E-Business
The Role of the Government in Supporting SMEs for Economic Growth
By Adewale A. Adeyipo
The Government at various levels has in one way or the other focused on the performance of SMEs for economic gains and growth. While some Government in developed economies like the US & China had formulated policies aimed at improving and empowering the growth and development of the SMEs.
In China, State Owned Enterprises (SOE) were transformed into small and medium Non-SOEs, which provided an opportunity for more SMEs to be established in China. This approach of Non-SOE promotion policy led to the development of more SMEs, which contributed to China’s economic growth.
They make up over 99% of all enterprises in China today, while the output value of SMEs accounts for at least 60% of the country’s GDP and generates more than 82% of employment opportunities in China. (According to China Statistical Yearbook).
However, other Government focus on assisting SMEs to grow through soft loans and other fiscal incentives to promote the socio-economic development of the country like poverty alleviation, youth unemployment, human capital development, and improve the social welfare of the people.
For example, in China, the World Bank offered support through enhancing access to finance for underserved micro and small enterprises with US$100 Million in IBRD financing, including both lending and technical assistance. Before the project began, about 20,000 micro and small loans were disbursed to MSME clients in 40 branches per year, but by the project’s completion at the end of 2010, more than 60,000 loans were issued in a year — tripling the supply of credit to small businesses. Over three years, US$2.3 billion in MSME loans were distributed through recipient Chinese financial institutions.
The Bigger Problem
Nigeria’s population, according to the UN, stands at approx. 200M with a median age of 18, which implies the Nigeria youth represents 42.54% of the total population. According to Trading Economics, the unemployment rate in the last 5 -10 years has continuously grown by 4% and was 23.1% as at the previous report generated in Q3 of 2018.
Also noteworthy is the fact that approx. 500,000 youths graduate yearly with 47% of these graduate’s unemployable (Jobberman Reports). The Government is consistently finding it challenging to match the skills of these graduates to the available jobs in the market which in turn puts more pressure on the nation’s dependency rate of 88.2% (Trading Economics).
One may suggest that to address this employability gap and high dependency rate is to engage our technical schools actively and also revisit the curriculum of our institutions. Many have argued on the suitability of the faculties responsible for transferring knowledge to the students in today’s VUCA world. Not so much about the technical understanding of it, but more on the practicality of the same knowledge outside the walls of the classrooms.
Sadly, the fact is that these institutions are not enough and ill-equipped. While the Government has only been able to establish 156 approved technical schools (NBTE Reports) across the 36 states with an average of 4 technical schools per state, these statistics show that the technical schools available can’t match the current population of Nigerian graduates (500,000/year).
How then can we engage unskilled laborers when providing jobs for graduates is still a major challenge? Can the Government establish more technical schools to accommodate the skilled and unskilled? (That’s a discussion for another day).
The World Bank has estimated annual growth of 2.6% of the Nigerian population, while the unemployment rate was recorded to be at 23.1% in Q4, 2018. Trading economics predicted that there will be a 4% YOY in unemployment in Nigeria. The math is simple; if all variables remain constant, the 4% YOY increase in 6 years would have resulted in an unemployment rate of 29.02%. This scenario would lead to an increase in crime rate, political instability, exploitation of labor, increase in poverty, and social problems.
However, one of the quickest solution to this futuristic problem of unemployment is to integrate SME skills program as a curriculum in our early years of schooling, build more technical schools to reduce dependency rate, improve on existing infrastructure (good road, rail network & power generation), encourage more public-private partnership policies, introduce policies that guides SMEs to excel.
The Nigerian Government through her many agencies like the NIPC, SMEDAN, and FIRS can enhance their engagements with the MSMEs, and also create central policies where SMEs are allowed to showcase their products/services and sell to the global market while ensuring adherence to the international standard.
It is quite important to note that the financial sector also plays a significant role in the sustainability of SMEs as they are a major player in providing loans to SMEs. Just as reported by Techpoint, Oyapay, a Fintech start-up company, shut down due to a case of a family investment gone wrong. This approach shows that Start-ups often depending on family members as a source for funding, isn’t a sustainable model.
Technological Innovation
In spite of globalization, an important section of developing countries’ SMEs operationalizes business the conventional way. This results in a low level of productivity, low-quality of products, and exploring to a small and local market. It is noted that generally, SMEs tend to have low productivity and as a result, are weak when competing.
This is the result of using conventional technology and not having the maximum utility of machinery. Due to the limitation of funding and innovation, it may not be possible for them to improve their processes. However, policies can be implemented to guide SMEs on adopting the use of technology.
