joseph o sanusi : small and medium enterprises in nigeria opening remarks by dr joseph o sanusi, governor of the central bank of nigeria, at the national summit on the small and medium industries equity investment scheme ( smieis ) held at the lagos chamber of commerce and industry auditorium, victoria island, lagos, 10 june 2003. * * * representative of the honourable minister of industry ; the president, lagos chamber of commerce and industry ; captains of industry ; eminent bankers ; members of the organized private sector ; entrepreneurs ; distinguished ladies and gentlemen. i am most delighted to join the president of the lagos chamber of commerce and industry in welcoming all dignitaries to this national summit on the small and medium industries equity investment scheme ( smieis ) and to make a few opening remarks. the establishment of smieis was informed by the lingering problems of the dearth of long - term funding and poor business management skills which have inhibited the realization of the potentials of the small and medium - scale industries as the engine of growth in the nigerian economy, despite the various schemes that had been initiated in the past to provide incentives for development of this sector. smieis is an innovation designed for our peculiar situation in the country. this initiative has recorded satisfactory progress so far within the short period of its existence. as at 31st may, 2003, a total of n14. 6 billion had been set aside by banks for equity investment under the scheme. however, despite the rapid accumulation of resources, only n4. 3 billion, or 29. 4 per cent of the fund had been invested so far. the reasons for this slow pace are not far - fetched. first, equity investment requires skill - sets which are quite different from what the banks are familiar with in credit appraisal and management. secondly, at the time the scheme took off in 2001, the necessary structures for the investing banks to effectively administer the scheme were not in place. however, it is encouraging to note that several applications are being processed by the securities and exchange commission ( sec ) for the registration of subsidiaries of banks as venture capital companies for the purpose of channeling investments under the scheme. thirdly, the dearth of attractive projects in which banks can invest, owing to poor record - keeping, poor managerial capability and lack of business packaging skills remains a limiting factor. fourthly, there was resistance from the entrepreneurs who were reluctant to dilute their shareholding. it took them time to accept the idea of patronizing equity

oil wealth “ but almost none of it flows to the people ” ( san francisco chronicle, march 11, 2007 ). corruption has denied nigerians the value of the petro - dollar that has accrued to the country over the years. the failure of infrastructure, political and ethical standards as well as moral and educational standards can easily be traced to corruption. v. low quality of education : education is an important factor in economic growth and development. but the nation ’ s educational system has been facing myriad of challenges, which prevent the country from achieving its economic objectives. the problems include inadequate funding and planning and management, inadequate infrastructure, irrelevance of curricula to industrial needs, and inadequate commitment on the part of students and teachers, among others. all these have combined to hinder the production of a high quality work force to propel the economy ( uness for nigeria : 2006 – 2015 ). as dike ( 2006 ) noted, the state of a nation ’ s educational sector, among other things, determines the economic health of the nation. vi. the dutch disease : since the oil price boom of the early 1970s, the country abandoned the agricultural and industrial sectors of the economy to the old and weak. both the public and private sectors of the economy concentrate their efforts in the oil and gas industry to the extent that the mainstream economy is denied funding, requisite investment and even managerial capabilities. thus, the mainstream economy has become uncompetitive globally while the country has turned into a trading outpost for foreign companies. this has hindered the muchneeded transformation of the economy in the last four decades. vii. poor investment climate : the consequence of all that have been said above is the poor investment climate in the economy that has rendered the economy uncompetitive. in the absence of adequate infrastructure ( power, roads, water, etc. ) the cost of doing business in the country remain high, forcing to neighboring countries even companies that had existed in nigeria for upwards of four decades. 5. prospects for the economy having reviewed the growth performance of the nigerian economy and the challenges facing it, the next appropriate question to address is whether the prospects are bright for the economy. the answer to this question depends on the policies articulated for the medium - tolong term and the seriousness with which they are implemented. indeed, it has been projected that by the year 2050, brazil, russia, india and china, usually referred to as the bric countries, would have a combined