VAT, rent suspension… SMEs suggest COVID-19 interventions to FG

Micro, small and medium enterprises in the country have asked the federal government to increase interventions to help businesses survive COVID-19 restrictions.

In a document released on Friday, the businesses said current interventions by the government are not sufficient.

“The ₦50 billion (US$ 135 million) credit facility is for both SMEs and households.
With a maximum loan amount of ₦25 million (US$ 67,500) for SMEs, this will
mean that if there is a 50-50 split between the two beneficiary groupings, only
about 1000 and 1,500 SMEs are likely to be reached.

“This is simply not enough.”

They also said the collateral requirements to access the maximum N25 million is out of reach for SMEs.

Suggesting action plans to be taken suing the COVID-19 lockdown and post COVID-19, they advised the federal government to provide N30 billion grants to businesses in the vulnerable industries.

This, they suggested, should be disbursed as N3 million grants to cover at least 10,000 SMEs to cover at least three months of their payroll.

“Furthermore, we insist that the funds be deployed directly to the beneficiaries, using their BVN numbers.

“In the interest of time and to avoid complexity, the funds should not be channelled through any financial intermediary.”

It was also suggested that the Central Bank of Nigeria and regulated financial institutions completely forgive principal and interest repayments on existing SME loans.

As an alternative, it suggested a three-month forbearance on principal repayments once businesses resume operations.

“This means that the loan tenor will be extended by this period. Interest on these loans should be repaid, even during the forbearance period.

“We seek a halt in all state and federal tax collections, including VAT and consumption tax, as well as an extension on filings.

“We urge the government to appeal to landlords to allow for moratoriums and not evict businesses that have rents due but are unable to pay for renewal due to the impact of COVID-19 on their businesses.

“Also, to ensure landlords are not charging service fees or deferring them, during the lockdown period.”

It also urged the federal government to advocate, on behalf of SMEs, to the telecommunications companies to provide free or subsidized data services to employed Nigerians.

It was also suggested that a small business resilience fund be set up allowing contributions from private sector individuals, corporations and foundations, to provide tailormade financing, utilizing various financing instruments including grants, equity and debt.

“The Fund should be managed by an independent private fund-manager or administrator who can put in place transparent guidelines and quickly assess potential beneficiaries, deploy and effectively track the funds in a transparent manner.

“This fund-manager will be experienced in investing in SMEs and have a
a defensive strategy that specifically supports existing and new business opportunities that increase resilience to future pandemics and other shocks, while creating thousands of dignified, skilled jobs.”

Post COVID-19 interventions suggested include the inclusion of SME agencies in the presidential task force, direct tax relief to incentivise investments and 90-day free transportation on state-owned commuter buses.

A petition advocating SME interventions have gathered 2,894 signatures on Change.org.