Infrastructure (Road, Rail Network & Power)
Poor infrastructure is a major frustration for SMEs trying to get on with their jobs; be its poor-quality broadband; it is stopping a small business from operating more online or rural firms finding it harder to move around because of poor roads and public transport.
Poor and deteriorating infrastructure can pose severe damage on business growth and viability, hence the lack of such amenities has led to extremely high cost of operating businesses in Nigeria. Other factors like; cost of sourcing for raw materials, transportation, internet services and finished products all add up, often leading to the provision of poor service delivery rendered to customers just for the business to keep afloat and possibly break even.
Thus, adequate and basic infrastructure can act as a catalyst for economic growth beyond the usual ease it provides. A good example is the establishment of the IPP project launched at Sura-Shopping Complex, Simpson road in Lagos Island. A project handled by Rural Electrification Authority under the Office of the Vice President of Nigeria. The initiative was very basic, focused on providing regular and reliable power supply to the over 1,000 shops and offices within Sura-Shopping Complex.
Upon the commencement of this project, it was observed that beyond the power supply, more jobs were created due to an uninterrupted power supply at the complex. The offices and business owners could almost immediately afford to employ more hands, do shifts (including night shifts) for more production. Initiatives like this would further encourage SMEs and as well as improve our ease of doing business index.
Workable Models for SMEs Funding
One viable model I have seen is the way some of the Micro Finance Institution dispense loan. The Group-lending model requires individuals to form a group of five and receive five-days financial training to obtain a loan from the lending Institution.
The emphasis from the very outset is to strengthen the SMEs organisationally and to build their capacity to plan and implement micro-level development decisions. (Grameen Group Lending Model).
The Government can thereby adopt this approach and provide loan to a group of different clusters of SMEs based on their demographics, business type, location and the raw materials required to run those businesses. Other lending models can also then be adopted here.
Many would say such initiatives will not be successful in Nigeria going by the previous experience of bad debts, unaccountability, lack of adequate records, and poor or lack of identity management systems. My assumption is the same, however, one begs to wonder if the community lending Initiative could make a difference which allows one to be responsible for another?
For instance; one can only qualify for loans if my fellow community members are fruitful in the commitment to repayment. Then there is bound to be an exponential growth in the SME sector when each member depends on another to grow. Currently, for some of the micro-finance companies – these clusters can only qualify for a bigger loan after repayment.
In my days in the FMCG sector, working at the production line, a bonus is received when targets are met as a group and not as individuals. As the goals are met as a group, this qualifies the group to be engaged with a bigger task as they continue to grow as a unit. Is this method applicable to the SMEs?
The TraderMoni initiative, for example, is focused on providing loans for petty traders that are unbanked but require access to funds to run their small businesses. Corporate Finance Houses might not be able to capture these set of the population due to their locations, lack of interest to own a bank account or the knowledge gap on why being financially included is vital to them.
TraderMoni can advance to the next stage on requirements where traders would only qualify for their next loan when they have successfully registered a bank account to their name through USSD service. Would such an initiative improve financial inclusion? I believe so.
Government Agencies like the SMEDAN; are responsible for initiating and articulating policy ideas for small and medium enterprises growth and development. If they further enrich their database, FDI inflows may grow based on credible and available data showing the opportunity for growth.
The Government’s form of supporting SMEs doesn’t necessarily have to be financial support all the time; as Government can even lease equipment to a group of farmers in community X as a service for five years. This support would promote the effective use of these equipment’s and drive more farmers to make the best use of the time allotted to them.
NISRAL, a CBN initiative founded in 2013 currently executes the equipment-as-a-service model for farmers in rural areas. The major advantage with this initiative is that every member of such a group depends on each other to ensure the funds being received are used for its real purpose while profit generated is channeled back into the business.
SMEs in Nigeria
In Nigeria, the importance of SMEs in the process of social and economic development cannot be neglected, and its significance in the development of the country.
It was summarized in Nigeria’s third National Development Plan, 1975-1980; as the generation of employment opportunities, stimulation of indigenous entrepreneurship, facilitation of effective mobilization of local resources including capital and skill as well as a reduction in regional disparities.
Despite the slow growth of SMEs development, Impact of SMEs has been a known fact dated back as 1975!
The Small Business and Entrepreneurship Council (SBE Council) statistics revealed that 99.7 percent of U.S. businesses are SMEs. However, there are several barriers that the US SME sector still faces, especially in commodities.
