the clinic is to bring these regulatory agencies right here to meet with the small businesses so that they may have the interactions, with the prospect of being able to see each other are and know what the requirements of each other are. We can always have a better business environment and more fruitful relationships between our small businesses and several of the regulatory agencies.

Just as some other State Governments have done, I would urge the Ebonyi State Government to build on the achievements of this Clinic by doing some of the following:

(i) the first is the creation of a one-stop regulatory shop for all of the regulatory agencies. What this means is to have one office somewhere, where our regulatory agencies can come and set up shop so that all businesses can see them here in Ebonyi State as opposed to going to Lagos or Abuja or wherever they are stationed at the moment.  This will enable small businesses to interact easily with the regulatory agencies.

(ii) the second is the organisation of a State version of the MSME Clinics. I know of course that there is already a very robust environment for small businesses here, but I think it’s not a great deal if we can have a State version, which of course, will involve the Local Governments of these MSMEs Clinics.

(iii) the third is that by extension, we are getting State regulatory agencies also to key into the spirit and letter of MSME Clinics.  In other words, encourage the States MSMEs Clinic to partner with the Federal Government in order to work together for a better business environment for small businesses.

Some of the consistent feedback we have received from MSMEs is that the high financial burden in buying equipment.  These are equipment they require for their businesses. So, for example, a cluster of tailors may require a special monogramming machine and of course, one individual tailor may not be able to afford it. And this is one of the problems that MSMEs have.  Sometimes their equipment is so expensive. I know from the State Governor that he bought several machines for MSMEs.

But what we want to achieve also is what we described as a Shared Facility, which is a facility which allows clusters of businesses to come together to share expensive machines provided by the government. Now in this place, the Federal Government, in collaboration with the State Government are supposed to bring these Shared Facilities where we to put these machines that are too expensive for individual businesses to buy, so that business clusters and the clusters of those who are manufacturing, those who are trading and those who are making shoes and bags can benefit from the use of expensive machines which will be put into these clusters.

The other thing that we do with these clusters is that they have been pre-certified by relevant agencies so that we already register them with the Federal Government regulatory agencies so that there is no need for the MSMEs to go through the process of registering again.  We register the facility, so there is no need to back to NAFDAC to register. We will get certification for the facility.

Distinguished ladies and gentlemen, having heard and noted some of the other challenges facing small businesses, we will prompt action on these issues in the next MSME Clinics and update also the National Economic Council on top of this development. I have heard already quite a few of the complaints that small businesses have; some have to do with credit, especially low interest credit, some have to do with purchase of machine, many have to do with the problems of the regulatory agencies and the time it takes to be able to register products whether with NAFDAC or SON.  And I assure you that we will take great pains to ensure that all issues affecting MSMEs, and including “overzealousness” government officials, are addressed comprehensively in order to foster growth and deepen economic inclusion. We will also strive to ensure that MSMEs stay informed of how Federal Government agencies can play an enabling role in advancing their businesses.

In the effort to solve challenges for and champion small business owners across the country, we will continue to promote initiatives that we have for supporting MSMEs.  Some of these initiatives include:

• The recently approved $20million technology fund which is run by the Bank of Industry to support young innovators and encourage the technology ecosystem’s development.  I see quite a few of these young generation today. I saw a gentleman who building a helicopter already.  So, some of these young generation need assistance. Some of them are technologists and innovators. It is for this type of purpose that the Bank of Industry has the special fund for innovation and technology.

• The second is the N90billion in soft-loan facilities offered by the CBN through the National Microfinance Bank to agriculture-based MSMEs;

• The rollout of NAFDAC’s new e-registration platform and a 75% cost-reduction for product registration, and;

• A partnership between SMEDAN and the Corporate Affairs Commission to register MSMEs en masse and build a comprehensive database to help plan, coordinate and deploy policy responses to some of the challenges our small businesses face. The whole idea is to ensure that everybody who has a small business is able to set up a corporate entity and can benefit from loans, both local and international facilities.

These are just a few of the initiatives to ensure an empowering and inclusive business environment for our small businesses. We as Federal Government will do our part, but we must work together at all levels, Local, State, and Federal Governments, as well as Civil Society Groups, Business Groups, and Chambers of Commerce. We all have a duty to ensure that our small businesses thrive and all the work being done is coordinated for our people.

In closing, I wish to once again congratulate the Governor of Ebonyi State and his team for your focus on creating wealth for the so many young and talented Nigerians who live here. This is seen in the enormous investment in the empowerment of small businesses, including the creation of an office for Human Capital Development & Monitoring which we have seen at work, especially in the organization of this particular clinic. This is aside from the massive infrastructural developments going on here, which is so evident at every turn. Well done indeed and congratulations!

I thank you once again for your kindness and warmth and I commend the participants for making the time to attend this clinic, but also for ensuring you have taken the full advantage of all the opportunities presented in this Clinic. From the quality I have seen, I have no doubt that MSMEs from Ebonyi State will do well in the 3rd edition of the National MSMEs Awards.

So, I encourage you all to apply for the awards and participate in that process.

Thank you for listening.