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Redefining Enabling Environment For SMEs (2)

Last week we made the point that so much is being said of enabling environment with very little being done. We also raised the case of small enterprises and taxation. After thoroughly reviewing the plethora of challenges confronting small businesses in Nigeria, I came to the conclusion that there is no reason why any microenterprise in Nigeria, defined appropriately, that is less than five years old should pay any form of tax whatsoever.
First, most microenterprises suffer infant mortality and die within five years of their birth. And this is official and not a peculiarly Nigerian phenomenon. All over the world, new businesses are like human babies. The first five years is usually very difficult for them. So we find that infant mortality is high among small and microenterprises, like it is with humans in many countries, especially poor countries. Why should baby companies that are yet to survive pay taxes? Do children and infants pay taxes? And nobody should get me wrong here by thinking of the so-called infant industry argument of post-independence Import Substitution Industrialization. This is a matter of proven life expectancy for this category of firms.
We can give them a deserved tax holiday for the time of their infancy. Beyond that, one could safely assume they will survive and the tax them appropriately. This life expectancy is the standard expectation for microenterprises all over the world. It means that the first five years are usually difficult for them, just as it is for human children. So why should they be taxed during this period when survival is uncertain? And it is not even taxes alone. All kinds of levies are slapped on infant organizations that barely know why they were formed. In other words, they are yet to test the theoretical strategies they brought to the market to see if they will make money, especially in the hostile Nigerian environment. That is certainly not enabling environment.
Upon all the environmental challenges, the moment one opens a shop, the first thing one finds is that some clueless individuals will come to ask for all sorts of payments, ranging from pension remittances to signage fees and levies. We need to give our startups, and in particular in the micro and small enterprise sector, some breather. That way they employ more people and produce more. Such rational tax reform strategies, involving tax holidays, reliefs and abatements, fit into my idea of enabling environment. And I bet you, it will not hurt our finances. What may be hurt are the finances of tax collectors and economic renteers who brutally extract rental resources from these taxpayers for their own private benefits. That also is not enabling environment.
We are told that the law is an ass. I think government is the real ass, going by some of its acts. For instance, to prevent people from obstructing traffic, government imposes a fine that is so disproportionate that nobody will actually pay it. Sometimes such fines ramp up to as much as N50,000 for very minor traffic offences. We all know that only very few people in all of Nigeria are capable of paying such an amount (especially when payment is demanded on the spot). Even those who are capable of paying such high penalties are likely to do so only if they can relate the fine of N50,000 to the offence. Some people are arrested for merely pulling up the roadside to ask for road direction. This is not the nature of an enabling environment. Hostile implementation of defective laws repel, they do not enable anything.
Moreover, in almost all cases, there are no road or traffic signs warning people not to stop there. So they usually are forced to settle the officials or hired thugs who usually “hide in the woods” and arrest people at the slightest attempt to commit an offence. In other climes, officials will help motorists to obey the law by asking them to keep moving where they have no warning signs. Here they help you to commit the offence. This is why there is so much hatred for certain government officials among motorists. The idea of “hiding in the woods” and taking people unawares speaks volumes of the crass lack of integrity in the revenue drive itself. Any government that is run by respectable people should dissociate itself from such a “gunboat revenue collection” conduct.
The argument for unreasonably high fines for minor traffic offences is that the deterrent is in the size of the fine. The proponents believe the high fines will deter potential offenders. If you think that way you are wrong. In an environment in which “egunje” is part of the culture and poverty is palpable even among those driving SUVs, this strategy does not cut it. It merely creates an avenue for some people to defraud both the government and the citizens. That too is not enabling environment.
Enabling environment is the provision of industrial parks with basic infrastructure to help budding entrepreneurs. Beyond water, light and roads, which are vital, we should be talking about industrial parks that understand the commonalities of different kinds of enterprises or industries; parks that have adequate security, sanitation, communication and medical facilities. The former minister of industries, Charles Ugwu, had a good concept of these parks. I had the privilege of discussing it with him during his tenure. Sadly, he did not enjoy the longevity of tenure that was needed to implement his good ideas and as usual, every great idea in Nigeria’s government dies with the promoter. That concept of industrial parks fits into my idea of enabling environment. It may not be an innovation but there are a lot to be gained from collocation and common services.
Enabling environment is the reform of our educational system that will prevent teachers from teaching the children things that are not relevant to their success. Any educational curriculum that is not aware that the way money is made today is completely different from how it was made by the parents of today’s teenagers fails flat on its face. Today’s kids who hope to make money through the same old strategies used by their fathers need to think again. The times have changed. How to make money has also changed from what it was even a mere 10 years ago. Perhaps it is time for us to read the book ‘Rich Dad, Poor Dad’ all over again.
Even the way schools are built (their physical outlook) is changing. The ambience of the school environment and the setting of the classroom are evolving. They now come complete with e-learning systems as basic. What is taught in today’s schools should reflect the new atmosphere of the new generation. To them, enabling environment includes the liberty to do some internet surfing and some degree of pinging while the professor rides on with his theories. Of course, they will surely miss a few points of the lecture but never mind, they will download much more after class. That is enabling environment for today’s learning.
The sad story of the Nigerian artisanry sector is common knowledge. Enabling environment is finding out why our artisans cannot deliver a clean job. It is also finding out where the boys from the neighbouring Francophone countries learnt the artistry and craftsmanship that has become part of their artisanry work. They now dominate the construction industry in Nigeria. Thanks to Nigerian hospitality and the absence of xenophobia in Nigeria. I hope we are aware that most Nigerians no longer give serious finishing jobs that demand craftsmanship to their kinsmen because of the substandard nature of their work. Finding answers – right answers that help retrain and return craftsmanship to Nigerian youth – is within my definition of enabling environment.
Emeka Osuji

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