The significant barriers to trading include insufficient access to finance, high transportation costs, tax laws, and rules, maintaining profitability, developing new products, language, and cultural differences. Gaps like these signify no SME ecosystem is perfect, and they are required to keep evolving with time as new challenges arise. Despite the challenges in the SMEs market in the US, the sectors still contribute 47% of total employment.
While in developing economies like India, the contribution of the SME sector to manufacturing output, employment, and exports of the country is quite significant. It is noted that regarding the value, the SME sector of India accounts for 45% of the manufacturing output and 40% of the total exports. India’s SME sector employs around 42 million people in over 13 million units throughout the country. (Source: Department of Commerce, Govt. of India)
Conclusion
It is evident from my article that SMEs contribution is considerably high in economic development whether it is a developed country or developing country. Not only financially subsidized promotion is essential, but the strategic implementation becomes vital for sustainable development of the SME sector. Strategic implementation takes care of financial aspects, human resource, marketing, research and development, technology, and corporate governance in the SME sector.
SMEs in developed Nations are not only relying on Credit availability but Technological Innovation and Infrastructural Policies. Hence, it is critical for Policymakers to create an enabling and sustainable environment as a bedrock for SMEs to flourish. Great to recall the words of Richard Branson; “A business starts small”.
Adewale A. Adeyipo, Ag. Group managing director, CWG plc,
Kaspersky is addressing one of the most debatable technological challenges of the coming decade: the rise of quantum computing and its potential impact on digital security.
In this context, experts have identified the main quantum threats that demand immediate action from the cybersecurity community.
As classical computers approach their physical limits, their performance growth is slowing — constraining progress in areas that depend on complex computation.
At the same time, quantum computers offer the potential to solve specific problems far faster than classical systems. For now, however, their practical use remains limited to narrow and experimental domains.
Nevertheless, experts estimate that we may see a fully fault-tolerant quantum computer within the next decade — a development that could unlock significant advances, but also unleash a new era of cybersecurity threats.
Supporting this urgency, Deloitte’s 2024 Global Future of Cyber Survey reports that 83% of organizations are already assessing or taking steps to address quantum computing risks, demonstrating growing awareness and proactive strategies in the private sector.
To better understand the scope of the evolving threat, Kaspersky has identified three of the most urgent quantum-related risks that demand action from the cybersecurity community:
The top three risks:
Quantum computers could be used to compromise the traditional encryption methods that currently protect data in countless digital systems — posing a direct threat to global cybersecurity infrastructures.
Threats include the interception and decoding of sensitive diplomatic, military, and financial communications, as well as the real-time decryption of private negotiations – something quantum systems could handle much faster than classical machines, turning secure conversations into open books.
- Store now, decrypt later: the key threat of the coming years
Threat actors are already harvesting encrypted data today, with the intention of decrypting it in the future once quantum capabilities advance. This “store now, decrypt later” tactic could expose sensitive information years after it was originally transmitted — including diplomatic exchanges, financial transactions, and private communications.
- Sabotage in blockchain and cryptocurrency
Blockchain networks are not immune to quantum threats. Bitcoin’s Elliptic Curve Digital Signature Algorithm (ECDSA), which relies on elliptic curve cryptography (ECC), is especially vulnerable.
Potential risks include forging digital signatures, which threatens Bitcoin, Ethereum, and other cryptocurrencies; attacks on ECDSA that secure crypto wallets; and tampering with blockchain transaction history, undermining trust and integrity.
- Quantum-resistant ransomware: a new front
Looking ahead, developers and operators of advanced ransomware may begin adopting post-quantum cryptography to protect their own malicious payloads. So-called “quantum-resistant” ransomware would be designed to resist decryption by both classical and quantum computers — potentially making recovery without paying a ransom nearly impossible.
At present, quantum computing does not offer a way to decrypt files locked by current ransomware. Data protection and recovery still rely on traditional security solutions and collaboration among law enforcement agencies, quantum researchers, and international organisations.
Building quantum-safe defenses
Quantum computers are not yet a direct threat — but by the time they are, it may be too late to respond. Transitioning to post-quantum cryptography will take years. Preparations must begin today.
The cybersecurity community, IT companies, and governments must coordinate to address the risks ahead. Policymakers should develop clear strategies to migrate to post-quantum algorithms. Businesses and researchers need to begin implementing new security standards now.
“The most critical risk lies not really in the future, but in the present: encrypted data with long-term value is already at risk from future decryption. The security decisions we make today will define the resilience of our digital infrastructure for decades.
“Governments, businesses, and infrastructure providers must begin adapting now, or risk systemic vulnerabilities that cannot be retroactively fixed,” states Sergey Lozhkin, Head of Kaspersky Global Research & Analysis Team for META and APAC.
