Professor Chris Onalo, registrar/chief executive officer, Institute of Credit Administration (ICA), has attributed the mortality rate of small and medium enterprises (SMEs) to the unfavorable manner the multinational companies settle contract obligations with them. Onalo, made this claim at a recent business luncheon in Lagos. He said that blue chip companies and multinationals including their conglomerates that outsource businesses to the SMEs should adjust their payment policy standard to favour the SMEs.“Our national reorientation needs to be addressed. Most of the times 70 per cent of the SMEs that go into extinction is as a result of many factors but chief among those factors is that SMEs are subjected to slow payment response to their invoices. If payment date is 30 days, cut it to two weeks within which SMEs invoice must be paid, so that they can fly,” Onalo said.
According to him, long wait before payment would be made for service rendered could starve the SMEs of fund to attend to other business obligations. “This scenario can cause the SMEs to fold up because before you pay, other things would have eaten deep into his profit,” he said
He also pointed out other problems militating against the growth of the SMEs. They include poor management and low capacity building. He also called on successful entrepreneurs to mentor and encourage younger entrepreneurs. “Those entrepreneurs who started with nothing but have become multinationals and conglomerates, have made it impossible for the young entrepreneurs to come down to them. They are afraid of sustaining what they have established forgetting that they need to impact that strength and trait that enabled them to be successful businessmen today.
Onalo observed with regret that in spite of the large consumer market in the country, Nigerians are not yet enjoying consumer loans at the moment. “We have not seen what constitute consumer credit yet. If you are taking credit far above your income, you have planned to become a distressful person because it is above your income.For the economy to stand firm, there must policy initiative that encourage the manufacturers of goods and services to produce in mass and use credit to sell continuously,” he said.
By Dike Onwuamaeze