Contrary to popular belief, using cutting-edge artificial intelligence tools slowed down experienced software developers when they were working in codebases familiar to them, rather than supercharging their work, a new study found.
AI research nonprofit METR conducted the in-depth study, on a group of seasoned developers earlier this year while they used Cursor, a popular AI coding assistant, to help them complete tasks in open-source projects they were familiar with.
Before the study, the open-source developers believed using AI would speed them up, estimating it would decrease task completion time by 24%. Even after completing the tasks with AI, the developers believed that they had decreased task times by 20%. But the study found that using AI did the opposite: it increased task completion time by 19%.
The study’s lead authors, Joel Becker and Nate Rush, said they were shocked by the results: prior to the study, Rush had written down that he expected “a 2x speed up, somewhat obviously.”
The findings challenge the belief that AI always makes expensive human engineers much more productive, a factor that has attracted substantial investment into companies selling AI products to aid software development.
AI is also expected to replace entry-level coding positions. Dario Amodei, CEO of Anthropic, recently told Axios that AI could wipe out half of all entry-level white collar jobs in the next one to five years.
Prior literature on productivity improvements has found significant gains: one study found using AI sped up coders by 56%, another study found developers were able to complete 26% more tasks in a given time.
But the new METR study shows that those gains don’t apply to all software development scenarios. In particular, this study showed that experienced developers intimately familiar with the quirks and requirements of large, established open source codebases experienced a slowdown.
Other studies often rely on software development benchmarks for AI, which sometimes misrepresent real-world tasks, the study’s authors said.
The slowdown stemmed from developers needing to spend time going over and correcting what the AI models suggested.
“When we watched the videos, we found that the AIs made some suggestions about their work, and the suggestions were often directionally correct, but not exactly what’s needed,” Becker said.
The authors cautioned that they do not expect the slowdown to apply in other scenarios, such as for junior engineers or engineers working in codebases they aren’t familiar with.
Still, the majority of the study’s participants, as well as the study’s authors, continue to use Cursor today.
The authors believe it is because AI makes the development experience easier, and in turn, more pleasant, akin to editing an essay instead of staring at a blank page.
“Developers have goals other than completing the task as soon as possible,” Becker said. “So they’re going with this less effortful route.”
Kaspersky GReAT (Global Research and Analysis Team) experts have discovered open-source packages that download the Quasar backdoor and a stealer designed to exfiltrate cryptocurrency. The malicious packages are intended for the Cursor AI development environment, which is based on Visual Studio Code — a tool used for AI-assisted coding.
The malicious open-source packages are extensions hosted in the Open VSX repository that claim to provide support for the Solidity programming language. However, in practice, they download and execute malicious code on users’ devices.
During an incident response, a blockchain developer from Russia reached out to Kaspersky after installing one of these fake extensions on his computer, which allowed attackers to steal approximately $500,000 worth of crypto assets.
The threat actor behind these packages managed to deceive the developer by making the malicious package rank higher than the legitimate one. The attacker achieved this by artificially inflating the malicious package’s downloads count to 54,000.
After installation, the victim gained no actual functionality from the extension. Instead, malicious ScreenConnect software was installed on the computer, granting threat actors remote access to the infected device.
Using this access, they deployed the open-source Quasar backdoor along with a stealer that collects data from browsers, email clients, and crypto wallets. With these tools, the threat actors were able to obtain the developer’s wallet seed phrases and subsequently steal cryptocurrency from the accounts.
After the malicious extension downloaded by the developer was discovered and removed from the repository, the threat actor republished it and artificially inflated its installation count to a higher number – 2 million, compared to 61,000 for the legitimate package. The extension was removed from the platform following a request from Kaspersky.
“Spotting compromised open-source packages with the naked eye is becoming increasingly difficult. Threat actors are using increasingly creative tactics to deceive potential victims, even developers who have a strong understanding of cybersecurity risks — particularly those working in the blockchain development field.
As we expect adversaries to continue targeting developers, it is recommended that even experienced IT professionals deploy dedicated security solutions to safeguard sensitive data and prevent financial losses,” commented Georgy Kucherin, Security Researcher with Kaspersky’s Global Research and Analysis Team.
The threat actor behind the attack published not only malicious Solidity extensions but also another NPM package, solsafe, which also downloads ScreenConnect. A few months earlier, three additional malicious Visual Studio Code extensions were released — solaibot, among-eth, and blankebesxstnion — all of them have already been removed from the repository.
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